It has been ten years since Act 71, the Alternative Gaming Bill, was passed under the administration of Governor Ed Rendell. The state levied a 55% tax on the net profit of the licensed casinos and racinos that followed. The operators retained 45% of the profit. The 55% tax was divided as follows: 34 % for Pennsylvania tax relief, 5% for the promotion of tourism, and 4% to local municipalities in which the casinos and racinos were located. The remaining 12% was awarded to the horse industry, which was in serious trouble. The 12% that was awarded to the Race Horse Development Fund, (RHDF), has provided roughly 240 million dollars annually, of which 120 million dollars is allocated to each of the racing breeds (Standardbred and Thoroughbred.) Sixteen percent of the 12% was awarded to the Pennsylvania Breeders Fund for Thoroughbreds. In 2015, the Governor has proposed to take 23 million dollars from the RHDF to be given to the Pennsylvania Department of Agriculture for the funding of veterinary laboratories, county fairs, the farm show, and regulatory funding. The horsemen organizations are rewarded with approximately three percent of their purse account from the remaining 210 million, with health and pension benefits receiving 4 percent.
The 16 percent of the RHDF that flows to the Pennsylvania Breeders Fund has generated approximately 18 million dollars annually. Of this, approximately 10 million dollars has been paid in breeders and stallion awards, and the remaining 8 million dollars used to fund restricted stakes, restricted overnight races, and owners bonuses. In 2014 there were 545 races restricted to Pennsylvania bred horses, only one of which was restricted to Pennsylvania bred and sired horses. There was approximately 1.9 million dollars allocated for Pennsylvania restricted stakes none of which was written for Pennsylvania bred and sired horses. The question becomes with the kind of money allocated to the Pennsylvania RHDF and its accompanied breeders fund why has the Pennsylvania Thoroughbred breeding industry faired so poorly? One needs only to compare the highly successful New York program with a breeders fund of approximately the same size and resident mares of approximately of the same number which has had increasing numbers of mares bred and foals produced while mares bred in Pennsylvania have dropped from 1752 in 2009 to 810 in 2014. This is 217 mares fewer than were bred in 2004 before the implementation of RHDF. The number of Pennsylvania bred foals (not PA sired) have dropped proportionately. There are several reasons that this has occurred:
1) Even though the amount of money in the RHDF is adequate to support a healthy and exuberant breeding industry, many breeders inside and out of the state do not have confidence in the program due to the constant threat by the state government to confiscate some or all of the RHDF money.
2) Again even though there is adequate money allocated to the horse industry, Pennsylvania Thoroughbred breeding is poorly incentivized in that the number of restricted races are too few. In addition, stakes and races restricted to Pennsylvania bred horses are not adequately funded. There are virtually no Pennsylvania sired stakes or overnight races offered, thereby encouraging owners to breed to sires outside of Pennsylvania where the incentives are much greater for their sired offspring. In New York, for example, they have fewer race days than in Pennsylvania and significantly more restricted races (823 to 545) and award 44.4 million dollars to these races compared to Pennsylvania’s approximately 15 million.
3) Pennsylvania does not offer marque race days for Pennsylvania bred or Pennsylvania bred and sired horses of any significance. New York’s program provides approximately 1.5 million dollars for sired races. Maryland, a more modest program, still provides a million dollars for sired races to encourage owners to breed to sires in their state. Pennsylvania provides very little to promote sires standing within the Commonwealth.
Until these three problems are addressed, Thoroughbred breeding in Pennsylvania will continue to decrease and farms will continue to be sold (there are few remaining). Many Thoroughbred breeders have given up all together. We have reached the point where the only Thoroughbred breeders remaining are those that have significant wealth to continue to absorb the losses and those that cannot find a way to escape a rapidly deteriorating agricultural industry.