PA Group: End Diversion of Slots Revenue

A coalition says the proposed state budget will take $31 million from horsemen.

A percentage of horsemen's revenue from slot machines in Pennsylvania will continue to go to the state's general fund and other programs under the fiscal year 2013-14 unveiled Feb. 7 by Gov. Tom Corbett.

The Pennsylvania Equine Coalition, which represents owners, breeders, and trainers in the Thoroughbred and Standardbred industries, said the budget as written would take about $31 million from the Pennsylvania Race Horse Development Fund, which accrues revenue from slot machines at racetrack casinos and non-track casinos.

The percentage that goes to the state's general fund from purses and breed development was supposed to sunset June 30 of this year. No money is taken from the casino operators' share of slots revenue.

The coalition estimates that overall, there will be a $5 million to $15 million funding hit for the PRHDF in the next fiscal year because in recent months, revenue to the fund has declined. Slots play in January at Pennsylvania casinos was down 1%, according to the Pennsylvania Gaming Control Board.

"While less money is being diverted to other budget items, our projections show significant declines in money going into the fund," said Pete Peterson, a spokesman for the coalition. "That's bad news for the industry, considering that breeders' incentives are already down, and some tracks were forced to reduce their purses by 10% to 13% this year."

Peterson said $48.2 million was diverted from the fund in fiscal year 2011-12, and $54.2 million in fiscal year 2012-13.

The cumulative decline for the first seven months of the fiscal year (June 2012 through January 2013) is $7.69 million, the coalition said. The group cited competition from new casinos in neighboring states.

"Horse owners, breeders, and business owners made investments in Pennsylvania based on the commitment that funding to the Race Horse Development Fund would be fully restored after this fiscal year," Peterson said. "Just as other Pennsylvania businesses require a 'degree of certainty,' so too does the equine racing industry.

"For many in our industry, running a breeding operation or owning and racing horses is a break-even proposition at best. The declining revenues and diversion of money from the Race Horse Development Fund will negatively impact countless small businesses in Pennsylvania that make up and serve the horse racing industry.

"We are only asking that policymakers keep their promise that the four-year diversion of funding from the racing and breeding fund would end after this fiscal year."

Purses and breed development programs in Pennsylvania receive 12% of slots revenue from racetrack casinos and 6% from non-track casinos under the 2004 casino law. However, because of the casino buildup and other tax changes, the PRHDF actually receives 10.7% of slots revenue from racetrack casinos, Peterson said.