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PA Gaming Report Examines Revenue for Purses

Statistics show that in 2011, 16% of purses earned came from wagering on racing.

Slot machine revenue for purses increased by more than $19 million at six Pennsylvania racetracks in 2011, while pari-mutuel handle and the revenue it produces for prize money continued to drop.

The figures are included in the “Pennsylvania Racetrack Casino Benchmark Report” prepared by the Pennsylvania Gaming Control Board. The report is released each year to gauge the impact of gaming on the horse racing industry in the state.

Slots revenue for racing was greatly impacted in 2010 when $68.8 million of racing’s share was used to support the state general fund. That figure dropped to $48.8 million in 2011 when the take was changed from 34% to 17% and is expected to remain at 17% through June 30, 2013, when it is scheduled to expire.

Purses earned through slots at three Thoroughbred and three Standardbred tracks totaled $178.6 million in 2011, up from $159.1 million in 2010 but still down from the high of $188.5 million recorded in 2009, the PGCB report shows. The first slots began operating at a few tracks at the end of 2006.

According to the report, in 2011 only 16% of purses earned--$34 million—came from wagering on Pennsylvania racing. That downward trend has continued since 2006, when only $3 million came from slots and $52.9 million came from handle.

All categories of handle were down in 2011, according to the PGCB. Out-of-state export wagering on Pennsylvania racing totaled $594.1 million, down 10% from 2010. On-track handle of $38.2 million at the six tracks was down 5.6%, while wagering at off-track betting parlors in the state dropped 14.2% to $15 million.

Pennsylvania was considered a leader in OTB when the tracks built parlors in the early 1990s. Statistics compiled from 2006 to 2011 show a 45.4% decline in handle at the facilities during that period; several OTB parlors have been shuttered in recent years.

The total number of races in 2011 was 11,559, up 136 from 2010 and 20 more than in 2009, according to the report. There were 989 race days—individual programs at each track—eight more than 2010.

Under the 2004 racetrack gaming law, racetracks are required to spend a certain amount on barn area improvements. (Two were built from the ground up after slots became law: Presque Isle Downs & Casino and Harrah's Philadelphia Casino & Racetrack.) Through 2011 Parx Racing has spent $17.5 million on stabling improvements, followed by Hollywood Casino at Penn National Race Course ($7.6 million),  and Mohegan Sun at Pocono Downs and The Meadows Racetrack & Casino (both at $6.5 million).

The racing industry gets 12% of slots revenue at racetrack casinos and 6% at non-track casinos. Of that cut, 66% goes to purses, 17% to the general fund (through June 2013), 7% to Thoroughbred breeding, 6% to Standardbred breeding and the sires stakes program, and 4% to health insurance and pension benefits for horsemen.