PA Budget Approved With Reduced Slots Revenue

Pennsylvania horsemen opposed a plan to take away revenue from slot machines.


Democratic Gov. Ed Rendell has signed into law a budget for Pennsylvania that reduces the share of revenue horse racing gets from slot machines by about 17% over four years.

The budget was signed into law Oct. 9, more than 100 days late. Horsemen’s groups in Pennsylvania fought the plan by the state legislature to reduce the contribution from slots to balance the state’s budget. The impact statewide could be about $50 million a year.

The Pennsylvania Horse Breeders Association in a memo said the reduction in slots revenue to horse racing is 17%, which means purses will get 10% rather than 12% of gross gaming revenue under the Pennsylvania Race Horse Development and Gaming Act. The PHBA said the Thoroughbred breeding fund will lose about $2.7 million a year for four years.

Officials said some of the reduction would be offset by full-year operations at non-track slots casinos that pay 6% of gross gaming revenue to horse racing. That percentage, however, also will drop by 17% over the next four years.

Breeders’ awards will remain at 20%-30% and stallion awards at 10%. The PHBA said the Pennsylvania Horse Racing Commission Breeding Fund Advisory Committee will determine how the decrease in revenue will be applied to the program.

Slot machines at racetracks in the Keystone State were approved legislatively in 2004. Lawmakers also are negotiating to add table games to casinos, though no revenue would go to horse racing under the plan. The racing industry instead fought to maintain its share of slots revenue.

In an Oct. 1 release, the Pennsylvania Thoroughbred Horsemen’s Association, which represents horsemen at Philadelphia Park Casino & Racetrack, said the cut would mean a $32-million reduction in revenue over four years at the track. Horsemen said the proposal could force a reduction in racing dates and cuts in stakes purses.

"We are going to have to make some difficult choices and cuts to make up that cut in funding," Pennsylvania THA executive director Mike Ballezzi said in a statement. "Purse cuts and breeders award reductions will slow or stop the growth in Pennsylvania racing and breeding by eliminating the major incentives for horsemen to race in our state or for breeders to bring their mares to the state."

The Pennsylvania Harness Horsemen’s Association, which represents horsemen at Harrah’s Chester Casino & Racetrack and Mohegan Sun at Pocono Downs, said the Pennsylvania Race Horse Development Fund is "under attack" from legislators.

"Table games, if passed, may or may not negatively affect slots revenue and reduce purses even further," the PHHA said in a legislative alert. "The PHHA supports the passage of table games legislation because it is good for the overall financial health of state casinos, which in turn helps provide a more stable foundation for us.

"However, a cut to the Race Horse Development Fund would cause Pennsylvania to immediately become non-competitive with neighboring states, and could lead to the collapse of Pennsylvania racing, its infrastructure, and related businesses."

Ballezzi said at Philly Park, there could be 17%-20% cuts in benefits for horsemen’s pension and health-care plans. On the racing side, he said the purse for the grade II Pennsylvania Derby could drop from $1 million to $250,000, and the $750,000 Cotillion Stakes (gr. II) could be dropped from the schedule.