Casino Subsidy for Racing Seems Safe in Indiana

A proposal that could lead to eliminating the state's $27-million-a-year subsidy to the horse racing industry likely won't make it out of the starting gate.

A government efficiency report released the week of Dec. 3 questions the value of subsidizing the industry and recommends the practice be reviewed to determine if there are any benefits for taxpayers. The review was one of about 150 recommendations, some of which already are being acted upon, contained in the 56-page report.

But Gov. Mitch Daniels said Dec. 8 that reviewing the subsidy is "just not a priority of mine at this time."

The horse racing industry receives 65 cents from the $3 admission tax charged to each gambler who visits Indiana's riverboat casinos. Between 1995 and 2005, the subsidy totaled nearly $223 million, according to the report released by the Office of Management and Budget.

In 2005, the horse racing industry received $27 million, $10.8 million of which went directly to the state's two pari-mutuel tracks, Hoosier Park and Indiana Downs. Another $10.8 million was allotted to purses, and $5.4 million went to breed development.

"It is unclear if these subsidies are intended to exist in perpetuity, or if the horse racing industry is expected to become self-sufficient sometime in the future," the report said. "Equally unclear is the economic return on the taxpayer dollars spent on these subsidies."
Proponents of horse racing claim the money is an investment in an agricultural industry."

"According to an American Horse Council study, the Indiana racing industry generates more than $294 million in annual economic impact," said Michael Brown, a spokesman for the Indiana Horse Racing and Breeding Coalition. "Given that, a $27-million investment has yielded $11 for every $1 the state put into Indiana horse industry. We think that's a pretty good investment."

The coalition lately has been lobbying for gaming machines to be allowed at both tracks, in which case the subsidy could be eliminated. But Daniels opposes a major expansion of gambling and said allowing slot machines at tracks sounds like such an expansion. Lawmakers also have resisted allowing the machines.

"We believe the industry would be able to stand on its own...under legislation that would create alternative gaming at the state's two pari-mutuel tracks," Brown said.