NTRA Sees Hope for Legislative Initiatives

The Thoroughbred industry, bolstered by the efforts of its political action committee, has a decent chance to get key legislation passed in Washington, D.C., officials with the National Thoroughbred Racing Association said.

Congress is in the first year of a two-year session. The NTRA and American Horse Council are working on several initiatives tied to the horse, taxation, and pari-mutuel wagering, said Greg Avioli, executive vice president of legislative and corporate planning for the NTRA.

Avioli was one of three NTRA officials who spoke during the May 3 Kentucky Thoroughbred Farm Managers' Club meeting in Lexington.

Key issues are reducing the capital gains holding period from two years to one year; accelerating depreciation of horses from seven years to three years; getting horses categorized as livestock; extending H-2B visas, limitation of which impacts horse farmers; reducing the withholding tax on pari-mutuel winnings; and preserving account wagering and simulcast rights.

Avioli said the seven-year depreciation scheme isn't applicable now in an industry in which horses may race only three to five years. He said Kentucky Sen. Mitch McConnell is pursuing legislation to change the law.

"If you're in the business of buying and selling horses, this can make a whole lot of difference to your pocketbook," Avioli said of the proposed depreciation change.

Avioli said the issues tied solely to wagering would be a challenge given the fact Congress could revisit Internet gambling. The Justice Department contends the federal Wire Act prohibits Internet gambling, while the Interstate Horseracing Act contains an exemption for pari-mutuel betting.

Internet wagering accounts for about $3.2 billion in Thoroughbred handle a year, Avioli said. That's more than 20% of total handle. Purses would drop about $250 million without Internet wagering, said Avioli, who indicated the plusses outweigh the minuses when it comes to account wagering.

"For the most part we still think it's a good thing because you get access to so many markets through the Internet," Avioli said. "We have issues in our industry because that's really the only form of growth we have right now."

The NTRA PAC in a two-year cycle has raised $750,000, which puts it in the top 10 in fund-raising among companies and trade associations. The National Rifle Association tops the list at $12.6 million, but the NTRA isn't far behind Microsoft and AT&T.

"For the first time, racing has become pretty well represented in Washington," Avioli said. "It has broader representation than the casino industry."

In a related matter, NTRA commissioner and Breeders' Cup president D.G. Van Clief Jr. said the Breeders' Cup board of directors has contributed to the Kentucky Equine Education Project, which seeks to establish the importance of the horse to Kentucky's economy. The contribution follows a similar one made to Friends of New York Racing, which looks to build a new economic model for the pari-mutuel industry in New York.

KEEP and FNYR are active politically in their respective states. Tim Smith, former commissioner of the NTRA, heads the New York effort.

Van Clief said the board has a policy of not making such financial contributions, but did so because the Kentucky and New York markets are critical to the racing and breeding industries. "We made an exception to the rule," he said.

Joe Morris, president of NTRA Purchasing, said sales topped $60 million in 2004, up from $31 million in 2003. In three years and three months, Kentucky farms alone have saved $3.88 million on products, Morris said.

This year, it appears NTRA Purchasing is headed for another record based on first-quarter figures. Group purchasing has become a major aspect of NTRA sponsorship programs.

"Support is critical," Morris said. "It's the only way we can grow our sponsorship base."