Kentucky Horse Industry Gains Legislative Clout

As the 2005 Kentucky General Assembly session nears an end, the horse industry finds itself with a few important benefits--and a sense that it could show a lot of muscle in future legislative endeavors.

The tax modernization plan and budget to be signed into law by Republican Gov. Fletcher includes provisions for three breed development programs, modification of a tax on the purchase of yearlings and 2-year-olds, and millions of dollars for the Lexington Disease Diagnostic Center.

That's much more than the industry achieved in recent legislative sessions, when its primary goal of winning approval for alternative gaming hit the wall.

"The way the horse industry came together--all breeds of horses--to make a case for legislation was unbelievably significant," said former Kentucky governor Brereton Jones, who owns Airdrie Stud near Midway, Ky., and also serves as chairman of the Kentucky Equine Education Project, a multi-breed organization charged with elevating the state's signature industry. "I don't know of a state where all horsemen have united. This is just the beginning. There are lots of things that need to be addressed to make the industry stronger."

Republican Sen. Damon Thayer, an executive with the National Thoroughbred Racing Association and Breeders' Cup, advanced the breed development incentives after meetings with Fletcher last year. He said success only comes by having legislators who are willing to advance an issue, and by having a "strong grassroots advocacy membership group" such as KEEP.

During sessions earlier in this decade, racetracks led the alternative gaming effort but met with criticism from key legislators. Industry insiders believe the emergence of KEEP, with its million-dollar marketing and education campaign, will lead to a different approach perhaps next year.

"For an issue to move forward, all aspects of the industry, such as breeders and racetracks, have to be united," Thayer said. "Hats off to KEEP for its educational campaign. Its presence was noted in Frankfort."

It's inevitable KEEP will take a position on expanded gambling. It remains to be seen if a racetrack coalition could make progress without support from KEEP and its growing constituency.

"I think all of us want a level playing field," Jones said. "This is step number one toward getting to a level playing field."

The breed development incentives will come from a transfer of about $15 million in stud-fee tax revenue from the state's general fund. Each year, Thoroughbreds will get $12 million, Standardbreds $2 million, and other breeds $1 million.

The splits themselves show the growing power of the multi-breed coalition. The Thoroughbred industry generates $14 million of the $15 million, but gave up $2 million to other breeds.

The Kentucky Horse Racing Authority will promulgate the rules for the three programs based on input from horse owners and breeders. The programs will begin Jan. 1, 2006.

Thus far, only the Standardbred industry has decided how to use the money. It will go to boost purses for sires stakes--races for offspring of Kentucky-based stallions-- held each year at The Red Mile.

"If any of us live long enough to see a slots bill pass, it would generate $6 million to $8 million for breed development," said Alan Leavitt, who operates Walnut Hall, a Central Kentucky breeding farm. "Then, we would think about using that money for a breeders' awards fund. At the moment, we're helping the part that needs it the most."

Thayer said he purposely left the structure of the programs out of the legislation, but that he would encourage the KHRA to adopt rules that don't limit the awards to races run in the state.

"We have a unique situation in Kentucky," Thayer said. "We have a large foal crop that races all over the world. "Limiting (breeders' awards) to races in Kentucky defeats that purpose."

As for the existing tax on the sale of yearlings and 2-year-olds, Kentucky residents would continue to pay, but non-residents would no longer need to remove the horses from Kentucky within a certain period of time to avoid the tax. The goal is to keep more horses in the state for training and boarding purposes.

The $8-million budget provision for the diagnostic lab was pushed by the Kentucky Thoroughbred Association, which has lobbied for improvements at the facility since the outbreak of mare reproductive loss syndrome in the spring of 2001. The money will be used for expansion and renovation of the lab.