Pari-Mutuel Pull-Tab Proposal in Indiana Lacks Unanimity

By James Platz
Indiana's horse racing industry rested its hopes for financial stability on pull-tab legislation during last year's General Assembly and ensuing special session. Interest groups ranging from Hoosier Park and Indiana Downs to Standardbred, Thoroughbred and Quarter Horse breeders and owners watched bills progress through both chambers with unprecedented support. In the end, however, legislators refused to allow an expansion of gaming at both tracks and off-track facilities.

Again this year pull-tab legislation has been introduced in the form of House Bill 1598, authored by Rep. Scott Reske (D-Pendleton). While it could mean solid footing for Churchill Downs-owned Hoosier Park and upstart Indiana Downs, all interest groups in the state are not in agreement at how the bill is structured.

As it currently reads, HB 1598 calls for the installation of up to 700 pari-mutuel pull-tab machines at both Hoosier Park and Indiana Downs, as well as any off-track betting locations in Marion County. A wagering tax of 32.5 percent would be imposed on a permit holder's first $150 million of adjusted gross receipts, with the tax increasing to 37.5 percent on adjusted gross receipts exceeding $150 million. Furthermore, the greater of 70 percent of the wagering tax -- or $27 million -- would be distributed to the Indiana Horse Racing Commission for purses and breed development, with the remainder going to the state's General Fund. It is this final condition that has caused concern among groups in the state.

In response, the Indiana Horse Racing and Breeding Coalition was formed and is spearheaded by former Indiana Thoroughbred Breed Development Advisory Committee chairman and IHRC member Ed Martin Jr. Its members include the Indiana Standardbred Association, Indiana Thoroughbred Owners and Breeders Association, Indiana HPBA, Quarter Horse Racing Association of Indiana, and Indiana Downs, the state's newest racing facility located in Shelby County. According to Martin, the coalition's concern is to obtain a more secure form of funding. He feels that obtaining funding from the tax revenue on pull-tabs is no better than the industry's current scenario; a supplement paid to the IHRC from riverboat casino admission tax revenue.

"We need and we want alternative gaming, but we don't support this bill in its current form," said Martin. "It's still a subsidy paid through tax dollars."

In the end, Martin says Rep. Reske's proposal does nothing more than guarantee the financial security of the state's two racetracks, leaving the rest of the industry to continually fight in the General Assembly to keep their portion of the pull-tab tax revenue. The Thoroughbred owner sees no reason why Hoosier Park and Indiana Downs cannot take on the burden of supplementing purses and breed development. Martin says he has received forecasts that put annual adjusted gross revenue on pull-tabs at between $270 and $250 million.

"There's no reason that with that kind of revenue we can't all do well. It's pretty substantial. We want the same security as tracks," explained Martin. "The majority of the industry's economic development comes from the supply side. The supply side is what this bill doesn't take care of."

The coalition, in turn, has offered an amendment it hopes will pass in the House. In the amendment, 16 percent of total adjusted gross revenues would be distributed to purses and breed development, reducing track operators' share to 50 percent. The remaining 34 percent would be distributed to the state via the wagering tax.

Third-generation Standardbred owner Dr. Nat Hill, also a member of the coalition, agrees that money paid to Indiana horsemen should not come from tax revenue.

"I'm extremely concerned about where we get our revenue. We don't want to be on the state dole fighting taxpayers," Hill said.

He also pointed to the state government's nearly $1-billion budget deficit.

"The (coalition) amendment frees up money for the state. They need the money," Hill noted. "We think it makes perfect sense."

The only party notably absent from the coalition is Hoosier Park. Co-owned by Indianapolis-based Centaur, Inc., which maintains the top lobbying group in the push for pull-tab legislation, the state's first pari-mutuel facility has its sights set on moving HB 1598 through the House and on to the Senate.

"The industry is united in the need for alternative gaming and the positive impact it will have on the state. Hoosier Park feels it is important for the passage of House Bill 1598, which is the only bill that has been filed on the matter, and that is our focus at this time," Hoosier Park president Rick Moore said in a prepared statement. "We have worked hand-in-hand with the horsemen of Indiana for nearly 10 years, and hope to do so again during this legislative session."

The bill is scheduled to be heard by the House Committee on Public Policy and Ethics and Veterans Affairs on Monday, Feb. 10.