Thoroughbred horsemen in Massachusetts will get a significantly smaller allocation of the state's multimillion dollar Race Horse Development Fund for purses and breeders' awards as the result of a unanimous decision to revise the split between the Standardbred and Thoroughbred industries.
The Massachusetts Gaming Commission's Horse Racing Committee voted 5-0 June 20 to divide the RHDF 55% to harness horsemen and 45% to Thoroughbred horsemen, retroactive to Jan. 1, 2016.
The previous split was 75%-25%, Thoroughbred to Standardbred.
Massachusetts Gaming Commissioner Gayle Cameron, the sole member of the MGC to sit on the HRC, told Blood-Horse that the number of current live racing days in the state for each breed affected the decision.
After the MGC in 2014 denied a license to Suffolk Downs' gaming partner Mohegan Sun to develop a $1.75 billion casino on the racetrack grounds, there were only three days of Thoroughbred racing there in 2015. When the MGC granted a slots parlor license to Penn National Gaming Inc., the company completed the purchase of the state's only harness track and there were 100 days of live racing at Plainridge Park Casino last year.
Pans call for six days of live Thoroughbred racing at Suffolk Downs and a 15-day meet at the Brockton Fairgrounds in 2016. Plainridge, by state law, must increase its live meet to a minimum of 115 days this year and then 125 days annually.
"The members of the committee read all of the reports submitted by the attorneys for each group. Look, they (the Standardbreds) have the bulk of the business now and all of the numbers have flipped as far as live handle, employment, and ancillary jobs outside of the track. The only numbers that haven't changed would be the simulcast handle on Thoroughbred racing, even at Plainridge, and that was a plus for the Thoroughbreds," said Cameron. "The Standardbred people made a pretty compelling case."
As big of a blow as the decision is to the Thoroughbred horsemen, who will lose 40% of their current RHDF monies allocated when the ratio is factored in, it could have been worse.
"Their (the Standardbred horsemen) original brief called for flipping the splits 75% to the Standardbreds and 25% to the Thoroughbreds," said Cameron, who noted the June 20 decision may be revisited at the next HRC meeting scheduled for late October.
The HRC solicited public comments from all interested parties, which were taken into consideration, and the number of comments submitted were equal between the two factions. Thoroughbred horsemen made the argument that it is through no fault of their own that they cannot race more days, but that didn't sway the committee.
Under state statute, the RHDF is fueled by a percentage of the license fees and gaming revenue from Plainridge Park Casino and two future destination resort casinos to be developed in Greater Boston and the western part of the state. There also is a Native American casino coming to the southeastern part of the state but different regulations apply to the federally recognized Mashpee Wampanoag tribe.
The RHDF monies for the racing industry, regardless of breed, are allocated 80% to purses, 16% to breeders, and 4% to backstretch welfare. There is approximately $8 million escrowed in the fund from 2015 currently designated for Thoroughbred horsemen.
Suffolk Downs chief operating officer Chip Tuttle said that the HRC decision will not alter the upcoming meet, which begins July 9 and will offer average daily purses around $500,000. The owners of the Brockton Fairgrounds are waiting for final licensing approval from the MGC and hope to start racing in July with an approximate $150,000 in average daily purses.
"The committee's decision should not have any effect on our 2016 racing festivals as we have already been granted our $2.4 million allocation (for purses by the MGC) from existing funds in the RHDF," Tuttle said. "It's full speed ahead for us."
Nevertheless, the state's Thoroughbred breeders are reeling from the dramatic change in the splits. Their 16% of the Thoroughbred's share goes to purses for races restricted to Massachusetts-breds in state and at Finger Lakes Race Track, out-of-state purse supplements for state-breds, additional breeders' awards, and operating expenditures.
Dr. Anthony Zizza, a member of the Massachusetts Thoroughbred Breeders Association board of directors, addressed the volatility, instability, and uncertainty created for the breeders by the HRC's decision.
"When anyone breeds a Thoroughbred, there is a major investment involved. We all know it can take three to four years before your foal gets to the races," he said. "It is our mission to advance Thoroughbred breeding in Massachusetts and we are concerned by the lack of permanence and stability in an environment (where the RHDF allocations) can change from year to year. Investors require a multiyear, and multigenerational, commitment.
"Another important part of this is we need people willing to invest the money to bring stallions and mares into the state and to buy farms to support breeding. No smart investor is going to put money into a market that has the current inherent volatility," Zizza continued. "In the very short time that we have had the RHDF, there has been substantial and positive activity with new owners coming in and buying, claiming and racing Mass-breds. Now everything that they based their business plan on is gone. I know one potential owner who was planning a big investment in Massachusetts has already pulled back because of this change in the splits. Everything has already been turned upside down."
The New England affiliate of the Horsemen's Benevolent and Protective Association has developed plans to construct a non-profit, state-of-the-art equine center that would provide year-round Thoroughbred racing and other events. The NEHBPA is counting on the passage of enabling legislation, but the bill has yet to be filed.
"Our money was just eroded by 40%. The answer to getting a stable and permanent environment in which to breed Thoroughbreds is to have the new equine center," said Zizza. "Without that, all of this is for naught."
Cameron said the committee must deal with the situation at hand, even though the Thoroughbred horsemen spoke of the equine center and asked members to bet on the future.
"I don't think the committee found that argument all that compelling," she said. "The legislature sees a big pot of money (the RHDF) that's not being spent and that's not a good thing when that money could easily go to other industries and interests. We can revisit the splits in the fall."
"It appears the Thoroughbred industry needs to advance the horse park legislation that is now being presented to the legislature. I anticipate the Thoroughbred industry will seek an increase in the split when and if the legislation passes," said attorney Frank Frisoli, who is the Thoroughbred industry representative on the five-member HRC. "The other four members of the HRC agreed as to what is equitable under present circumstances. I really cannot find fault with their conclusion. The HRC was unfortunately restricted by the statute (state law says the HRC must make its decision based upon five criteria) from giving the Thoroughbred industry a larger percentage, especially when 2016 purses and the handle on live racing in 2016 is considered."