Underfunded Budget Moves Forward in Pennsylvania

Industry concerned that added gambling competition could be approved.

Industry groups in Pennsylvania will stay vigilant after Governor Tom Wolf on July 10 allowed an underfunded budget to become law without his signature.

Legislators sent Wolf (Democrat) a $32 billion budget that, according to numerous reports, did not include funding for more than $2 billion of the plan. Under that scenario, legislators will have to come up with a funding source, which will see industry groups in the state stay active.

The two major concerns for the industry in Pennsylvania are that lawmakers could divert money from the Pennsylvania Race Horse Development Fund (RHDF) or add more competition by expanding gambling in the state.

Pennsylvania Horse Breeders Association executive secretary Brian Sanfratello said July 11 that his group will remain active by reaching out to lawmakers to make sure that they understand the importance of the RHDF, which he said has helped create jobs in the state in an industry that now boasts more than 23,000. He said the industry in the state has a $4 billion economic impact. Part of the strategy is having lawmakers who have supported the RHDF in the past rally support in Harrisburg, Pa.

Industry groups are working to ensure that the fund isn't touched, or is minimally touched, to help close the budget shortfall. The Pennsylvania Gaming Control Board reported that in calendar year 2016, gaming in the state generated $245 million for the RHDF, which was used to enhance purses, provide beneifts for breeders, provide health and pension benefits for horsemen, and support agricultural initiatives.

Sanfratello wouldn't venture a guess on any timeframe for legislators to take action, saying it could come in short order or could take as long as August or September. 

According to the Pennsylvania Horsemen's Benevolent and Protective Association, the industry contributes $1.6 billion in economic activity every year, the RHDF has helped increase industry jobs by 205% to 23,028, and horsemen have reinvested 89% of the money ($210 million) from the fund.

The Pennsylvania Thoroughbred Horsemen's Association has worked to protect the RHDF and has opposed further expansion of gaming.

In a May letter to members, the Pennsylvania THA noted, "There are two major issues impacting our industry that could be voted on by our state Representatives and Senators in the coming weeks. First, we are concerned—as we are each budget cycle—by the potential for the legislature to divert funds from the Race Horse Development Fund, which provides money for purses and breeder incentives.

"The second major concern, and an issue that could have a long-term impact, is the potential for the legislature to approve gaming expansion in the form of Video Gaming Terminals (VGTs) at bars and taverns, Internet gaming, or smaller satellite casinos with slot machines. That expanded gaming would decrease slots revenues at our racetrack casinos, which fund the Race Horse Development Fund."

On July 11, Casino.org reported that expanded gambling in the state is viewed by some legislators as a possible solution to the funding deficit. An already passed House bill would put up to 40,000 slot machines in bars and restaurants and legalize Internet gaming, daily fantasy sports, and sports betting—should it become legal at the federal level for states to add. 

Casino.org reports the Pennsylvania Senate has opposed the expansion and a report from the state's Gaming Control Board that slot revenue at current land-based casinos may chill legislators on adding more competition for the gambling dollar in the state.

Sanfratello noted that of the expanded gaming options being considered, the addition of gaming at bars and taverns is of the most concern because it would impact the performance of such games at the state's racinos, which provide funding for the RHDF.