Pennsylvania’s top agriculture regulator is warning that the state’s horse racing industry could be shut down because declining tax revenues from the industry don’t cover the cost of regulating it.
And that shutdown could come as early as Oct. 30, a spokesman for Gov. Tom Wolf told reporters.
The state’s six race tracks have seen a 71 percent decline in wagering since 2001, Pa. Agriculture Secretary Russell Redding said in a statement.
Betting at racetracks topped $1.4 billion in 2001.
The roughly $12 million State Racing Fund is propped up by a mix of licensing fees, admissions taxes and taxes on rounding of payouts, according to a 2104 report by state Auditor General Eugene DePasquale.
But under state law, none of the licensing fees on horses, jockeys and owners can exceed $100. None of the racetracks charge admissions, so regulators have imposed a fee of 3 cents per person that goes to the track. And then there is the rounding off of wagers. Tracks round winnings down to the nearest dime, meaning that if a bettor wins $20.71, the track shaves a penny off of the payout. That penny is taxed at 25 percent.
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There are also taxes on wagering, between one and two percent.
That hasn’t been enough to cover the cost of personnel at the state racing commission and drug testing on horses.
“The system is broken, and it needs to be fixed,” Redding said.
To bridge the gap, the racing commission has in some cases simply billed the Department of Agriculture, or it has turned to another fund — a tax on slot machines that was designed to increase purses for winning horses and help build the state’s horse racing industry overall.
That fund, the Pennsylvania Horse Race Development Fund, brought in more than $242 million in 2014, but has been regularly tapped by the Pa. General Assembly to plug budget gaps.
The Pittsburgh Tribune-Review reports that there is a bill in the legislature that could reform the industry, but it’s been held up over a three-month long budget stalemate.
Todd Mostoller, the executive director of the Pennsylvania Horseman’s Benevolent and Protective Association told the paper that the threat of a shutdown has the industry worried.
“It just shocks me. It seems like a strong-arm tactic,” said Mostoller, told the Tribune. “If this is the tactic they want to use, I understand why there isn’t a budget.”