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PENNSYLVANIA NOW AND SOON TO BE
In the summer of 2004 the Pennsylvania legislature passed, and Governor Rendell signed, a comprehensive gaming bill which guaranteed alternative gaming at seven race tracks: four Standardbred and three Thoroughbred. The legislation is projected to generate $3 billion in annual revenue, of which 9 % or approximately $270 million is to be divided equally between the Thoroughbred & Standardbred industries for both breeder incentives and purses.
To understand the impact of $135 million infusion in the Thoroughbred industry, it is important to know that the Thoroughbred purse account at the two current Pennsylvania Thoroughbred tracks combined is approximately $45 million annually. When fully implemented the Thoroughbred purse account is projected to total approximately 160 million dollars annually and the breeders incentive program, which is currently approximately $8 million, is projected to increase to as much as $28 million.
The Standardbred industry, which is to have four tracks when the program is fully implemented will race for approximately $130 million (currently it is less than $30 million) and the breeders incentive program which is now approximately $3.5 million (entirely in Pennsylvania sire stakes) will increase to over $20 million, with approximately $10 million legislated for those who breed and raise their horses in Pennsylvania.
Who benefits from the current program, and who will benefit when the program is fully implemented? Currently the Thoroughbred incentive program rewards breeders of Pennsylvania-breds (horses foaled in Pennsylvania, who reside themselves, or their dams, in the state for 3 months during the calendar year of their birth) with a breeders award of 20% if not Pennsylvania sired, or 30% if Pennsylvania sired, of the purse when placing first, second or third in Pennsylvania races. Stallions receive a 10% stipend when their offspring place accordingly. In addition, a bonus of 10% of the earned purses is awarded to horses finishing first in Pennsylvania races. These awards and their percentages are mandated by law and currently amount to approximately half of the $8 million of the program. After partially subsidizing the operation of the PHBA (Pennsylvania Horse Breeders Association) the remainder (approximately $4 million) is awarded as additional owner bonuses and for Pennsylvania-bred stakes races.
The Standardbred incentive program currently awards the entire approximate $3.5 million to the sires stakes program for horses that are sired by Pennsylvania sires. This program will change dramatically with new legislation where approximately $10 million is projected to be allocated to the sires stakes program and $10 million awarded to a newly legislated breeders program, 70 % of which will be reserved for breeders that keep and foal their horses in Pennsylvania and breed to Pennsylvania sires. These awards will be granted at all levels of racing to breeders of horses that win, place or show in Pennsylvania races. This program is expected to create a significant surge in agricultural activity and every aspect of horse breeding will benefit.
Where is the Pennsylvania Thoroughbred program going as the legislation is implemented? Most projections suggest purses at Penn National and the newly licensed Presque Isle will approach $200,000 per day or about $40 million annually for each track. Philadelphia Park is projected to have purses approaching $400,000 per day or $80 million annually. Purses will be healthy and better stables will move into the state similar to what happened in Delaware when alternative gaming was implemented.
The Pennsylvania program is going to change dramatically due to the relief given by this legislation. Now the question becomes what does the Pennsylvania program need to change in order to protect our industry, improve the worth of our Pennsylvania-bred horses, and improve the lot of Pennsylvania stallions. The PHBA is charged with the definition of a “Pennsylvania-bred” and making decisions on how the Pennsylvania fund is disbursed within certain legislated criteria. The breeders awards and the 10% owner bonus to winners must be paid first and only up to 20% of the remaining funds can be allocated to “PA-bred” stakes races. The first and most difficult task has already been completed which was to change the definition of a Pennsylvania-bred to require a longer broodmare residency in the state beginning in 2007. The next change that needs to be made is to abandon the current non-legislated owner bonus program (which only encourages out of state owners to claim “PA-bred” horses with little benefit to the breeders), with a restricted Pennsylvania-bred racing program, designed to enhance the value of young “PA-bred” horses. One which will give “PA-breds” significant earning capability and still allow them to race through their open conditions similar to the New York program.
More than half of the approximately one thousand “PA-bred” foals in recent years are sired by out of state sires. This happens for two reasons: first, neighboring states offer significant purses for their state sired Thoroughbreds (Maryland, West Virginia, and New York in particular), New Jersey goes so far as to offer state-bred status to New Jersey-sired foals. This has led to the second problem, which is difficulty attracting higher quality stallions in Pennsylvania, in that these horses are likely to breed mores mares in neighboring states. The PHBA should begin immediately to initiate a race day at Philadelphia Park that not only awards “PA-bred” but “PA-bred” and sired participants. There is no greater incentive for breeders to breed to a state stallion than to have a chance to win a six figure purse in restricted company as in the “Maryland Million”. There should be ample money available for both a Pennsylvania racing program and the Pennsylvania Race Day when money from the new legislation becomes available.
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