Bill Could Overhaul State Horse Racing Industry

Jul 8, 2014

Special series: This week we're exploring legislative action taken recently in Harrisburg on important bills that were overshadowed by the passage of the state budget.

The Pennsylvania House Agriculture and Rural Affairs Committee is considering a Senate bill that would change the state’s oversight of the horse racing industry.

The legislation, sponsored by Sen. Elder Vogel (R-Beaver), would dissolve the Department of Agriculture’s State and Harness Racing commissions and create one independent five-member commission.

Vogel said his measure would amend the state’s Horse Racing Industry Act.

“Nothing’s really been done to the act in about 30 years,” he said. “So, we’re consolidating and moving some things around. We’re setting up a whole new commission to oversee horse racing.”

Last month, Auditor General Eugene DePasquale announced that Pennsylvania’s $1 billion horse racing industry was at risk of bankruptcy due to the diversion of funds and declining revenue. He reports the Department of Agriculture overcharged the State Racing Fund by $873,206 over three years to plug budget holes and another $5.2 million over four years for personnel costs that can’t be documented.

Vogel said his bill is a response to the industry’s dire economic straits.

“Last December, we actually had to put an extra $5 million [from the State Racing Fund] ‘in the kitty’ I guess you’d say, to get them through the first six months of this year because of the issues they have as far as paying for the drug testing and things like that. So, all those issues have all been addressed,” he said.

Vogel’s legislation would also make changes to fees, fines, licensure and taxes in order to fund regulatory oversight and drug testing. These types are oversight activities are currently paid for by the State Racing Fund, which was allowed $4.2 million from the slots-funded Race Horse Development Fund this past spring to save it from bankruptcy. There are six racetrack casinos in Pennsylvania, including The Meadows in Washington County.

The Race Horse Development Fund is having its fair share of problems as well. Since 2010, more than $212 million was diverted from the fund, including $185 million to the state’s general pool and $5 million to the Farm Products Show Fund.

Vogel said he originally wanted to put the Pennsylvania Gaming Control Board in charge of the racing industry.

“Gaming felt they weren’t able to oversee it properly because they didn’t have the expertise, I guess, in racing and things like that,” he said. “So, we chose to just set up a whole new commission with members of the racing industry as members of the commission to oversee racing.”

A 2012 study by Rutgers University found that Pennsylvania’s horse industry generates about $1.6 billion in economic activity every year and employs more than 23,000 people. About 3 million people attend Pennsylvania race events and wager more than $1 billion each year, according to the study.