June 30, 2016
Tom LaMarra, Blood-Horse

The Pennsylvania House of Representatives June 30 approved substantive changes to the Thoroughbred breeding fund, some payments from which have been suspended for months because of problematic language in a horse racing reform bill that became law in February.

The Republican-controlled House, which passed the measure on a 193-2 vote, on June 29 called the bill for consideration on the floor. The bill was then sent to the House Appropriations Committee, which sent it back to the House the morning of June 30 after no members had questions about the fiscal aspects of the bill.

It now goes to the Republican-controlled Senate for concurrence. The Senate in May approved a bill designed to correct mistakes in the omnibus racing reform bill, but the House Agriculture and Rural Affairs Committee amended it June 27 with language intended to increase the percentage of breeders’ awards and potentially change oversight of the Thoroughbred breeding fund.

The Pennsylvania Horse Breeders Association, Pennsylvania Thoroughbred Horsemen’s Association, and Pennsylvania Horsemen’s Benevolent and Protective Association supported an amendment offered June 29 by Democratic Rep. Mike Carroll that would have reverted to the Senate’s version of the bill. But that amendment and four others were withdrawn before the legislation was sent to the House Appropriations Committee.

A memo from the Pennsylvania Equine Coalition, of which those three organizations are members, called the revised bill passed by the House Agriculture and Rural Affairs Committee “fundamentally flawed.”

“It would essentially eliminate restricted races for Pennsylvania-bred horses because there would be no funds left available to support the programs,” the memo said. “It would also eliminate the owner bonus program which incentivizes horse owners to purchase Pennsylvania-bred horses.”

There is a split in the Pennsylvania breeding industry over how the program’s revenue should be divvied up.

Supporters of the language passed by the House earlier said the impact wouldn’t be that dramatic because the number of Pennsylvania-breds has declined substantially in recent years, so breeders’ award money that is paid has dropped in tandem. They also said there would be sufficient funding for owners’ purse bonuses.

According to The Jockey Club, the number of mares bred in Pennsylvania fell from almost 1,000 in 2013 to 660 in 2015. The breed registry’s statistics show 47 registered stallions in Pennsylvania in 2015, down from 73 in 2013.

The breeding fund provisions in the omnibus racing reform bill, which also combined the state’s two racing commissions—one for Thoroughbred racing and one for Standardbred racing—were expected to be carried over, but somehow the language was altered. The changes weren’t noticed before Democratic Gov. Tom Wolf signed the bill into law.

The Pennsylvania Department of Agriculture, which oversees the racing and breeding industry in the state, then found the language regarding the Thoroughbred breeding fund problematic and in turn suspended payments to breeders in late March. In response to questions June 30 about why the payments were suspended and when they would be restored outside of the revised language becoming law, Brandi Hunter-Davenport, communications director for the department, said it’s in the hands of lawmakers.

“The legislature will need to take action authorizing the payments to be made,” she said. “As soon as that occurs, we will work to honor those payments as quickly as possible. We will continue working with the members of the legislature to rectify this situation.”

There appears to be some urgency given how quickly the House acted on the bill.

Breeders and owners traditionally get the funds about 90 days after a race, according to industry participants. A fiscal note states payment of awards from the Pennsylvania Breeder’s Fund are retroactive to Feb. 23, the day the racing reform bill was signed into law.

Under the bill that passed the House, awards to breeders of Pennsylvania-breds sired by Pennsylvania stallions that finish first, second, or third would jump from 30% to 50% of the purse. Similar awards for Pennsylvania-breds by out-of-state stallions would increase from 20% to 30% of the purse. Bonus money for the owners of Pennsylvania-based sires whose progeny finish first, second, or third remains at 10%.

The program traditionally gives any funds left over after breeder and stallion awards are paid to racetracks—for purses for owners and for management of the breeding fund. That would continue under the bill, but new language mandates that 50% go to races restricted to Pennsylvania-bred or -sired horses, and 50% be used for races restricted to Pennsylvania-breds.

For claiming and non-claiming events with a Pennsylvania-bred preference, if eight or more state-breds enter, the race will be restricted to state-breds.

Pennsylvania has three Thoroughbred tracks, all three of which are racing live now: Parx Racing, Hollywood Casino at Penn National Race Course, and Presque Isle Downs & Casino.

Regarding oversight of the breeding program, the House bill says a breeding fund advisory committee would be scrapped because the new Pennsylvania Horse Racing Commission, which met for the first time June 29 for orientation, now has members that specifically represent Thoroughbred breeders and horsemen. The bill also changes language in the racing reform bill that states the Department of Agriculture “shall” contract with the PAHB to “the commission may contract with an organization to be responsible for the registration and records” of state-bred racehorses and stallions.

The Thoroughbred breeding program in the state gets 16% of racing’s total share of slot-machine revenue at Pennsylvania casinos as part of the Race Horse Development Fund. The program totals roughly $30 million a year in bonuses, awards, state-bred stakes worth more than $2 million, and more than 400 overnight races restricted to state-breds.

The fiscal note states that enactment of the bill “will have no fiscal impact on commonwealth funds. The changes proposed in the legislation do not increase or transfer funds related to the Pennsylvania Breeding Fund, but revises the percentages available to award distributions for winning Pennsylvania bred horses. The fund has a balance of approximately $17.5 million and is supported by dedicated slots revenue from the (RHDF).”