June 20, 2016
Tom LaMarra, Blood-Horse

Horsemen’s groups and casino operators in Pennsylvania have made known their opposition to legislation that would authorize tens of thousands of video gaming terminals in bars and taverns.

The Pennsylvania General Assembly is considering the gambling expansion as part of state budget negotiations. Various forms of the legislation also call for slot machines in airports and off-track betting parlors as well as Internet gambling.

Purses and breed development get a share of revenue from slots at the state’s 12 casinos. Last year the Pennsylvania Race Horse Development Fund totaled more than $243 million, according to Pennsylvania Gaming Control Board statistics.

Horsemen’s groups in the state, which has three Thoroughbred tracks and three Standardbred facilities, all with casino gambling, reference a study that suggests placement of VGTs in bars and taverns would lead to a 25%-30% reduction in revenue from the RHDF.

The tax rate for the proposed VGTs would be 34%, the same rate charged to the state’s casinos. The casinos, however, have argued their tax rate is in excess of 50% because of the RHDF and other programs.

“This legislation would provide VGT companies a third of all revenues generated by the new machines, taking money out of the pockets of property owners, the local horse racing industry, its employees, and the farmers who depend on it,” the Pennsylvania Horsemen’s Benevolent and Protective Association said in a statement.

The group, which represents horsemen at Hollywood Casino at Penn National Race Course and Presque Isle Downs & Casino, also said local governments would be impacted if casino business declines.

“Statewide, gaming has generated billions of dollars in property tax relief, and the horseracing industry has created 23,000 jobs and invested over $200 million in goods and services in farms and other businesses,” the Pennsylvania HBPA said. “All of this would be in jeopardy if this legislation is passed to create thousands of VGT mini-casinos that would literally pop up on countless street corners across Pennsylvania.”

“If some legislators have their way, they’ll expand gaming practically everywhere to include liquor establishments, fire halls, truck stops, video gaming terminals in taverns, and more,” the Meadows Standardbred Owners Association said in a statement. “There’s even a plan to allow for Internet gaming at a much lower tax rate. That means casinos with racetracks are more likely to market Internet gaming at the expense of our racetracks.”

Some lawmakers disagree. Rep. Mark Mustio, an Allegheny County Republican who is pushing the bill, said the state general fund needs more revenue.

“We are here to say that diversification is needed because Pennsylvania’s brick and mortar casinos are leaving too much of the market untapped,” Mustio said earlier in June. “At the state level, legalizing VGTs translates into $400 million in tax and fee revenue for the general fund that is otherwise left on the table every year. To look at this another way, Pennsylvania has missed out on an additional $4 billion in general fund revenue over the past decade.”