If the Welfare Spigot is Shut Off, Much of American Racing Will Collapse

The Associated Press recently ran a story on racino subsidies (our previous posts on the subject) for the racing industry, explaining how these subsidies translate to corporate welfare for an inexorably declining industry. (This decline has two root causes: competition – the younger generations prefer full-service casinos; changing sensibilities – more and more people find the whipping and killing of sentient beings for gambling repugnant.) The article begins thus:

Horse track operators and breeders are concerned the good times might be trotting to a close as some states move to rein in a lucrative subsidy that’s helped prop up their long suffering-industry. Twenty states divert a slice of casino and slots parlors revenue to help boost horse racing prize money…but facing budget deficits and out-of-state casino competition, some lawmakers are reassessing.

…Such subsidies are a critical lifeline for racing, which has seen steady declines across a number of industry metrics, including the number of races and racing horse births and overall betting activity… Few tracks even keep attendance numbers anymore because the numbers of spectators has dropped off so dramatically… Nevertheless, there was over $1.1 billion in prize money available in 2014, thanks in large part to the racing subsidies, which generated over $400 million toward purses that year…

The reassessing:

In New Jersey in 2011, Gov. Chris Christie ended a direct, $30 million subsidy to the racing industry from the Atlantic City casinos. Lawmakers in West Virginia have also pared back the percentage of slot machine revenues diverted to the industry in recent years, leaving owners and breeders there anxious. The debate has played out in Iowa, Indiana, Delaware and elsewhere too.

In Pennsylvania last year, state Rep. Todd Stephens proposed redirecting $250 million from the state’s horse racing fund to public schools, noting that a Saudi prince and other wealthy foreign horse owners were among the beneficiaries of the inflated prize money.

“It’s not government’s job to pick winners and losers,” Stephens said this week. “I generally oppose crony capitalism and corporate welfare-types of programs.”

Amen.

This is America, where, at least in theory, businesses are left to sink or swim based on their merits – their goods and services. If that, one of our founding economic principles, is applied here, the bulk of American racing would go the way of the horse-and-buggy industry. So, for those looking to help (besides, of course, sharing the daily carnage reported on this site), please, if you reside in a racino state, contact your legislators; let them know that proceeds from state-promoted gambling should be flowing to education, health care, and other noble causes – not to an archaic, mostly no-longer-viable industry. Racing can be toppled. And sooner than you think.

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  1. Bingo. Loss of state subsidies is the Achilles heel of racing. And we have numerous potential allies interested in seeing those tax dollars redirected.  This is the strategy I’m most interested in pursuing.

    Sent from my cell phone.

  2. I have been waiting a long time for this lightbulb to go on in politicians heads. So glad you wrote about this Patrick. I watched as 345 MILLION PER YEAR went directly to CEO’s and HBPA groups in Ontario, Canada directly from casino subsidies. This back room deal was cut between the Conservative leader at the time and his best buddy: President and CEO Wilmot of Woodbine Racetrack. During this cash cow that was intended for everybody it was only the top 10% that benefited from this money as small Trainer outfits were ousted out of Woodbine. These outfits supported that track for years when the purse money was an all time low. Fast forward 12 years when we finally switched governments from Conservative to Liberals. Ontario was in a huge deficit scrambling for revenue to support education and health care. They started doing audits into the books. They were flabbergasted to discover that 345 million per year was going to horse racing. They also concluded that the revenue to education and health care COMBINED was about 100 million per year. A detailed audit ensued. Long story short? Most of the monies was unaccounted for and this was while multimillionaires were in the board at Woodbine. One can only guess where the money was going while they were spending millions at Keeneland and buying up multimillion dollar farms in Ontario and Kentucky. So the hammer came down, and came down hard. The Liberals said if you want your rich hobby then pay for it yourselves. Of course proponents of horse racing fought back hard. After all. People get upset when they lose their cash cow. The Liberal Keader stepped down about 2 years ago and in went horse racing angel and saviour Kathleen Wynne. In an about face turn, and against the wishes of the majority of Ontario Residents, she pledged 100 million per year for the next 5 years to horse racing while they sort out how the government run Ontario Lottery will finance horse racing instead of taxpayers. The industry sighed a breath of relief. So they have until 2018 to partner with OLG and go from there. It was just so obvious that Wynne received a huge infusion of cash from supporters of horse racing. My point is 100 million per year to a millionaires hobby that exploits a living breathing racehorse to run in circles, and more than likely die on the track or the slaughterhouse. It’s absolutely a huge waste of money and lives. I would much rather see 100 million per year go into sustainable green enterprises, but our current Premier Wynne seems to be answering to those who probably put her in power or contributed in some capacity to her election campaign. She was instrumental in blocking a more detailed investigation as to where the money went. They sure got an angel in her. Horse racing is an antiquated blood sport that has no place in modern day society.

  3. You may want to do a little more research on racinos ,there would not be a casino with out the track in most states , I don’t like them myself , but for reasons different than yours.,that said the money the racinos put into the purses are not state funds , and the states benifit from them . Maybe you want to do a history check on Praire Meadows in Iowa .

    • While the details may vary state to state, the general arrangement is the same: A significant portion of VLT (or table game) revenue is diverted to racing purses, money that would otherwise be sent to the state to use at its discretion (usually education). You may want to read all my posts on racino welfare. I am quite well-versed on the subject.

  4. SERIOUSLY RAY PAULICK ???

    WRITTEN BY RAY

    “Bettors suffering withdrawal symptoms from the end of the Saratoga and Del Mar summer meets, have no fear. Belmont, Kentucky and Churchill Downs, and Woodbine are here.

    North of the border, it’s Ricoh Woodbine Mile weekend, which means there are half a dozen graded stakes and deep cards for handicappers to sink their teeth and bankrolls into.”

    Ray Paulick

  5. Of course the racing industry generates $$$…is that a shocker to you? That actually makes it more despicable! SeaWorld, circuses, dog racing, horse racing, bull fighting, puppy mills…and the illegal “animal use for entertainment purposes” dog fighting and cock fighting (and I’m certain I’m leaving out a plethora of other industries/activities that use animals for the purpose of money-making) all generate revenue and create jobs. So your point, Maureen?

    • Did I sound surprised? My remark was not to defend racing but to point out why it is hard to kill. States realize well how much $$ is generated. And that does not count their take of the gambling.

  6. JAMES GAGLION PROMOTES HORSE RACING BILL THAT PUT FOX BACK IN CHARGE OF HENHOUSE
    Sept. 15th, 2015

    FROM TUESDAYS HORSE

    Who is James Gagliano? Gagliano is the president and chief operating officer of The Jockey Club, which is a member of the Coalition for Horse Racing Integrity.

    Gagliano wrote an article for “The Hill”, Washington D.C.’s influential blog entitled, “Restoring integrity to horse racing“.

    Pretty much the only bit of information in Gagliano’s composition that rings true is “. . . recent polling found that while the vast majority of adults in the U.S. called horse racing both exciting and fun to watch, only 14% had a very favorable view of the industry.”

    I wonder why that is. In part the answer is the fact that the public has at long last caught on that U.S. racing matter of factly DRUGS AND KILLS ITS HORSES.

    I will not sport with your intelligence by laying out his argument FOR H.R. 3084. We strongly encourage you to take a stand against this weak piece of legislation. For all intents and purposes it is useless.

    What we object to most concerning H.R. 3084 is that if anti-doping agency USADA withdraws is leaves horse racing once again to police itself. And we know how well that is working — a plethora of DRUGGED AND DEAD RACEHORSES.

    In our opinion, Gagliano and his Coalition for Horse Racing Integrity have about as much interest in promoting the health and safety of racehorses as the people who take part in horse soring, slaughter, tripping, fighting and so forth.

    Come on, give racehorses a break will you?

    We urge everyone who cares about the lives of American racehorses to join us in support of H.R. 2641. Find your U.S. Representative.

    Jane Allin has written a comprehensive and illuminating report on this subject. Please see “Will federal legislation save American racing or help its horses? Don’t bet on it.; Tuesday’s Horse; August 14, 2015. Pdf version here.

    See also JO ANNE NORMILE’S comparison chart relating to these two bills.

    • What would lead you to believe the USADA would withdraw ? If you have no reason ,your concern holds no merit . Also since you have no vested interest in racing others than your hatred of it , why you should your opinions count at all ?

    • If James Gagliano, chief operating officer of The Jockey Club of the USA, has to resort to comparing the use of drugs in cycling and other real sports in the Olympics with the (legal and illegal) drugging of racehorses, then how pathetic is that! Comparing humans who decide for themselves as to what they put into their bodies with voiceless helpless horses who have no say, who are subjected to such unacceptable DRUG abuse all in the name of gambling and human entertainment is ridiculous. Horseracing is not a sport. He’s grasping at straws here, the situation is dire and the racing industry knows it, it has lost the confidence of the public. Animal abuse is no longer accepted by today’s society.

      • Exactly, Carolyn. And as Patrick has said before, this industry CAN be toppled and SOONER than one might think.

      • There is absolutely NO justification for abusing or exploiting animals for human entertainment…NONE. Therefore, there is NO justification for horseracing. Oh, and for those “rescues” that complain about the lack of funding, reach out to all the “good” people in racing and beg for financial support…yes, beg…because that is what is needed to give these horses a soft place to land when their exploitation ends IF they are lucky enough to make it out of racing alive.

  7. This particular article is over a year old, but it also points out that the gambling industry of horse racing cannot exist without – SURPRISE! – gambling!

    “Like it or not, horse racing cannot survive without gambling. Gambling, however, survives just fine without horse racing.”

    We know…so let’s be done with the crippling and killing of horses already! No more!

    https://www.michfb.com/MI/Farm_News/Content/Livestock/Horse_vs__horse__Betting_against_the_house/

  8. SPEAKING OF GAMBLING

    I HOPE AND PRAY TO GOD THAT DAILY FANTASY SPORTS COMPLETELY TAKES OVER THE GAMBLING WORLD AND HELPS BRING HORSE RACING TO A SCREECHING HALT

    ___________________________________________

    Daily Fantasy Sports: Horse Racing’s Newest Threat
    by Ray Paulick | 09.16.2015 | 11:21pm

    If you watched at least 15 minutes of football last weekend, chances are you saw TV ads for DraftKings or FanDuel – the two leading companies in the exploding world of daily fantasy sports, otherwise known as DFS.

    The ads make claims like “Turn $20 Into $2 Million” – simply by registering online, making a deposit, joining a contest and picking your team (it can be football, baseball, PGA golf, NASCAR and other sports).

    Eilers Research, which studies the gaming industry, projects 41 percent annual growth for daily fantasy sports, meaning it will top $14 billion a year within five years.

    Horse racing in the U.S. reached a highwater mark when it topped $15 billion in annual wagering in 2003 and ’04, but it has steadily fallen since. By the end of 2015, $10.5 billion will be wagered on Thoroughbred racing in the U.S., a decline of nearly one-third over the last decade.

    This is very tough competition for horseracing. All of the cable and broadcast networks that televise the NFL and other major sports now spend a disproportionate amount of time discussing “fantasy players,” feeding on the frenzy that the DraftKings and FanDuels ad campaigns started. Even CNN created an NFL segment to accommodate FanDuel advertising.

    Because daily fantasy sports contests are not “gambling,” there are no regulatory boards similar to those that burden horseracing. Participants can sign up quickly and not have to provide personal information (date of birth, Social Security number) like advance deposit wagering companies are required to collect. There is an endless stream of free online statistical information on the players that DFS participants need to “draft” or put together their rosters, unlike horse racing, where the industry-owned data company, Equibase, charges for the statistics that horseplayers rely upon.

    And then there is the 10 percent “takeout” in daily fantasy sports, virtually half the vigorish that horse racing takes out of every bet.

    There has been talk that FanDuel and DraftKings – both privately held and projected to be worth about $1 billion each – could do an initial public offering of stock in 2016.

    In the week before the National Football League season began, DraftKings spent $18.6 million on TV advertising, more than any other company or brand, according to iSpot.tv. No. 2 was Warner Bros., which spent $14.8 million to advertise “Black Mass,” the new Johnny Depp biopic about gangster Whitey Bulger. FanDuel ranked ninth with a $7.7-million weekly ad spend.

    Over the next two years, according to published reports, DraftKings will spend $500 million advertising its daily fantasy sports games.

    Complete article at the Paulick Report

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