07/15/2004 11:00PM

Breeders anticipate bonanza from slots

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To say that slots will be a boon to Thoroughbred breeders in Pennsylvania could be a classic understatement.

The Pennsylvania Breeding Fund is expected to triple - to more than $25 million annually - as the slots operations come to maturity, according to Mark McDermott, the Pennsylvania Horse Breeders Association's executive secretary.

The result will be an unprecedented bonanza for people who breed horses and stand stallions in the state.

"Unlike other states that have introduced slots, Pennsylvania offers a well-established program of year-round racing and a breeding fund that is already the richest in the nation on a per-foal basis," McDermott said. "There are a lot of farms, and a lot of expertise already in place. Plus, we have first-rate veterinary facilities, such as the University of Pennsylvania's New Bolton Center. It's difficult to imagine a better situation."

Development of slots facilities is on a fast track because of the push for property tax relief, and McDermott expects a rapid influx of breeding stock within the next several years.

"We're already getting a lot of calls, from people wanting to locate stallions," he said. "A lot of people are making inquiries about the breeding fund and its parameters."

Pennsylvania's breeding fund currently distributes about $8.5 million a year, with the bulk going to owner awards (44 percent) and breeder awards (39 percent). Approximately $850,000 (10 percent) is allocated to statebred restricted stakes, and the remaining 7 percent goes toward stallion bonuses.

Bonuses are paid for Pennsylvania-breds finishing first, second, or third in any race run in the state. Pennsylvania-sired runners earn an additional 30 percent of the purse share, and out-of-state-sired runners earn 20 percent.

McDermott does not expect the distribution formula to change as additional revenue comes in. "The program as it stands now is sound, and fair," he said. "Everything is based on the individual horse's earnings, so horses generate bonuses at their own level."

The PHBA was involved in slots lobbying efforts from the time of the first serious initiative, in 1997. At no time was there concern that the state's Thoroughbred breeders might not receive a fair share, said McDermott.

"There has always been an awareness, among both horsemen and the racetracks that the Pennsylvania-bred program is an integral part of racing in the state," said McDermott. "We agreed early on that the breeding fund would receive 16 percent of the horsemen's share. The question always was the size of the horsemen's share."

Did the legislation signed into law by Gov. Edward G. Rendell on July 5 exceed the PHBA's expectations? In a word, no.

"It wasn't a case of asking for the stars and moon, and maybe you'll get the moon," said McDermott. "Our approach was methodical. Once everyone became familiar with the projected revenue streams, it was cut and dried. We got close to what we set out to get."

McDermott, who has headed the PHBA since 1976, making him the longest-tenured state Thoroughbred breeders' association chief executive in the country, experienced a career high this spring as Pennsylvania-bred Smarty Jones rocketed through victories in the Kentucky Derby and Preakness.

McDermott believes there's no doubt that Smarty Jones helped deliver the slots bill's final push.

"As popular as Smarty Jones's Triple Crown effort was across the country, the level of excitement within this state was almost inconceivable for someone who wasn't here to witness it," said McDermott. "For so many years we were an industry that nobody wanted to talk about. It's not that way anymore."