02/24/2016 12:26PM

Pennsylvania governor signs racing regulation reform bill

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Pennsylvania Gov. Tom Wolf on Tuesday afternoon signed a bill combining the state’s two horse racing commissions and repealing a 10 percent tax on some account-wagering operations, according to Pennsylvania government agencies.

The bill, which was hashed out late last year after Wolf threatened to shutter the state’s racing commissions, will combine the Pennsylvania Harness Racing Commission and Pennsylvania Horse Racing Commission into one agency with nine members. It will also redirect $11.3 million from the State Racing Fund to drug testing in the state. The racing fund receives approximately $250 million each year in subsidies from casinos, and is used to provide purse and breeder awards at Pennsylvania tracks.

The bill also removes a controversial 10 percent tax on account-wagering operations that were not licensed in the state. The tax, which was approved in 2013 and applied to bets made by Pennsylvania residents through all but a handful of account-wagering companies, led many account-wagering operations to ask Pennsylvania residents to close their accounts.

Churchill Downs Inc., which owns and operates a leading account-wagering company, twinspires.com, challenged the tax in court, and in 2014 it received a “favorable tax ruling” from the challenge. In a Tuesday release, the Pennsylvania Department of Agriculture cited court challenges of the tax as one of the reasons it was repealed.

A spokesperson for Churchill Downs said on Wednesday the company would have no comment on the repeal of the tax.

Racing in Pennsylvania is conducted at eight tracks, three of which have opened since the state legalized casinos at tracks in 2004. But the fortunes of the racing industry have not markedly improved, aside from the growth in subsidized purses, with ontrack handle on Pennsylvania racing falling 71 percent since 2001, according to the state’s Department of Agriculture.

Ontrack handle on live races has been used to fund regulation in Pennsylvania, leading to a collapse in funding for the two racing commissions over the past decade. Gov. Wolf cited the drop in funding last year in his threat to shutter the commissions, which would have led to a shutdown of racing in the state.

“It was clear the status quo was no longer sufficient to maintain the integrity of the industry, to protect the wagering public, and to ensure proper oversight of racing in the commonwealth,” Gov. Wolf said in a statement after signing the bill. “Simply put, the system was broken. We were operating under a structural deficit that undermined our ability to regulate the industry properly and maximize economic opportunities of this industry.”

The new nine-member racing commission will comprise five members appointed by the governor, and one appointed by each of the four legislative caucuses, according to the bill. The governor’s appointees will include one veterinarian, one representative each from Thoroughbred horsemen and Thoroughbred breeders, and one representative each from Standardbred horsemen and Standardbred breeders. The appointees of the caucuses will be at-large appointments.