06/29/2009 11:00PM

Pennsylvania statebred bonuses take a trim


Pennsylvania's budget woes and declining parimutuel handle have affected the statebred owner bonuses program, reducing available money in the state breeding fund from $21 million to $17 million for 2009, racing industry officials there say. But the Pennsylvania Horse Breeders Association says the state's purses and bonuses still remain a strong draw for breeders and owners of Pennsylvania-breds.

Pennsylvania faces a $3.2 billion budget deficit, and the racing commission has seen its own operating costs rise, particularly in such areas as drug testing. The opening of the Harrah's Chester harness track in 2006 and the Presque Isle Downs Thoroughbred track in 2007 increased the state's number of live racing days, but also the commission's expenses. Meanwhile, the state's Thoroughbred parimutuel handle has declined from $942 million in 2000 to about $550 million in 2008.

"We're dealing with rising costs and declining revenue," said Daniel Tufano, the Pennsylvania State Horse Racing Commission's director of racing affairs. "It's a function of the economics of racing and of government."

Ontrack gaming has contributed to ballooning purses at the state's three Thoroughbred tracks - Philadelphia Park, Penn National, and Presque Isle - and has brought more players into the state Thoroughbred industry. The Thoroughbred breeding fund receives more revenue from the state's slots than it does from the state racing fund, which pays salaries of commission employees and administrative costs of racing. But the state racing fund receives no money from slots revenue. As its financial obligations to other areas - such as the racing commission's drug-testing program and other administrative costs - have gone up, the amount left over to contribute to the breeding fund has dwindled. Now, the state racing fund has no money left over after paying its other obligations as required by statute, according to a notice the breeders association sent its members in May.

Pennsylvania breeder and stallion awards are not affected by the decline, but breeding fund money available for owner bonuses and purses for Pennsylvania-bred stakes and overnight races will be reduced.

"We've had an influx of activity in Pennsylvania," Tufano said, referring to the new tracks and horsemen drawn into the state's breeding and racing programs because of the slots-enriched purses and awards. "But the slots law provided no further revenue to the racing commission. It's solely limited to the state racing fund, which relies on parimutuel handle, and we're seeing that revenue decline."

One possible solution is to change Pennsylvania's racing statute to allow the state racing fund to tap into slots revenue, perhaps as an amendment to gaming reform legislation supported by Gov. Ed Rendell. But industry insiders say that's unlikely this year, given the state budget crisis.

In the meantime, breeders association executive secretary Mark McDermott said Pennsylvania-breds are still a good bet, and few expect horses to stop coming to the state.

"Are the Pennsylvania-breds going to still come here?" McDermott said. "Between the incredible purses we have in Pennsylvania and putting the bonus on top of that, sure, they're going to come here, whether they're going to be running for a bonus that might be $6,000 or one that might be $4,500. That's the difference."