Slot-machine subsidies for Pennsylvania purses decline

Subsidies to Thoroughbred and Standardbred purses at Pennsylvania racetracks dropped 16.7 percent in 2010 compared with 2009 as a result of a legislative decision to divert a portion of the revenue from slot machines to the state’s general fund, according to a report released Thursday by the Pennsylvania Gaming Control Board.

The subsidies fell to $157.1 million in 2010 from $188.6 million in 2009 despite heady growth in betting at the state’s casinos, according to the report. Subsidies to the state’s breeders’ funds also declined at a similar rate. Approximately 12 percent of the revenue from slot machines at state racetracks are distributed to horsemen in the form of purses, breeders’ awards, and health and pension benefits.

The report underlined the enormous impact of the slot-machine subsidies on Pennsylvania racetracks, which were largely minor-league facilities before the legalization of casino gambling in 2006. In 2010, purse contributions from handle on state races totaled $37.3 million, 19.2 percent of the total amount of purses distributed that year at the state’s five racetracks. The rest was provided by slot-machine subsidies. The contribution of handle to purses in 2010 was down 10 percent compared with 2009, according to the report.

According to recent studies conducted by the racing industry, subsidies from casino gambling currently accounts for at least one-third of all purses distributed in the U.S. In 2010, total purse distribution at U.S. racetracks was $1.03 billion, down 6.1 percent from 2009, according to the Jockey Club.

In total, casinos raised $1.25 billion in 2010 for the state of Pennsylvania and other recipients such as the racing industry, a 17.9 percent increase over total revenue in 2009. In 2010, state casinos were allowed for the first time to operate table games such as blackjack and craps.

In 2010, the state legislature passed a measure that diverted 34 percent of the racing industry’s share of slot-machine revenue to the general fund through July 1, 2010. After that point, 17 percent of the racing industry’s share was diverted to the general fund, a measure that will expire on June 30, 2013, unless extended by the legislature.

Total wagering on Pennsylvania races from all sources was $769.6 million in 2010, according to the report, a slight increase from total wagering of $764.9 in 2009. The increase was due entirely to an increase in betting at out-of-state sites, as in-state wagering on races fell ontrack and at offtrack sites, including through the state’s telephone betting systems.