05/26/2010 11:00PM

Study finds purses 29 percent subsidized


Subsidies from casinos and state government provided 29 percent of all purses distributed at U.S. racetracks in 2009, according to a report released on Thursday by the Thoroughbred Racing Associations, a racetrack trade group.

The figure underscores the U.S. racing industry's reliance on casino-gambling subsidies as it struggles to maintain its market share on a landscape that is increasingly cluttered with other gambling options. According to the report, the subsidies provided $318.6 million to Thoroughbred purses in 2009, from a total distribution of $1.098 billion.

Purses derived from parimutuel sources declined $66.8 million from 2008 to 2009, while purses derived from non-parimutuel sources such as slot machines and other gambling subsidies increased $21.3 million, according to the report.

The report charted purse distribution and the source of purse funding from 1993 to 2009. In 1993, when casino gambling outside of Las Vegas or Atlantic City was first authorized in West Virginia, total purse distribution at U.S. racetracks was $692.1 million, according to the report, with only $530,000 of that total coming from non-parimutuel subsidies, or 0.1 percent. But that figure has steadily risen over the past 17 years as more and more casinos at racetracks have been authorized by legislatures.

In 1997, for example, purses derived from non-parimutuel sources had risen to $38.6 million, according to the report, or 4.5 percent of handle. Five years later, in 2002, the number had soared to $142.5 million, or 13.3 percent, and in 2007, the number had reached $255.8 million, or 21.7 percent.

While purses derived from non-parimutuel sources have grown every year since 1993, purses derived from handle declined in six of the 17 years charted by the report, including in 2008 and 2009.

While it is unclear what the impact of the recession has been on the figures for 2010, the amount of money derived from casino gambling is almost certain to grow once again in 2011 because of plans to open a 4,500-slot machine casino at Aqueduct racetrack in Queens. The casino is expected to generate at least $30 million a year in purse subsidies, according to analysts.

The report also detailed a steady decline in the percentage of parimutuel handle that goes to purses, though that percentage has inched up since reaching a low in 2003. In 1993, according to the report, 7.2 percent of handle was used to fund purses, but that number declined steadily over the next 10 years to 5.95 percent, principally because of a migration of betting dollars to account-wagering sites, which had fewer financial responsibilities to fund purses.

In 2009, however, the percentage had risen to 6.33 percent, according to the report, as many racetracks began to put pressure on out-of-state sites to accept higher rates for simulcast signals.