Pennsylvania Racing Commission threatened by shutdown

Pennsylvania racing interests and state lawmakers are engaged in discussions over how to fund regulation of the horse racing industry in the wake of threats from the governor that he would issue an order to shut down the state racing commission as early as next week.

While the order would not result in an immediate shutdown of racing, the threat from Gov. Tom Wolf is drawing attention to issues surrounding the Pennsylvania State Horse Racing Commission, which has perennially relied on the state’s legislature for additional funding. The commission recently told the legislature that it was anticipating having a $6 million shortfall this year, and that the shortfall in future years would approach $10 million annually due to increasing costs.

The issue is also wrapped up in a larger budget stalemate in Pennsylvania. The governor’s budget called for $6.5 million in immediate funding for the commission to continue its regulatory efforts in this fiscal year, but that budget has been blocked by legislators. At the same time, Wolf has said that he supports a bill that has already passed in the Senate that would require the state’s racing industry to contribute an additional $9 million a year to the racing commission in order to pay for drug testing, with the money coming from the increasingly controversial Race Horse Development Fund.

Racing interests and representatives from the state’s Agriculture Department and legislature were scheduled to meet Friday afternoon in an effort to seek a compromise on how to go forward, according to racing officials.

Racing interests have generally pushed back against any plans to use the Race Horse Development Fund for regulatory costs, according to officials involved in the talks. The fund receives money generated by casinos at the state’s racetracks, and it has provided approximately $250 million in subsidies each year for purses and breeders’ awards for Thoroughbreds and Standardbreds.

If Gov. Wolf issues an order to shut down the racing commission, the order would not go into effect until 30 days from the end of the month, according to the Agriculture Department.

Funding for the state racing commission is provided by a cut of in-state wagering on Pennsylvania races. That source of handle has declined 71 percent since 2001, according to the Agriculture Department, even as the number of races held in the state has jumped dramatically because of the effect of the casino subsidies. In Pennsylvania, casino licenses are tied to racing licenses, leading to a glut of racetracks and race dates in the state, despite moribund handle.

“The system is broken, and it needs to be fixed,” Agriculture Secretary Russell Redding said in a statement, in reference to the racing commission’s funding mechanism. “This problem has persisted for years.”

Racing subsidies from casinos are becoming more and more embattled in states like Pennsylvania, where handle on horse racing is small compared to the size of purses at state tracks. Several bills have been introduced over the past five years seeking to have the subsidies redirected to education, but the bills have so far failed to garner widespread support.