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Racing industry in dire straits

By Staff | Apr 4, 2017

The thoroughbred horse racing industry has fallen into dire straits. There has been a 50 percent reduction in purse revenue since 2007 due to adverse legislative changes. With increased costs for feed, hay, straw, labor, etc., this has created hardship and economic uncertainty. How did this happen?

After the 1997 video lottery referendum approval by Jefferson County citizens, horse racing and breeding flourished and created thousands of new jobs in our local community. Live racing interests made significant investments in our industry based upon the statutory allocation of gaming revenue. West Virginia became the model throughout the country for successfully integrating racing and gaming at Charles Town Races and the county, state and PNGI coffers grew abundantly beyond all expectations.

The original Racetrack Video Lottery Act defined how revenue from slot machines would be distributed to various stakeholders: the state, the racetrack operators, purses, breeders’ funds, counties and municipalities. The distribution was effective. Jefferson County’s economy thrived as out-of-state owners and breeders invested in new farms protecting agricultural green space, hired hundreds of residents as employees and provided millions of dollars of new economic revenue to the Eastern Panhandle.

In 2001, however, the Legislature changed the revenue distribution formula through a ten per cent “benchmarking” bill that designated any revenue above revenue collected in 2001 as “excess terminal revenue.” From 2002 through 2016 this bill has resulted in decreasing horsemen’s purses at Charles Town over $250 million from the statutory distribution contained in the original bill.

Another major revision enacted in 2005 established the Workers’ Compensation Debt Reduction Fund that reduced the percentage of revenue going to purses by $11 million per year and applied that to the state’s workers’ compensation debt fund. From 2005 through 2017, this bill has reduced horsemen’s purses at Charles Town by nearly $78 million. A provision in the original bill stipulated that whenever the workers’ compensation debt fund was paid in its entirety, the annual $11 million appropriated would revert back to the purse fund. It was projected that this debt would be paid in full in 2016, resulting in an anticipated $6 million annual infusion into our purse fund. However, in the first special session of the 2014 legislature this provision was changed and deemed to expire, and language was inserted to subject roughly half of all previously allocated purse monies to legislative appropriation.

Needless to say, this assault on purses and breeders awards has resulted in a combined decline in gross lottery terminal income from 15.0 percent in fiscal year 1995 to 9.7 percent in fiscal year 2013 to 5.0 percent in 2017. This decline has created instability and uncertainty in our business, and with the passage of the infamous 2014 “Haircut Bill,” it will only get worse. Like any other businessmen, horsemen and breeders have to plan their business four to five years in advance, allowing time for mares to be bred, foal, and grow before racing. It is an expensive and risky business. Without a stable and adequate revenue source projected for the future, most horsemen will either move to another state or close down their farms and businesses.

The horse industry has been subjected to a shell game of legislative promises made followed by legislative promises broken. The people of Jefferson County cannot afford to allow our farms, tourist industry, agricultural green space, and the thousands of jobs and economic dollars created by the horse industry in our county to be destroyed by these broken promises. I urge all citizens in Jefferson County to show their support of this historic and vital economic industry by contacting your representatives; ask them to pass legislation to “preserve, protect, and enhance” live year-round thoroughbred racing at Charles Town Races.

Randy Funkhouser

President Charles Town HBPA