August 2015 | Bill to Restructure Racing Commissions Passes PA Senate
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Bill to Restructure Racing Commissions Passes PA Senate

Suzanne Bush - August 2015

Senator Elder Vogel (R, Beaver, Butler and Lawrence Counties) has long sought reforms of Pennsylvania’s racing industry. Last year he proposed numerous changes to the way the state regulates horseracing; although the bill he introduced last year passed unanimously in the Senate, it languished in the House Agriculture & Rural Affairs Committee and the session ended without any further action.

Last month the Senate passed SB352, the latest iteration of Vogel’s effort to “bring the regulations regarding the horseracing industry into the 21st Century.” It will now go to the House of Representatives.

The legislation would dissolve the two current racing commissions—the Harness Racing Commission and the Thoroughbred Racing Commission—and consolidate their work under one commission within the Department of Agriculture. Additionally, there are provisions in the bill that would regulate the promotion and marketing of horseracing in Pennsylvania. And the bill would require random drug testing of any horse entered in a race, whether the horse is resident at the track or brought onto the track on race day.

Unlimited Access to Racehorse Development Fund
  While Vogel’s reform efforts have been embraced by many in the legislature, the 10,000-member Pennsylvania Equine Coalition has reservations. Pete Peterson, a spokesman for the organization says that there are several issues that concern his group. “One is the way the wording is drafted, it appears to give the Racing Commission unlimited access to the Racehorse Development Fund.” He believes that the language as it’s currently written states that, should the Racing Commission run over budget for any reason, additional funding will automatically be deducted from the Racehorse Development Fund, which funds purses and breeders incentives. He pointed out that last year Pennsylvania’s Auditor General Eugene DePasquale faulted the Department of Agriculture for using money from the Racing Fund, a separate source of funding for the business of racing, derived from taxes and other proceeds of betting, to support other department programs.

Michael Rader, Executive Director of the Senate Agriculture & Rural Affairs Committee, says that the legislation would give the Racing Commission, and that group only, authority over the Racing Fund. “There are services the Department provides such as administrative services for legal counsel and facilities and certain employees. The department will under the bill sign a memorandum of understanding with the Commission for those services. Right now there is no control. In the bill wee’ve put those controls in.”

The Racing Fund is a pool of money that was established in 1981 to cover costs in the Department of Agriculture associated with the equine laboratories that do drug testing of horses and the two racing commissions that oversee the industry. The money is also supposed to support other related agricultural programs such as the annual Farm Show. Money in the fund comes from wagering taxes, uncashed tickets, admission taxes and other sources. Slot machine revenue supports the Racehorse Development Fund.

Would Consolidation of Commissions Hurt Racing?
Peterson says that his coalition represents owners and trainers in Pennsylvania’s horseracing industry. They’re worried about the way the new, consolidated Racing Commission will be monitored. “We’re concerned if it’s going to be operated under the Department of Agriculture, we don’t think it’s appropriate for the Secretary of Agriculture to be on the commission.” The Coalition’s members believe that the legislation concentrates too much power in the Department of Agriculture. Again, Peterson points to DePasquale’s finding that the Department of Agriculture over-billed, or could not properly document $5 million in costs it charged to the Racing Fund.

But Rader says that the Commission would be organized to put the power in the hands of the Commissioners, not the Department of Agriculture. “Each breed would have a representative on the Commission; each legislative caucus will have a seat on the Commission. The Commission and the people on the Commission only can request a transfer from Treasury.” Thus the “blank check” that Peterson’s coalition feared would not be available to the Department of Agriculture.

Peterson says that the bill in its current form would reduce the expenses racetrack operators have to spend for on-track personnel such as stewards and clockers, and shift those expenses to the Racing Commission and, by extension to the Racehorse Development Fund. This will impact Pennsylvania’s ability to attract new breeders, and reduce the money available for purses and breeders’ incentives.

Rader says that the legislation includes enough new revenue from increased fines for things like drug violations, fees (the legislation raises the cap on the cost of occupational licenses) and licensing out-of-state entities that broadcast Pennsylvania races to cover the added expense. An additional provision in the legislation, transferring the cost of drug testing to the Race Horse Development Fund, had already been approved by both the Thoroughbred and Standardbred groups.

The Pennsylvania Equine Coalition opposes the consolidation of the two Racing Commissions, because there are significant differences between Thoroughbred racing and Harness racing. But Rader says that Senator Vogel sees one Racing Commission as a piece of the legislation that is non-negotiable. He said that there would be two bureaus under the Racing Commission—each with an independent director that has to be qualified and experienced in the industry.

Promotion and Marketing of Horseracing
One provision of Vogel’s bill would regulate the promotion and marketing of horseracing in Pennsylvania. Peterson says that his group is generally in favor of that…but “marketing is something the coalition has advocated for. We’re not entirely on board with the way it’s structured in this bill, however. We’ve seen other commissions get a pile of money for racing promotion and then give the money to agencies that don’t understand racing.” Peterson says that the industry itself should have greater input into how that money is spent. This has been a particularly galling aspect of racing for the people in the Pennsylvania Equine Coalition. Under the original provisions of the gaming act that created the casinos, the casino operators were supposed to promote horseracing. Most of the marketing, though, has focused on the casinos, slots, gaming and entertainment.

Compromise Still a Possibility
The Pennsylvania Equine Coalition agrees with the new drug testing protocols in the legislation.

“They want the integrity of the sport to be protected. That’s part of the reason for the changes proposed,” Peterson explained. He said that his organization’s advocacy had some effect on SB352, because the Senate passed it by only one vote. He says they will turn their attention to the House now, hoping to see some changes.

The overarching idea, Rader says, is to get good legislation, something that will work for both the industry and for those who bet on the horses. He’s optimistic about it. “Most likely if the House decides to consider (the bill), we have some ideas we’re willing to work with the industry folks, the coalition, the track operators to make sure we get a good final product.”