Pennsylvania Governor Signs Bill Creating New Racing Commission: Paulick Report 2/23/16

By: Edited Press Release

Governor Tom Wolf today signed House Bill 941, which, among other things, includes reforms of Pennsylvania’s equine racing industry. The governor was joined by state Department of Agriculture Secretary Russell Redding, members of each of the legislative caucuses, leadership from the House Agricultural and Rural Affairs Committee, and various representatives of the racing industry.

“Racing today is drastically different today than what it was 35 years ago when the last reform effort was put into law,” Wolf said right after signing the bill, which is now referred to as Act 6. “It was clear that the status quo was no longer sufficient to maintain the integrity of the industry, to protect the wagering public, and to ensure proper oversight of racing in the commonwealth. Simply put, the system was broken. We were operating under a structural deficit that undermined our ability to regulate the industry properly and maximize the economic opportunities of this industry.”

In October 2015, the Pennsylvania Department of Agriculture announced it no longer had the financial resources necessary to maintain operations at the state’s two racing commissions – the Horse Racing Commission and the Harness Racing Commission – or to operate the Pennsylvania Equine Toxicology Research Laboratory at West Chester University where samples from Thoroughbred and Standardbred horses are tested for performance-enhancing substances. As a result, the state faced the difficult prospect of suspending racing in Pennsylvania.

The structural deficit in the State Racing Fund was the result of a 71 percent decline in wagers on live horse racing in the state since 2001. Pari-mutuel taxes on those wagers fund the oversight of racing in the state. That persistent imbalance had been noted by the Wolf administration, the administrations of previous governors, as well as the state auditor general and the Pennsylvania Gaming Control Board.

In response to this challenge, the Wolf administration convened a working group of state officials, members of the General Assembly, and stakeholders from the equine industry and the state’s six licensed racetrack operators to develop a solution. The results of those negotiations are reflected in Act 6.

Among other things, the new law combines the two racing commissions into one unified commission that strengthens the governance of the industry, yet retains the ability to render decisions on breed-specific issues. The new nine-member commission will be composed of five members appointed by the governor (one veterinarian, one representative of a Thoroughbred horsemen’s organization, one representative of a Thoroughbred breeder organization, one representative of a Standardbred horsemen’s association and one representative of a Standardbred breeder organization) and four members appointed by each of the four legislative caucuses. The Secretary of Agriculture, or a designee, will be a non-voting, ex-officio member.

The new law also makes the industry, rather than taxpayers, responsible for bearing the cost of drug-testing horses, and it institutes new license fees for racetrack operators and for businesses that offer electronic wagering.

Act 6 repeals the 10 percent advanced deposit wagering tax on horse races that had been challenged in the courts, and the law calls for a comprehensive industry study to assess the financial, regulatory and market factors of the horse racing industry. The Joint State Government Commission, with assistance from the Independent Fiscal Office, is responsible for conducting the study.

“Getting to this point was not easy,” Agriculture Secretary Redding, “but thanks to the involvement of the stakeholders, we were able to arrive at a sound compromise that accomplishes our objectives: strengthening the integrity of horse and harness racing in the commonwealth, and putting in place a financial model that will allow for the long-term viability of the State Racing Fund. I want to thank all of the stakeholders, particularly the members of the General Assembly, including the four chairs of the Senate and House Agriculture and Rural Affairs committees, for their leadership and continued engagement on this issue.”