A horse is a horse, of course, of course, unless it's a Pennsylvania racehorse—then it's the symbol of government waste and an industry in decline. (Is that how this song goes? I may have taken some liberties.)
Pennsylvania's horse racing industry continued its downturn despite receiving more than $1.2 billion in subsidies since 2013. A new Pennsylvania Gaming Control Board (PGCB) report details this decline, though the report takes a positive view of the special subsidies used to prop up the industry.
In 2004, lawmakers passed Act 71, which dedicated casino slot machine revenue to the Race Horse Development Fund. The fund primarily finances a purse account used to distribute race prizes. The prize awards are notorious for going to wealthy out-of-state horse owners like the vice president of the United Arab Emirates.
However, the inflated prizes, which exceeded the entire General Fund budget for the Department of Community and Economic Development, have failed to revitalize the sport. The PGCB report notes a reduction in the number of foals and yearlings (young horses) active in Pennsylvania, attendance, and taxable handle (wagers) since 2013. The last two are depicted in the charts below.
The industry’s special privileges have not gone unnoticed. The Philadelphia Inquirer recently wrote a scathing editorial calling for an end to this egregious example of corporate welfare and summarized the absurdity of the current arrangement in just two sentences:
In other words, gambling losses in one sector (casinos) are used to prop up losses in another gambling sector (racing). In a state that has to scramble to balance its budget each year, is this not madness?
Lawmakers have taken notice too. Many considered using the racing subsidies to balance last year’s budget. Unfortunately, the industry’s lobbying efforts maintained their revenue stream and even persuaded lawmakers to add additional protections for the industry.
Let's be clear: the fund should not exist. There’s no justifiable reason why the racing industry should use the state to carve out a special arrangement that insulates it from market competition.
If lawmakers want to avoid another year of tax increases, borrowing, or both, they should eliminate this political privilege that benefits the few at the expense of Pennsylvania’s taxpayers.
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