Internet breeds gap for Pennsylvania horse racing oversight

Jim Simpson is president and CEO of York County-based Hanover Shoe Farms. Behind Simpson's desk hangs portrait of Sugarcane Hanover, a Standardbred trained by Simpson that won $1.7 million during its career. - (Photo / Amy Spangler)

There are 478 Thoroughbred and 172 Standardbred horse breeders in the state, according to the Pennsylvania Equine Coalition. Of them, 135 Thoroughbred breeders and 20 Standardbred breeders are in midstate counties.

In 2010, the horse-racing industry generated $1.6 billion in annual economic activity and supported 23,028 jobs, according to state Department of Agriculture statistics.

Act 71 of 2004, which legalized slot machines in Pennsylvania, has helped fatten purses to make racing in the commonwealth more attractive to owners and bettors.

Jim Simpson, president of Hanover Shoe Farms, who helped push for the slot-machine law, said the Adams County farm has been able to maintain property and buy new land for breeding horses.

“It has accomplished all it has set out to do,” he said of Act 71.

But the money used by the state for oversight under another law being considered for amendment has been dwindling.

Insolvent oversight

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In fact, in November, state officials told The Associated Press that the State Racing and Harness Racing commissions, which oversee the Thoroughbred and Standardbred racing industries, respectively, were on the brink of insolvency. The revenue projection for the State Racing Fund in 2013-14 was $13.5 million, while operating expenses were $18.5 million, according to information compiled by the Senate Agriculture and Rural Affairs Committee.

An audit of the State Racing Fund, released last month by Auditor General Eugene DePasquale, found $6 million in inappropriate charges to the fund were the result of overbilling to cover budget shortfalls and personnel costs unrelated to the operations of the state’s racing commissions.

But another big culprit cutting the racing fund’s revenue is a form of betting called “advance deposit wagering” that is not covered under the pari-mutuel wagering tax, the main revenue source for the State Racing Fund.

This kind of wagering, which uses a debit/credit system set up through the race tracks, allows bettors to place bets online or over the phone, meaning they do not have to be at the race track. The tax is collected only on wagers placed at tracks, said Mike Rader, executive director of the Senate Agriculture and Rural Affairs Committee.

Joseph Deinlein

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