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Horsemen: Purse fund cuts would damage industry

[cleeng_content id=”855674557″ description=”Read it now!” price=”0.49″ t=”article”]CHARLES TOWN – Legislation seeking to cut the amount of money appropriated to thoroughbred racing purses and development funds to support other public spending would further diminish a struggling horse industry in West Virginia just as it’s beginning to make long sought progress, says the president of the local horsemen’s association.

Randy Funkhouser, president of the Charles Town Horsemen’s Benevolent and Protective Association, said Gov. Earl Ray Tomblin’s proposal to cut $39 million a year for the next two years for certain accounts funded by lottery proceeds threatens a racing industry that supports thousands of jobs statewide and provides a foundation for Jefferson County’s agricultural sector and overall economy.

H orses near the finish line while racing at Charles Town.

Horses near the finish line while racing at Charles Town.

The legislation as drafted in Senate Bill 385 and its counterpart House Bill 4333 reduces by 15 percent the share of lottery funds – which includes traditional lottery games as well as slot machines and tables games – dedicated to various constituencies, including cutting roughly $6 million for horse racing purses and development funds.

The bill also proposes to cut about $4 million for cities and counties with racetrack casinos, as well as roughly $2.5 million for greyhound racing purses and development funds. Other provisions include cutting the state infrastructure fund by $20 million a year for the next three years.

Proponents of the bill say it will help shore up a $146 million funding gap in the 2014-2015 state budget and also address Wall Street’s concerns about declining casino revenue being able to support government bonds and maintain the state’s AAA rating.

The Senate bill is currently before the Senate Judiciary Committee and slated next to go before the Senate Finance Committee. Funkhouser said he was planning to meet this week with legislators in Charleston and speak late Tuesday afternoon during an open hearing in the House chamber on the legislation there.

“It’s taken a long time to little by little move the industry forward,” Funkhouser said. “But now this could be the dagger in the heart of that.”

West Virginia legalized slot machines in 1994 as a way to save its then-dying horse industry, offering subsidies from expanding gaming revenue to reenergize the state’s racing and breeding sectors. Purses rose rapidly and the number of foals born locally increased significantly as West Virginia established a reputable thoroughbred industry with lucrative incentives for horsemen to breed and race at its tracks, including Charles Town.

But a series of revisions over the years to the original legislation that ultimately reduced the percentage of gambling revenues going to purses, and increased competition from casinos in contiguous states and a global economic recession have hit the horse industry hard.

By 2012, purse revenue had fallen about 24 percent from its peak in 2005, according to a West Virginia University business school study published last month assessing the thoroughbred and greyhound industries’ statewide impact. Total purse share that year from parimutuel handle – racetrack bettors – was nearly $13 million, while purse share from slots and table games was nearly $92 million, or approximately 88 percent of revenue to breeders and owners, the study concluded.

The numbers of mares bred in West Virginia follow similar lines as it hit an all-time high in 2005 with 1,207, according to The Jockey Club, the breed registry organization for thoroughbreds in North America. That number had fallen to 653 in 2012.

While the funding formulas have changed over time, the percentage of video lottery revenue allocated to purses has fallen from approximately 14.1 percent in fiscal year 1995 to about 8.5 percent in fiscal year 2013, according to the WVU business school study. Combined purse and breeder development funds have fallen from 15 percent in fiscal 1995 to 9.7 percent in fiscal 2013.

“We’re grateful to the legislature for allowing us to create our breeding program,” Funkhouser said. “It’s gone from where we had a minor breeding program to now having a well-respected program in the mid-Atlantic and we’re getting horses of international and national repute.

“But when you continue to cut percentages, these people are going to go to our competitive neighbors,” he added. “People who are investing money into good horses, they’re looking for the opportunity to get a return on their investment and they get shaky when they see that investment go south.”

Thoroughbred and greyhound racing supported more than 7,300 jobs and generated more than $100 million in income to workers in West Virginia, including nearly 3,500 jobs and more than $48 million in employee compensation in Jefferson County, according to the WVU business school study.

Owners and breeders spent more than $57 million in the Jefferson County economy in 2012, while trainers spent an additional $17 million, the study concluded. When another $84.5 million of ripple effect was registered by other businesses, industries and governments, Jefferson County saw its total economic impact related to racing increase to nearly $160 million.

Funkhouser said the ripple effect shows how racing has a significant economic impact in the county as spending includes labor, tack and supplies, stud fees, veterinarians, blacksmith, and transportation and farming services.

“Everyone has benefitted from horse racing,” Funkhouser said. “It’s the kind of thing people want here.

“But it’s back to where horsemen are really suffering,” he added. “Many of them are living on extremely thin margins and about to go broke. Things have been very, very difficult for them, and they’ve continued to be targeted out of their purse fund.”

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