CONCERN IN HOOSIERLAND

“State Budget Puts Horse Racing On Edge.”   So said a recent onpolitix.com headline about Indiana.

Hoosier Park in Anderson and Indiana Downs in Shelbyville opened for business in September 1994 and December 2002, respectively.  The former is 39 miles northeast of Indianapolis and the latter is 32 miles southeast of Indianapolis. 

In 2004, the Indianapolis Star carried a downbeat assessment pertaining to the tracks’ viability: “Ten years after coming to Indiana, the horse-racing industry faces a crisis.  Hoosier Park in Anderson lost $555,000 last year. The state’s other pari-mutuel track, Shelbyville’s Indiana Downs, lost nearly $4 million. These losses came even though each track received more than $5 million in subsidies from the state of Indiana, the largest state subsidies given to horse tracks in the United States.  Now some legislators question whether there is enough interest to support two tracks — or even one.” 

This bleak outlook began to brighten in June 2007, when the Indiana General Assembly passed legislation authorizing both racetracks to offer video lottery terminals.  The bill stipulated that each racing breed (Thoroughbred, Standardbred, and Quarter Horse) would receive a share of slot machine revenues.  The rationale was that racing nurtured agribusiness in Indiana.

A pre-slots-era study by the American Horse Council found that in 2005 the Indiana horse racing industry had a direct economic impact of $181 million and a total economic impact of $294 million.  Similar research, based on 2009 data and published in late 2010, was undertaken by a small team of economists from Purdue University and the U. S. Department of Agriculture.  Their study revealed that, despite the debilitating recession in 2009, the Indiana horse racing industry had a direct annual effect of $733 million and a total effect of over $1 billion.  

Moreover, Indiana racing-related businesses contributed $45 million in state and local taxes in 2009, whereas the analogous figure for 2005 was $5 million.  The racing industry in 2009 was directly and indirectly responsible for the equivalent of 1,240 full-time jobs.  Hoosier Park and Indiana Downs paid out purses of about $49 million.  Ten percent of breeders resided outside Indiana and represented 34 states.

Currently, Indiana is having funding problems and Governor Mitch Daniels has vowed not to raise taxes or cut allocations to schools. Indianapolis-based WISH-TV wrote that “the race for state budget dollars is underway…in advance of the 2011 General Assembly.  Leading the pack is the horse-racing industry. Breeders and others are trying to protect a subsidy of more than $60 million meant to stimulate horse racing in Indiana.”  In addition, “the casino money tapped to create the horse subsidy is dwindling in the face of out-of-state competition.”

A convincing case has been made—replete with compelling statistics–that Indiana’s alternative-gaming subsidy to horse racing has been a manifestly worthwhile investment in terms of job growth, tax-revenue enhancement, and support of small business.  However, it remains to be seen how well this reasoning will hold up in the face of a state budget shortfall that has the governor and legislators scrambling for low-hanging fruit. 

Originally published in the Blood-Horse.  Reprinted with permission.

Copyright © 2011 Horse Racing Business.

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