Archives for January 2012


The Kentucky General Assembly plans to consider legislation in 2012 that would require Kentucky residents to pay a tax on bets they place with advance deposit wagering companies. The proceeds would benefit the Kentucky Thoroughbred Development Fund. Under existing law, a portion of Kentucky on-track bets go to the KTDF, whereas bets made via online wagering sites are not assessed. The size of the KTDF has been shrinking in conjunction with the decline in wagering at physical facilities.

(A competing bill, already filed, would allocate 85 percent of the additional revenue from the tax on ADW wagers to racetracks, with half going to purses.)

While this legislation is well intentioned, it is apt to have unintended consequences for Kentucky racing interests should it become law. National and state laws pertaining to intangibles like betting services can often be circumvented via the Internet.

Pari-mutuel wagering already extracts a takeout percentage higher than most betting and gaming alternatives. Adding even a small increment to the amount that Kentucky residents pay will either encourage some customers to curtail their betting on horse racing or find other places to do business.

Kentucky bettors will be incentivized to use ADW providers with no land-based facilities in Kentucky. Further, the proposed law might violate the U. S. Supreme Court ruling in 1992 that an online vendor is not obligated to collect state sales taxes on purchases if the vendor does not have a physical presence in the state in which a customer resides.

The magnitude of the takeout percentage matters most to the relatively small number of people who account for the lion’s share of all betting handle. Kentucky bettors in this category would be likely to bypass the proposed law by simply patronizing ADWs in another state or off-shore. Kentucky firms like Twin Spires and Keeneland Select would undoubtedly lose Kentucky customers and the KTDF would be no better off.

When elected officials carefully weigh the long-term costs and benefits of a tax on a major industry, they often come to the conclusion that it is not sound economic development policy to burden home-grown companies operating in a hyper-competitive global environment.

Recently, for example, the Moore County Council in Tennessee asked the state legislature to approve a referendum on the issue of whether the county’s largest employer, Jack Daniels, should pay a per-barrel whiskey tax that would have yielded about $5 million per year to county coffers. After further deliberation of the potential deleterious effects on Jack Daniels—and by extension, on the local community–the Council voted 10-5 to abandon the tax proposal.

In today’s integrated worldwide Internet-based economy, a state or local tax that is meant to help an indigenous industry can have precisely the opposite outcome.

Copyright © 2012 Horse Racing Business

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


FORT LAUDERDALE, FL. An article by Kathleen Haughney in the South Florida Sun Sentinel reported that a Florida senate bill to establish destination-type casinos originally was meant to limit gambling in the Sunshine State. However, the bill was modified so much that, if enacted into law, every geographical sector of Florida can have at least slot machines, subject to approval by voters in the various communities.

Dade County (Miami) and adjacent Broward County are presently home to seven racinos operating at horse-racing and dog-racing tracks. Under the enlarged senate bill, these racinos would be able to expand into full-scale casinos. In addition, racinos would have their current 35 percent tax rate reduced to the 10 percent rate proposed for casinos.

The outlook is that the senate bill will not become law in 2012, but may in 2013. Whatever the year, vastly augmented gambling is most likely  coming to Florida in the near future because the state requires the revenue and needs the destination casinos for tourism. When that occurs, Calder, Gulfstream Park, Pompano Park, and Tampa Bay Downs, will morph into full-line casinos that happen to have horse racing as part of their overall product mix.

Whether additional gambling is a pro or con for horse racing remains to be seen. The experience with racinos in other venues does not suggest that larger crowds who come to gamble translate into more betting on horse racing.

Rather than handwringing and lamenting the future competition from casino gambling, horse racing needs to figure out how to offer a more competitive product, particularly when it comes to fuller fields and lower takeout. With the prospects dramatically improving for legalization of full-scale casino gambling, bloodstock interests unfortunately can’t count on the racetracks to make a concerted effort in this regard.

Copyright © 2012 Horse Racing Business

Click here to read the South Florida Sun Sentinel article.


HALLANDALE, FL. On January 6, 2012, Gulfstream Park held a $51,500 Maiden Special Weight race for 3-year-old fillies at 6 furlongs on dirt. Todd Pletcher sent out first-time starter The Last Meow for Town and Country Farms. This filly is one of only three offspring from Storm Cat’s last crop and hence her name. She took the lead out of the gate and won by 7 ½ lengths in 1:09.82.

After the track photographer took The Last Meow’s picture in the Winner’s Circle, the groom removed her saddle.  One could not help but notice that she has a significant case of the genetic deformity lordosis, also known as swayback or low in the back or soft in the back. Curvature of the spine is seen in about 1 percent of all horses.

This defect no doubt accounted for the bidding on The Last Meow stalling at $220,000 at the Saratoga select summer yearling sale in 2010, despite the fact that she is by the outstanding sire Storm Cat and out of the Grade III-winning mare Rich Woman by Successful Appeal.

A study at the University of Kentucky found that lordosis does not inhibit broodmares from carrying foals to full term. Similarly, the mechanics of performance horses like jumpers and American Saddlebred show horses are not usually interfered with by the deformity. However, the study also said that racehorses with lordosis are often negatively affected, meaning it impedes their speed.

The business of selecting weanlings and yearlings for racing is a risky and inexact proposition. Some of the most perfectly conformed entries with the bluest of bloodlines have failed as racehorses. Not one of the nine most expensive auction yearlings in history won more than three races and two of them never even made it to the races. The record price paid for a Thoroughbred at auction is $16 million for the 2-year-old The Green Monkey in 2006, who turned in a torrid time of nine and four-fifths seconds for an eighth of a mile. In three career starts, he finished third, fourth, and fourth.

On the other hand, some of the best racehorses have had conformation flaws that turned off prospective buyers. Northern Dancer (too small) and Sunday Silence (sickle-hocked) are prominent examples of yearlings that did not reach their reserve price at auction, yet went on to become not only Hall of Fame inductees but sensational sires as well.

Looking back on the careers of racehorses can be like attending a high school class reunion, where the kid voted “most likely to succeed” forty or fifty years ago has badly underachieved, while the supposed dunce or clown that struggled to graduate has eclipsed the rest of the class in professional acclaim.

The chance to buy a racehorse prospect that others spurn because of conformation imperfections and/or a deficient pedigree and then have that ugly duckling turn into a swan is what makes for great intrigue. It is like selecting Tom Brady in the sixth round of the NFL draft and subsequently watching him develop into a surefire Hall of Fame selection.

Whether The Last Meow will go on to be a graded stakes winner will be interesting to watch. When she runs, she epitomizes the adage “pretty is as pretty does.”

Copyright © 2012 Horse Racing Business