Horse Racing Gets an Oxygen Mask

A last minute addition to this year’s budget may have given a little more life to the struggling horse racing industry in our state.

For the past 75 years horse racing has had to pay license fees into the California fair and exposition fund. The fees were used to pay salaries and administrative costs for the California State Fair as well as other maintenance fees at smaller county fairs and agricultural events.

The state has now relieved the industry of that duty. The bill, sponsored by Republican Sen. Roy Ashburn of Bakersfield and signed by Gov. Arnold Schwarzenegger, now makes the state directly responsible for this funding taking money out of general budget fund. It is estimated that this will save the horse racing industry about $32 million per year.

Horse racing generates more than $200 million per year in tax revenues and employs 65,000 so the state believes this move will help sustain the industry.

It’s seen as a “win win” for both the track owners and the fairs because as the popularity of horse racing has slowly been in decline, due to direct competition from the Indian casinos, the fairs have suffered from lack of support.

Although $32 million a year is a substantial savings, it may not be enough to keep the horses running as the Indian casinos have garnered the major gambling market share.

The California track owners would like to transform their venues into “racinos” like the Philadelphia Park Casino and Racetrack, the Fair Grounds Race Course and Slots in New Orleans or the Gulfstream Park Racing & Casino in Florida - that allow gamblers to bet on horses and also play casino games. But because the compacts between the gaming tribes and the governor in our state gives exclusive casino rights to Indian tribes it just isn’t going to happen.

It really is a “do or die” situation for the industry. Santa Anita Park in Arcadia is in bankruptcy as is Golden Gate Fields in Albany. The Bay Meadows track in San Mateo has been closed for development and its sister track the Hollywood Park in Inglewood may be next.

Interestingly, as the bill was working it s way through the passage process in Sacramento the idea was floated that perhaps the funding for the State and county fairs could be extracted from the Indian casinos, incorporating the stipulation into any new compacts that may come up. But the idea was shot down rather quickly as tribes got wind of it.

Allison Harvey, executive director of the California Tribal Business Alliance said, "The tribes objected to it coming straight out of the compact payment because it implied some link to the tracks. The implication was that Indian casinos were the cause of the decline of race tracks, which were in decline long before Indian casinos opened."

Horse racing interests have also shot them selves in the hooves financially in recent years by funding losing political campaigns intended to curb the growth of Indian gaming or to win the rights to operate casinos themselves…to make their venues “racinos”. Since 2004 they have spent $55.5 million on these failed efforts.