Harrisburg, PA — The Pennsylvania Equine Coalition, whose member organizations represent Standardbred and Thoroughbred horsemen and breeders in the state, told the Pennsylvania Horse Racing Commission May 28 that shifts in the gaming landscape in recent years have exacerbated the decline in revenue received by the Pennsylvania Race Horse Development Trust Fund.

Coalition members are the Pennsylvania Harness Horsemen’s Association, Meadows Standardbred Owners Association, Standardbred Breeders Association of Pennsylvania, Pennsylvania Thoroughbred Horsemen’s Association, Pennsylvania Horsemen’s Benevolent and Protective Association, and the Pennsylvania Horse Breeders Association. Todd Mostoller, executive director of the Pennsylvania HBPA, gave the presentation on behalf of all the members.

The 2004 Pennsylvania Race Horse Development and Gaming Act (known as Act 71), which launched casino gambling in the state, set aside 18% of gross slot machine revenue at Category 1 casinos, which are located at the state’s six racetracks, for the fund. Category 2 and resort standalone facilities also contribute a share of revenue to the PRHDTF.

Mostoller said the high-water mark of $280 million in revenue came in fiscal 2010-11. He said that since that time, the revenue amount for the PRHDTF in total has declined by roughly $500 million, and that the fiscal 2023-24 total is only $17 million higher than fiscal 2019-2020, when casinos and racing were shuttered for months because of COVID-19 restrictions.

The launch of Category 4 casinos — they don’t contribute to the PRHDTF — near existing Category 1 markets; a substantial spike in revenue from Internet casino gaming; and proliferation of “games of skill” devices that aren’t regulated and taxed by the state are fueling the revenue declines. Mostoller said Internet gaming revenue in Pennsylvania is poised to eventually exceed the combined gaming revenue from the six brick-and-mortar racetrack casinos.

“The real issue now is cannibalization,” Mostoller told PHRC members. “The gambling market in Pennsylvania has changed dramatically. This is a serious issue. The business model created by Act 71 is being destroyed. Everyone in the industry on the Thoroughbred and Standardbred side is impacted.”

Studies have shown the racing and breeding industry has an economic impact of about $1.6 billion in Pennsylvania. Mostoller noted the overall agriculture industry in the state also is impacted by continuing declines in the equine sector.

PEC members have been working to educate state legislators on the developments for the last three or four months.

“We’re just letting people know about the issue,” Mostoller said. “It is misunderstood (at the capitol) and misunderstood in most places. There may be a mechanism and ways the industry can be made whole to the promise made in the original (gaming legislation).”