state incentive ISSUE 18.qxd:Jerkins feature.qxd
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STATE INCENTIVES
Racing loves to denigrate its own status, crying impotently about its woes by calling itself a dying industry and thus fulfilling a self-induced antipopularity campaign. While its popularity will never rival football, the industry is far from dying. It is, however, the only business that exists at the mercy of government, and this relationship is more often antagonistic than supportive. By K.T. Donovan
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REEDERS and owners find some relief from stagnant or shrinking purses in statesponsored breeders’ incentive programs, with varying results. What makes a successful incentive program also makes for a successful racing state. And what makes that program most successful is often a healthy slots bill that serves racing interests well. Trainer Steve Asmussen races across the country and finds that state-bred programs not only attract him to horses he buys, but hugely influences where he races. “It’s as important as whether the horse is a girl or a boy,” he said. “It’s a condition for a race, so it’s a determining factor on where to place them. It’s hard to say where I prefer because they are changing so quickly. Indiana and Pennsylvania are really coming on here lately. Louisiana is more established, and I like New Mexico, too.” Government supporting racing at the state level means not grabbing as much of the gambling revenue stream for itself as possible and sharing with breeders. Most governments seem to object to racetracks being profitable enterprises and consider owners wealthy enough to not deserve to make any money off a recreational sport. When it appears that someone in racing might prosper, governments act quickly to insert their hand in the till, as if they are entitled to a share of this business unlike any other. Much of this sense of entitlement is fueled by ignorance of racing’s economic impact and hostility toward any form of gambling. The onus is on racing to correct this relationship to build support. In Kentucky, the surrounding states of West Virginia, Pennsylvania, Ohio, and Indiana all have some form of gaming while Kentucky legislators refuse to allow slots. While 2,000 broodmares have left Kentucky in the last year – taking jobs and families with them – the legislators have heard Kentucky horsemen whine and complain and threaten doom until they believe the industry is dying and not worth saving if it can’t stand on its own. To the government, slots would merely be a handout to prop up a fading sport for rich
people, so they would rather support their anti-gambling constituents than revitalize the racing industry by leveling playing field with its neighbors. Former Kentucky governor Brereton Jones, owner of Airdrie Stud, started the Kentucky Equine Education Program in 2004 to enlighten those in the state who take the horse industry for granted. He keeps in his pocket figures from a year and a half ago that list the six top job-producing companies in Kentucky: Humana with 9,300; Toyota with 8,900;
“At the end of the year, we had three-tofive stallions in the top 100 stallions, more from outside of Kentucky than any other state” Doug Burge – CTBA
UPS with 7,700; GE with 6,900; Ford with 6,800; and Delta with 4,300. Combined that’s 43,000 jobs, while the horse industry provides 100,000 jobs throughout the state. “If those six companies got together and went to Frankfort (Kentucky’s capital) and said that they didn’t have a level playing field and were going to leave Kentucky for a state that offered them a better place to do business, the legislators would go berserk,” he declared. “They’d promise them the dome off the capital to get them to stay! And yet, with 100,000 jobs in Kentucky, the horses are taken for granted. These aren’t just lower-paying jobs, either, from lawyers to veterinarians, to trainers. There’s some rich people, but there is a small percentage of rich people in any business. The CEOs of companies are wealthy, too. You’ve got to support the entire group of people, and the horse industry does that better than any business.” While state governments happily create more lotteries, they do not see that investing in racing’s future by returning the revenue flow back to its own racing and breeding industry creates jobs and improves the economy. “Slots are not propping up the horse industry,” Jones declares. “You need to have a good product, and lots of things need to happen for ANY industry to survive.” Part of creating a strong product is a healthy incentive program. Unlike some of the older programs which encouraged people to breed anything to create a statebred Thoroughbred, Kentucky focused on purse dividends going only to superior runners. “Kentucky only collects money from ontrack wagers, so that is a limitation,” trainer John Ward said. “But I like how the rewards only go to those who win in open company, so it is rewarding quality over mediocrity.” The quantity over quality argument played out for many years in California, which has had one of the oldest breeders’ incentive programs, since 1973. The program is fairly typical of what most states offer. [Details can be found at http://ctba.com/incentive-awards] The rewards are skewed with more money going toward races in Southern California than Northern California, to encourage better quality racing. To entice stallions to California, the program also includes awards for stallion owners whose California-conceived or California-bred progeny have won a qualifying race. As with many states, increased quantity resulted from such a program at first but now quality is taking over. Doug Burge, general manager of the California Thoroughbred Breeders’ Association (CTBA), has noted the change over the years.
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