Racing officials: Bill threatening dog racing risks thoroughbreds, too

CHARLES TOWN — With the specter of bills to divert greyhound racing financing in West Virginia twice having reached the governor’s desk in Charleston, Jefferson County’s thoroughbred horse racing community is on guard to prevent their longstanding industry, livelihoods and sporting heritage from going a similar way of the dogs.

“The bill up there (in Charleston) makes horse racing very vulnerable,” said Randy Funkhouser, a thoroughbred horse racing owner outside Charles Town.

“Basically, it sets a very bad precedent if left unchallenged,” said Jim Miller, a thoroughbred horse owner near Middleway, of the revenue-diversion bills that would affect greyhound racing. “That’s the issue.”

Funkhouser and Miller are board members of the Charles Town Horsemen’s Benevolent & Protective Association, an advocacy organization for the horse racing industry in the Eastern Panhandle.

The controversial greyhound racing-funding bill that Funkhouser and Miller described passed the state Legislature this year was Senate Bill 437, which was also introduced in the current special legislative session as House Bill 119. The bill would divert a vital financial pillar of funding for greyhound racing in West Virginia that was arranged and approved by voter referendums years ago, they said.

Before Gov. Jim Justice vetoed SB 437 in the regular legislative session, the bill passed the Senate in March with a 19-15 vote. It passed the House in April with a roll call vote of 56-44. Lawmakers are girding for another fight next year over some similar greyhound funding legislation.

Backed by lawmakers seeking extra revenues to balance the state’s projected $455 million shortfall in a $4.1 billion budget for fiscal year 2018 and supported by animal rights groups aiming to end dog racing altogether, SB 437 would divert casino revenues that are directed by law into a special West Virginia Racing Commission account to fund ongoing greyhound breeding programs that dog racing officials say are important to financially support and perpetuate the sport.

The money accumulated in the Greyhound Breeding Development Fund is expected to generate slightly more than $13 million for greyhound racing breeders this year. Under the proposed legislation, the portion of casino revenues flowing to greyhound breeders from the Racing Commission account would be sent to the state’s general fund coffers, except for $1 million that would be earmarked to promote greyhound adoption programs.

The greyhound racing industry predicts the loss of about 1,700 jobs statewide if a greyhound bill similar to SB 437 would be enacted. Most of those jobs would be lost at the Wheeling Island Hotel-Casino-Racetrack in Wheeling and the Mardi Gras Resort and Casino in Cross Lanes — casinos with the state’s two greyhound racetracks.

The recent debate over the greyhound racing funding legislation during the past two state legislative sessions has primarily focused on protecting the financial viability of the dog racing industry, and the legislation would not interfere with casino revenues currently streaming to the thoroughbred racing industry through a similar Racing Commission horse breeding fund.

Funkhouser and Miller said a funding change similar to SB 437 for horse racing — which has not yet been debated or drafted, let alone enacted — in the future would be devastating for the thoroughbred industry, the Charles Town racetrack and the economy of Jefferson County.

“You’re going to lose agriculture here in Jefferson County,” said Funkhouser, if such legislation were enacted that destabilized or undermined the current casino funding share for horse racing.

Fortunately, Funkhouser and Miller agree, Gov. Justice and Jefferson County’s state delegates understand the economics of horse racing, as well as the issue and purpose of casino funding for the industry.

A 2014 study by the University of West Virginia estimated that the economic impact of the Charles Town racetrack directly and indirectly creates 3,500 to 4,000 jobs in the county. The racetrack, the first modern racetrack founded in West Virginia in 1933, generated a direct and indirect economic impact of about $150 million in 2012, nearly half of all the racing economic activity in the state.

The other horse racing track operating in West Virginia is the Mountaineer Casino and Racetrack Resort in New Cumberland, which generates about 30 percent of the state’s race track revenues.

Funkhouser operates a historic 160-acre family horse breeding and racing farm founded in 1939 outside Charles Town that directly employs 18 people and has 70 race horses, about 10 to 15 of which are running at the Charles Town racetrack.

Miller operates a 20-acre horse farm in Middleway that directly employs nine people and raises about 100 thoroughbreds at various farms across the country. Those horses race at Hollywood Casino at Charles Town Races, as well as other racetracks around the country. His farm in Jefferson County has about 30 horses, an operation that spends $100,000 each year for hay alone, he said.

Their horse racing farms employ exponentially more people indirectly in the Eastern Panhandle, from trainers to furriers to veterinarians to other farmers providing hay and other goods, Funkhouser and Miller said. And those people indirectly employed by their farms employ more people as well, whether at the Charles Town racetrack or elsewhere.

“It’s a very involved business,” Miller said. “That’s why it has a huge economic footprint. The farms drive a lot of business.”

Miller and Funkhouser explained that West Virginia’s four casinos were originally approved by voter referendums with stipulations that those casinos must continue to operate greyhound or horse racing tracks and that the casinos must financially support those race tracks. Like the state’s two casinos operating with greyhound racing tracks, a public referendum approving the casino in Charles Town only passed in Jefferson County because the city’s historic horse racing track was made an essential part of the deal.

“If you didn’t have a race track, you couldn’t have a casino,” Miller said. “And that’s what the voters actually wanted.”

“People didn’t want casinos all over the state of West Virginia,” said Funkhouser of the referendums that limited the number of casino operations in the state.

Part of those referendum approvals by voters included arrangements where three sources of gambling revenues would financially support the state’s two greyhound tracks and two horse tracks, including a percentage of casino gambling table and slot machine money. As a result, three sources of gambling revenues are distributed through the horse racing industry, Miller and Funkhouser explained.

The first revenue source involved a percentage of the money exchanged at racetrack betting windows, called “the handle,” Miller said. That money supports the race purses that are distributed to horse owners by merit by their winning rankings.

Similar to a funding arrangement for the greyhound racing industries, a second source of revenue comes from a portion of casino table and slot machine revenues directed at horse breeders, an arrangement that is also distributed by merit according to the outcome of participants in races.

“Basically, the funding encourages people to buy and breed West Virginia horses,” Funkhouser said.

A third, much smaller stream of revenue derives from licenses paid to broadcast races for off-rack betting venues.

“What you have is a huge amount money that comes into Charles Town that gets spread around the state,” Miller said of the structure and reasoning of casino revenue sharing that voters approved. “But some of it was supposed to come back to Jefferson County.”

Significant doubts surround the legitimacy of SB 437 to be legally able to change the casino funding source for the greyhound breeding program, as would any similar legislation that would change casino revenues directed toward breeders in the thoroughbred racing industry. The state Legislature can’t alter, particularly by a majority vote, the funding terms that voters approved in Jefferson County, they said.

“That’s the issue with the dogs — can the legislature come in and say the vote of the referendum (involving the structure of dog racing funding) is no longer valid?” Miller said.

Any law similar to SB 437 would most likely be contested on constitutional grounds in the court system because such legislation would overturn greyhound racing referendums approved for the Wheeling and Cross Lanes race tracks, Miller and Funkhouser said.

“I think there will be legal challenge to it,” Funkhouser said. “Because constitutionally when you have a referendum approved by people in the county, that can’t be overridden by a vote in the state Legislature.”

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