Race Horse Development Trust Fund Overview

• PA Horse Racing Brochure
• Governor Tom Wolf’s proposed FY 20-21 budget proposal to raid the Race Horse Development Trust Fund (RHDTF)
  for $200 million is bad public policy that will have far-reaching negative consequences for the state’s agricultural
  sector and overall economy:
  • His proposal is a legal loser because it violates a trust fund created by the legislature in 2017.
  • While Wolf’s proposal is not legally viable, it poses immediate and irreparable financial harm to PA breeders
  by calling into question the long-term viability and fiscal security of the state’s breeding program just days
  before the start of breeding season on February 15.
  o Unless Wolf’s proposal is forcefully rebuked by the state legislature within the next few days and
  weeks, risk-wary investors will likely choose to breed in other states where there is more economic
  certainty about the health of the industry, resulting in significant financial losses for PA breeders.
  • If approved, Wolf’s proposal will have devastating consequences for the state’s agricultural and
  manufacturing sectors because it will destroy the state’s horseracing and breeding industries threatening:
  o 16,000 to 23,000 direct and indirect jobs;
  o $1.6 billion in economic impact that flows from racing and breeding in PA;
  o 105,458 acres of open space in Pennsylvania directly attributed to racing and breeding, plus tens of
  thousands of additional acres used by farmers to supply the industry with products such as straw for
  bedding, as well as alfalfa and other feed.
  Wolf’s proposed raid is a legal loser:
  • Wolf cannot legally raid the horsemen and breeder funds because Act 42 of 2017 converted the Race Horse
  Development Fund to a trust fund.
  • Act 42 states that the money in the trust fund – which comes from assessments that casinos pay on slots
  revenue — “are not funds of the Commonwealth” and that the “Commonwealth shall not be rightfully
  entitled to any money” in the RHDTF.
  • The trust fund was intentionally established by the legislature in 2017 in order to provide economic certainty
  and encourage new investment in Pennsylvania’s agricultural economy.
  • From 2009 up until the adoption of Act 42 of 2017, Pennsylvania’s horse racing and breeding industry had
  been dogged annually during the state budget process with threats of drastic cuts to the funds, which are
  used for purses and breeder incentives.
  • Prior to the formation of the trust in 2017, the repeated threat of fund diversions during the annual budget process caused businesses and investors to question the long-term viability of the state’s breeding and racing
  industries and
  • This had a chilling effect, as businesses and investors that conducted a cost-benefit analysis of the long-term health of the industry were unwilling to relocate to PA or invest in Pennsylvania-bred horses because of the
  perceived instability of purses and breeders incentives that are the lifeblood of the industry;
  • The legislative intent of the trust fund language was to provide some measure of fiscal certainty in order to
  entice new businesses and individuals to invest in Pennsylvania’s racing and breeding industries.
  • The trust fund language had an immediate positive impact, resulting in significant increases in Standardbred
  and Thoroughbred breeding (which runs counter to national trends);
  • The certainty and security created by the trust fund language spurred new business investment in PA’s
  economy, such as the $5 million invested by two business partners to open Silver Springs Ranch, a new 76-
  acre racehorse training facility in Wyoming County;
  • Wolf’s proposal to raid the trust fund will not withstand a court challenge and could expose the
  Commonwealth to additional litigation from individuals and businesses that invested significant financial
  resources in PA who will view the breach of the trust as a bad faith action by the state.