A halt to horse racing in Pa.?

Bayern takes the lead in the Pennsylvania Derby at Parx on Sept. 20, 2014.

The Wolf administration on Thursday threatened to shut down horse racing statewide as soon as next week if the industry does not start to shoulder millions of dollars in regulation costs.

A spokesman for Gov. Wolf cited a decrease in wagering at the tracks and the ongoing budget stalemate. But the threat of a shutdown was also a bid to get lawmakers to pass a controversial bill that offers long-term fixes, including having the industry take over the cost of drug testing, which runs about $9 million annually.

"It wasn't an ultimatum - it was a hard truth," the spokesman, Jeff Sheridan, said in an email. "If there is not a solution by next Friday ... we will be forced to shut down horse racing."

Unclear was how long a shutdown might last and how it might affect the casinos that operate alongside the state's six thoroughbred and harness racetracks - and the 23,000 jobs they generate.

Industry leaders said they had been in private talks with the administration, but were blindsided by news that a deal needed to be reached so soon.

"We knew there was a shortfall in the funding. That's not surprising," said Salvatore M. DeBunda, president of the Pennsylvania Thoroughbred Horsemen's Association, which represents trainers and owners at Parx Casino in Bensalem. "The fact that they told us we had a week to resolve it is surprising. I'm disappointed that this was made public, and for what purpose, I don't understand."

The woes of the industry have been well-documented.

Auditor General Eugene DePasquale warned last summer of impending doom for the horse-racing industry, and said Thursday that legislation may not be the only solution.

"The horse-racing industry - like every industry - needs certainty and stability in regulation and oversight from the state," DePasquale said. "A shutdown could well cause irreparable harm."

Administration officials said the state Racing Fund has been struggling with declining revenue for years and was propped up by one-time fixes.

The fund covers licensing, safety measures, staffing of an equine laboratory, and drug testing of horses, among other things, that generally cost up to $20 million a year. It's paid for through a tax on horse wagers, which have steadily declined for years, now generating only about $10 million annually.

"The system is broken, and it needs to be fixed," Agriculture Secretary Russell Redding said in a statement. "This problem has persisted for years. There has been a 71 percent decline in wagers placed on live horse racing in the state since 2001."

To help fill the widening hole, the legislature and previous administrations have used slots revenue or the general fund. Wolf's proposed budget for this fiscal year continued the practice, calling for $6.5 million to buttress costs as a stopgap measure

But the budget impasse has blocked new money from flowing in.

"There is a serious problem with the overall funding, and we do not have the resources to maintain the integrity of that fund anymore," Sheridan said.

Wolf supports a measure sponsored by Sen. Elder Vogel (R., Beaver) that passed the Senate in June by a vote and is now in the House.

DeBunda, from the Thoroughbred Horsemen's Association, said the industry is agreeable to changes. He said working out a deal in one week is unrealistic, although he said it will try.

The six tracks with casinos also include Harrah's in Chester. Sheridan and officials from the Gaming Control Board declined to speculate on what would happen to such racinos, whose gambling licenses are contingent on horse racing.

The trend here is not different from other states. Horse-racing wagers and their associated tax revenues have been falling for years, prompting many states to discuss ending subsidies to the industry.

Many states, including Pennsylvania, shift large portions of tax revenue from slots to expand racing purses. State lawmakers, including some in Pennsylvania, have suggested using that money to fund schools.

"Historically, horse racing was the only form of gambling allowed in most places, " said Frank Fantini, publisher of Fantini's Gaming Report, a newsletter. "But today, it's been surpassed by casinos and online gaming. Some people don't want to wait half an hour between each event. The pace doesn't keep up with the 21st century."

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