Indiana horse breeders worry cuts would halt boom

Associated Press
April 9, 2011
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Indiana's booming thoroughbred horse breeding industry has been growing so fast in recent years it's even lured breeders away from horse powerhouse Kentucky.

But some of Indiana's thoroughbred breeders are worried that their good days could take a hit if state lawmakers approve proposed cuts to a state incentive fund.

The Courier-Journal of Louisville, Ky., reports that more than $57 million of racetrack slot-machine tax revenue last year was directed to the fund for Indiana's horse industry, which employs an estimated 5,800 people involved in horse breeding at more than 1,500 farms.

A budget plan approved by the Indiana House and under consideration by the Senate, however, would cut that money roughly in half. (Find IBJ's February coverage of this issue here.)

With cuts that size, "you're basically going back to the beginning of when it was struggling," said Gale Bess, general manager and part owner of Scottsburg's Lake Shore Farm, which got into the breeding business last year because of the slots-funded incentives.

A piece of the slot machine revenue from Indiana's two horse racing tracks is directed to breeders and owners chiefly through larger purses for winning races and awards for Indiana-bred horses that do well in Indiana races.

Expected increases in gambling this year mean the breeding industry could get about $58 million based on the existing incentive law, including about $27 million for thoroughbreds, according to legislative estimates. If the House budget plan eventually wins final legislative approval, though, the industry would get a total of about $29 million, including $13 million for thoroughbreds.

The Senate already has begun its own hearings on the House proposal, with breeders from Michigan, Colorado and Ohio saying the incentives led them to invest in Indiana — and that cuts to the fund would make them reconsider.

Senate Appropriations Chairman Luke Kenley, R-Noblesville, said he doesn't know what his committee will decide when it makes changes to the House proposal, but said he's not inclined to alter the current law.

"We made this investment with the idea in mind we would get a return . and we're getting more of a return than we even anticipated," Kenley said. "I think it's a terrible precedent to think we're going to make these kinds of investments and then not follow through."

Indiana law currently provides the horse industry with up to 15 percent of the racetrack slots revenue after winnings are paid. Thoroughbreds and standardbreds each get 46 percent of the total, with the quarterhorse industry getting the remaining 8 percent.

The fund replaced a subsidy that the horse industry received from riverboat casinos until the legislature approved the racetrack slots in 2007. Since then, Indiana's breeding statistics have soared with the growth in incentives.

The state's 25 percent growth in the foal crop from 2008-09 was the largest among significant racing states.

Southern Indiana has three major breeding operations, which all say at least 35 percent of their boarding business comes from Kentucky.

"When the slots came in, we really took off," said Larry Ernst, who has bred thoroughbreds at his Foot Fall Farm in Palmyra since the late 1990s. "They all want to come over here because that's where the money was."

Still, Indiana represents just a portion of the overall U.S. foal crop, at about 2 percent in 2009. Indiana breeders acknowledge the state won't replace Kentucky, which had about a third of the crop, as the nation's horse breeding capital.


  • read
    The money is coming from slot revenue marked for purses for racing. The state receives their tax money from the slot revenue as well. You people are acting like the money going into the pirse fund is taking away from casino taxes going to the state. That is not the case. You should inform yourself on the way the law is written before speaking. And save all the use the money to save the world bs---leave that to your president and libs in congress
  • Taxpayer Money
    Yes, we are talking about Indiana taxpayer money being forgone in subsidizing the horse industry, not state legislators dictating private business expenses.

    Contrary to popular media perceptions, our legislature does not run these private casinos/racinos. They just get a very small percentage(taxes)of these out of state companies revenue in return for monopoly control of the states legal gambling industry which are limited by licenses.

    IBJ Quotes:

    "Indiana law currently provides the horse industry with up to 15 percent of the racetrack slots revenue after winnings are paid."

    "The fund replaced a subsidy that the horse industry received from riverboat casinos until the legislature approved the racetrack slots in 2007."
  • Whoaaaa
    As I understand it, the financial incentives come from gambling money (the slot machines), not tax money. To be a registered Thoroughbred requires live breeding, not AI, which naturally limits the number of T-breds. This is not like puppy mills knocking out 6-10 offspring at a time. This is one foal born of natural cover and from intelligently chosen blood-lines. It sure seems like a good use of gambling money (not tax money) to provide incentives leading to nearly 6,000 Hoosier jobs. Hmmm....no tax money and lots of jobs? Sounds like a good deal to me.
  • Horse cruelty
    This horse breeding reminds me some what of the puppy mill business,both should be banned in a civilized nation their are already plenty of homeless horses and the shelters for them are either full or almost full and cruelty runs rampant to both horses and dogs and other animals, if you are loving enough to have animals living with you then by all means adopt them from rescue organizations and don't contribute to over breeding as is so often the case and if it is a business be it farming or making steel products or anything else it should stand on its own financially or it should not be in business.
  • common sense
    if it can not exist without a subsidy then its not a legitimate business ... its a hobby paid for by already suffering tax payers... make it go away or exist on its own merrits... this is no different then forced union subsidies for school teachers ... just a slight twist to make it sound good while the only real jobs its creating are filled by illegal alians ...
  • Enough is Enough
    Here we go again.

    Not too long ago the two horse tracks claimed poverty to get authorized to add off track betting parlors statewide, then they pleaded poverty to add thousand of slot machines and card games to supplement the tens of millions we already gave them in taxes paid from other profitable casinos to boost racing purses and support money losing horse racing.

    Here we are today, the racinos still dont show a profit and have finally declared bankruptcy showing they are failures.

    Enough is enough, let them go away by pulling their subsidies.
    • No subsidy
      There is no reason to subsidize horse racing as which is cruelty. That is the same dog racing, both should be outlawed. Take the money and feed hungry families something worthwhile
    • Bigger priorities than mature gambling industry
      I agree wholeheartedly. its about priorities.
    • The business is a nag
      Why would taxpayers continue to subsidize an industry that is not self sustaining? With enough "incentives," you could turn even the buggywhip business into a big employer. There's no plausible reason why $57 million a year should be diverted to an industry that can't stand on its own, especially one with such a narrow interest base.
    • Horse & Buggies Drive Our Economy?
      Give us a break.

      They should cut this subsidy to zero! Taxpayers have been subsidizing the horse industry for a decade and it still can't support itself?

      Let the casinos and rachinos compete on a level playing ground and let taxpayers keep casino taxes instead of propping up two bankrupt horse tracks. Let the market weed out the winners and losers without government bailouts.

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