Online gambling dragged into race track dispute with Pennsylvania governor

Pennsylvania has been the primary battleground for internet gambling this week as legalisation initiatives have gathered momentum due to the need to plug a state budget deficit, and Sheldon Adelson’s Coalition to Stop Internet Gambling focused on the state’s legalisation moves (see previous reports).

A new area of contention opened up as the week came to a close when state governor Tom Wolf and the Pennsylvania Horsemen’s Benevolent and Protective Association clashed over the finances of the Pennsylvania Race Horse Development Fund (PRHDF)…and online gambling was dragged into the debate.

Gov. Wolf is keen to address an annual funding shortfall of around $9 million in the PRHDF and has threatened to halt racing at the state’s six tracks at the end of October if legislative moves to overhaul the body prove fruitless. A bill passed by the state Senate in June would establish a single oversight commission for thoroughbred and harness racing as well as shifting drug-testing costs to the industry.

Reacting to the governor’s warning, the executive director of the Pennsylvania Horsemen’s Benevolent and Protective Association, Todd Mostoller, said he was shocked by the threat, which he characterised as a “strong-arm tactic” that would be discussed by the racing industry.

In a rather barbed reference to the deficit-plagued, three-month-overdue state budget, he commented: “If this is the tactic they want to use, I understand why there isn’t a budget.”

Mostoller is apparently trying to stall any immediate action on the dispute, proposing that a solution to the shortfall may be possible from a revenue standpoint.

Perhaps this is why his Association used the opportunity Thursday to drag online gambling into the dispute, using the widely discredited argument that legalised online gambling in Pennsylvania will further damage an already ailing horse racing industry by cannibalising business at existing state brick and mortar facilities.

This could occur because the land casinos contribute a portion of annual gambling revenues from slot machines to the Pennsylvania Race Horse Development Fund…last year to the tune of $242 million. If that is impacted by the legalisation of online gambling through state casinos, horse racing would suffer, Mostoller argued.

Observers claim that the Pennsylvania Horsemen’s Benevolent and Protective Association has opposed moves to legalise intrastate online gambling because these initiatives do not include a cut of online gambling for the horse-racing industry.

Representative John Payne, who heads the House Gaming Oversight Committee and is supporting legalisation, says he is open to discussions on including a cut for the Association, but that he does not feel this is necessary

“The horsemen want money from Internet gambling, daily fantasy sports and even the bingo halls,” Payne said. “I’m still trying to figure out how online gaming or fantasy sports have anything to do with being at the horse tracks.”

Mostoller responded by saying that his Association wants a cut of online slots action should remote gambling be legalised.

“All we are saying is we should get compensation should there be any harm that comes our way,” he said.

Taxable wagering at Pennsylvania tracks dropped 71 percent from 2001 to 2014, according to the state Department of Agriculture. A tax on parimutuel bets contributed $31.8 million to the racing fund in 2001 but only about $11 million last year.

Governor Wolf’s spokesman told reporters this week that the Fund has a $9 million deficit “year after year.”