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Racinos reviving horse industry

Anticipation of $10 million a year from casino revenue taxes and an estimated $1 million a month from video lottery play has led to a rebound in race horse breeding in Ohio.

“When most of the public says horse racing, they’re thinking about multi-million dollar companies that own the racetracks. It’s much more than that,” Jerry Knappenberger, general manager of the Ohio Harness Horseman’s Association said.

Horse racing has a yearly financial impact of $450 million on the Ohio economy from wages, purchase of goods, services and taxes, said William Crawford, executive director of the Ohio State Racing Commission at an April senate presentation. The industry employs over 12,000 people from stable hands to veterinarians. It’s a pared down version of the enterprise that had a $731 million impact eight years ago, but Bob Schmitz, chairman of the state racing commission says it’s rebuilding.

Growth in standardbred breeding, comes after years of decline.

Once the top producer of standardbred horses in the nation, the Ohio industry had been declining since 2005 as other states approved video gaming at racetracks. Revenue from gaming supported breeding programs and raised purses in other states, while Ohio lost its place at the top. The decline led to a migration of quality Ohio horses, trainers and jockeys/drivers. Now, millions of dollars from taxes on gambling revenues and VLTs are making Ohio competitive again.

Ohio Sires Stake purses, harness races for Ohio-bred standardbred horses, totaled $1.92 million in 2012 and will reach about $2.9 million this year. In April, opening day purses at Thistledown jumped 65 percent compared to last year.

“We’re just seeing a glimmer of the future. It’s bright,” Schmitz said.

Standardbred horses born in 2012 could be among the starters in 2015 at the proposed Holloywood Slots at Dayton Raceway and the racino under development in Warren County by Miami Valley Gaming & Racing.

At Hagemeyer Farms in Clarksville east of Lebanon, owner Scott Hagemeyer has 136 standardbred horses. The most he ever had before was 85. He spends $5,000 a month on grain, $1,500 on hay and about $11,000 a year on sawdust for the breeding stalls, but feels the investment is worth it.

“Previously, we wondered what the future of the business would be,” he said. “I’m not only planning for today, I’m planning for the future.”

There were 1,650 Ohio standardbred mares bred to Ohio stallions in 2012, more than double the 2011 figure, according to the United States Trotting Association. Ohio ranked third in North America for standardbred mares bred last year, up from sixth in 2010. Knappenberger predicts more than 2,000 will be bred this year.

“Most of this is just anticipation, because there is only one harness track open as a racino,” Knappenberger said. “For every horse, there’s a big financial multiplier. You need more products, hey and tack, more veterinarians, trainers and drivers.”

The number of thoroughbred broodmares registered in Ohio also grew nearly 54 percent from 2011 to 2012, but the total is still too few, Schmitz said.

“I want to increase the number of quality thoroughbreds in the state. What we need is for thoroughbred people not to take their mares out of state to breed,” Schmitz said.

Larger purses may be incentive to make that happen. Racing purses in Ohio were based on the amount of pari-mutuel betting. Now, pari-mutuel betting is one of three components contributing to purses, Schmitz said.

Ohio’s gross casino revenue tax, money received by casino operators less winnings paid to patrons, is imposed on casino operators at the rate of 33 percent. The state racing commission gets 3 percent of that, or about $10 million a year now that all four casinos are open. Of that, $9.5 million will be used to increase purses at racetracks and to support horse breeding..

“This will grow horse racing overall in Ohio which is a positive result for agriculture,” Crawford said at the April presentation. “As breeding and purses increase, the number and quality of horses will also increase.”

The state also has paved the way for video lottery play at racetracks. According to Ohio law, a 9 to 11 percent cut of the net win at racetracks will be placed into an escrow account to enhance racing purses, to promote breeding programs and perks for horseman like health insurance and retirement benefits. The net win is the revenue remaining after payout of prizes.

From July to April, the net win at Scioto Downs and Thistledown, which opened April 19, totalled about $121 million, according to state data. At 9 percent, the cut twould be about $10 million.

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