Pennsylvania’s billion horse-racing industry, which was, in theory, to be saved by the casino industry launched in 2006, is in danger of a catastrophic shutdown, according to a report by the state’s auditor general.
In a State Racing Fund report issued last week, Auditor General Eugene DePasquale warned that horseracing in Pennsylvania has suffered from declining revenue and the diversion of its revenues to other state needs.
According to the report, the Department of Agriculture has been overbilling the State Racing Fund by $870,000 for the last three years to cover budget shortfalls, and has billed the fund nearly $5.2 million over four years for additional personnel costs that it could not document, including $177,000 to a state fund for a “Special Agriculture Advisor to the Governor,” including a full year’s salary of $101,264 between 2012 to 2013.
Audtiors found the adviser spent time on special projects assigned by the agriculture secretary that were unrelated to the horse-racing industry.
“The horse racing industry is one of Pennsylvania’s largest agricultural industries, but it is in trouble because funds intended to provide necessary oversight and revitalize the industry are being diverted to plug budget holes,” DePasquale said in a statement. “Balancing the Department of Agriculture’s overall budget with State Racing Fund monies is not an allowable use of the fund and represents an abuse of Agriculture’s authority.”
The State Racing Fund, which was created in 1981, is used to pay for the personnel and operating costs of the Horse and Harness Racing Commissions, Equine Laboratories, the PA Fair, and racing tax collection. The fund also collects revenue from wagering taxes, uncashed tickets, license fees, breakage, admission taxes and other miscellaneous sources.
“If the State Racing Fund goes bankrupt, the racing industry would shut down,” DePasquale said.
The Pennsylvania Equine Coalition lauded the report. “This report confirms what the Pennsylvania racing industry has been saying for a number of years: that money intended for the operation of the state’s racing commissions and for breeders incentives was improperly diverted for other purposes,” said Pete Peterson, spokesperson for the Pennsylvania Equine Coalition, in a statement. “We greatly appreciate the efforts of Auditor General DePasquale in taking a closer look at this issue. These diversions resulted in less money being available for oversight of the industry and shortfalls in the operating budget of the commissions.”
