State Subsidies for International Billionaire

Last year the state financed a $1 million purse (prize money) for a multi-billionaire whose horse won the Pennsylvania Derby. Seriously. The billionaire also happens to be the vice president and prime minister of the United Arab Emirates.

Purses awarded to wealthy out-of-state horse owners are not unusual. According to a 2015 Tribune-Review report, top owners living outside Pennsylvania won a majority of the prize money in harness and thoroughbred racing from 2013 through 2015.

The state raises the money for purses—approximately $250 million—by taxing slot machines. Some of the revenue is also used to fund health and pension benefits for horsemen and breeding operations.

The subsidies are supposed to create a thriving horse racing industry in the commonwealth. But a report from the Pennsylvania Gaming Control Board indicate this form of corporate welfare isn't working:

The racing industry in Pennsylvania continues to struggle attracting a new fan base as evidenced by a reduction in wagering on the racing product. $722 million was wagered on live races held in Pennsylvania in 2015 representing a decrease of 6% when compared to 2014.

As wagers have declined, so has total attendance, which has dropped by more than 22,000 people since 2011.

In addition to funding purses, the state encourages breeding by offering awards to Pennsylvania breeders who finish among the top 3 in state races. Last year, Pennsylvania-based breeders earned the fewest awards since 2011. Although, according to the Gaming Control Board report, more stringent residency requirements triggered the sharp decline during 2015.

Nevertheless, the horse racing industry’s struggles are cause for concern, but efforts to reverse the downward trends with state subsidies are neither fair nor effective.

It's difficult to justify raising taxes on working people when Pennsylvania simultaneously hands out millions to out-of-state wealthy horse owners, and hundreds of millions of dollars in other corporate welfare.