Permission to post granted by journalist Melanie Kiser
Racing in Arizona Runs Off Your State Tax Dollars
Racing enthusiasts are not the only people gambling on Arizona’s pari-mutuel betting and live racing industries.
Since 1995, most horse and greyhound racetracks in the state have received significant financial support from the state of Arizona as part of legislation (pgs. 7-8) passed in 1994 to assist the racing industry in competing with the onslaught of Indian casinos.
“People don’t do pari-mutuel gambling as much as they used to,” said Dan Luciano, general manager of Phoenix Greyhound Park. “The population has gone towards casinos.”
Luciano said live racing and the pari-mutuel industry is “nothing like it used to be in the old days.”
The statute, senate bill 1373, provides for a hardship tax credit based on the percentage decrease in pari-mutuel wagering each year compared with the base year, which ranges from 1989-1994. Pari-mutuel wagering encompasses all wagering at horse or dog tracks and off-site betting locations.
Additionally, the bill lowered taxes for greyhound tracks and exempted simulcast handle from state taxation. Simulcast wagering made up 75 percent of total commercial racing handle in 2008.
Critics of the policy argue the live racing industry, particularly greyhounds, has been in decline for over 20 years now.
“The industry is dying and they are being artificially kept a live because they are hoping to get slot machine or video terminals,” said Joan Eidinger, editor of Greyhound Network News and former head of the Department of Racing’s greyhound racing task force. “They’re just holding on for that.
The Horse Racing Industry Gallops On
Arizona’s commercial horse tracks, Turf Paradise and Yavapai Downs, are faring much better. Neither received hardship tax credit in the last five years, but the state only collected $430,000 in revenue because it does not tax simulcast wagering, which makes up 83 percent of the tracks’ handle.
Turf Paradise in Phoenix brings in enough revenue to make the track ineligible for the hardship tax credit. The track has seen a 4 percent decline since 2004, however, and its net decrease since the early 1990s was enough to earn it a large tax cut in 2008. Instead of the $6.6 million it would have paid prior to the SB 1373, Turf Paradise paid less than $500,000.
Pari-mutuel handle at Yavapai Downs in Prescott Valley increased by a third since 2004, but its 2008 handle of $34.9 million was not enough for the state to tax it. If the state did require Yavapai Downs to pay the 2 percent on the first million wagered and 5 percent thereafter, Arizona would have collected $1.7 million in tax revenue.
In fact, both tracks earned enough in 2007 and 2008 to make them ineligible for a hardship tax credit. Turf Paradise is the only racetrack, horse or dog, in the state to pay any taxes on its pari-mutuel revenue.
State pari-mutuel tax revenue in 2008 was $430,000, less than one-fifth of one percent of the gross handle for the industry, including horse, greyhound and county fair racing.
Is Greyhound Racing At Its Finish Line?
Half of the US dog tracks operating in 1991 have ceased live racing or closed completely. As of January 2009, 31 tracks had been closed and 31 remained open.
In fiscal year 2008, the total pari-mutuel handle for commercial greyhound racing was $67.7 million, a 17 percent decrease from 2007.
If the greyhound tracks were not protected by statute and given hardship tax credits, the state would have received $3.73 million in tax revenue and saved an additional $1.8 million.
Many, including Eidinger, predict the greyhound racing industry will continue to lose support as PETA and other animal welfare groups speak out against it.
“Let me tell you this, the trend has been that it is declining,” said Luis Marquez, director of the Department of Racing. So it’s likely to continue to decline. Is it going to bottom out? Is it going to start increasing? It depends on what the public wants to see and what the industry offers.”
Marquez said that even if the revenue does continue to decline, the tracks would receive more state funds through the hardship tax credit, and the tracks would eventually have to make a “business decision.”
Luciano said he seems racing become a “niche sport,” almost like miniature golf.
“There used to be miniature golf places everywhere, and now there are very few,” he said.
“The inherent problem with racing, whether horses or greyhound, is you have a product where they run counterclockwise around a racetrack every 12 minutes or so, and that’s all we have to offer. And there’s just so much more to do now than there was back in 1987, when Phoenix Greyhound Park opened.”
The Only Way Racing Will Survive
Luciano said some states, like West Virginia and Iowa, are allowing slot machines and casino card games in the grandstands, and they generate around $400 million in taxes each year.
[Iowa Expanded Gambling to fill $130 million budget deficit, and its tax revenue from gambling increased by $1.3 billion.]
“That’s the only way racing is going to survive,” he said, but acknowledged the odds were not in the tracks’ favor. “Because of the make-up of the legislature, most of them just feels gaming isn’t something they want in their state.”
A 2002 ballot initiative called the “Fair Gaming Act” would have permitted non-tribal gaming operators a limited number of gaming devices and allotted 40 percent of gross revenues to the general fund for things like elementary school reading programs, college scholarships and prescription benefits for senior citizens.
The “Fair Gaming Act” failed in every county, however, and garnered only 20 percent of the vote statewide.
If the legislature did allow such gaming in racetracks or anywhere off of reservations, “it would void some of the contract with the Tribes,” who wouldn’t have to pay as much to the state in taxes and would be allowed unlimited machines, Luciano said.
Marquez said the local economy would be negatively impacted if all the racetracks closed.
“I think the legislature provided these hardship tax credits because they see the importance to the economy of trying to help them cope with the situation,” he said.
Joan Eidinger said the only way to keep the state from being heavily burdened by the track tax breaks would be for the legislature to repeal SB 1373, which will most likely not happen this session because of the budget crisis.
The budget crisis has hurt racing in another way, also—the Department of has had its budget by 20 percent, from $2.8 million to $2.3 million in the last two years, Marquez said.
Eidinger worries that the Department of Racing is approaching its own finish line.
“We’re potentially facing not having a Dept of Racing, and it’s really the only defense the animals have,” she said. “Can the racetracks function without a regulatory body? I don’t think they can.”
Tags: Arizona - Show Me the Money, Speak Out Against Greyhound Racing by NoMoreRacing
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