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Helping Kentucky Remain Competitive

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I. The Horse Industry is Important to Kentucky

II. The Kentucky Horse Industry is Under Siege

from Other States

III. Kentucky Can Remain Competitive

Importance of the Horse Industry to

KentuckyA leading cultural and economic contributor.• Total economic impact of $3.5 billion

− $758 million from showing horses• Direct economic impact of $2.3 billion • Approximately 320,200 horses• 96,000 jobs• 194,000 Kentuckians involved as horse owners, employees and volunteers

Source: American Horse Council, Deloitte Consulting LLP, 2005

It’s a statewide industry. Horses permeate the culture of Kentucky from the county fair to the Kentucky Derby and are raced from Prestonsburg to Paducah.

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Importance of the Horse Industry to

KentuckyThe Kentucky Thoroughbred is coveted nationally and internationally.

Kentucky is the world’s leading exporter of Thoroughbreds.

Buyers come to Kentucky from virtually every state and more than 48 countries.

They invest millions of dollars annually providing a huge stimulus for the state’s economy.

Kentucky-bred horses dominate North American racing, winning in 2008:• 77 of the 122 Grade 1 Stakes

(63 percent)• More than $436 million in

purse money

Source: Equibase

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Importance of the Horse Industry to Kentucky

The horse industry is a very green industry and leaves the land better than you found it.

Importance of the Horse Industry to

Kentucky

• Ours has been a “green” industry from its inception.

• Horse farmers are wonderful stewards of the land.

• The industry is well-regulated at a surprisingly low cost.

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Kentucky is the Horse Capital of the

World. What that means is…

Horse Jobs Capital of the World.

• Great diversity within the various levels of employment; economic impact runs wide and deep.

• Positions range from entry level to skilled professional.

• If you are at the top of your profession (equine attorney, accountant, surgeon, etc.) in Central Kentucky, you are at the pinnacle of your peers.

• Significant economic impact on rural (agriculture, raising horses) and urban (racing) areas of Kentucky.

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If you were Secretary of Economic

Development of another state, wouldn’t you be going after this

industry? They are. They are spending billions in purse money and breeder incentive

awardsto compete with us.

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States competitive with Kentucky are growing their purses and breeder incentive funds with alternative gaming (indicated in red), while Kentucky remains stagnant and in some aspects, in decline. Sources: Thoroughbred Racing Associations, Comparative Study, November 2008; Economic Impact of Slot Machines on Pennsylvania’s Pari-mutuel Industry 2006-2007; 2007 Minnesota Racing Commission Annual Report; The Economic Impact of the Iowa Race Horse Industry on the Iowa Economy, December 2008; New York State Racing & Wagering Board 2007 Annual Report

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States which permit commercial, Indian or racetrack casinos are indicated in red.

Source: American Gaming Association website

Growth of Casino Gambling

• The U.S. has experienced an explosion in casino gaming.

•  States which are considered very conservative, much like Kentucky (Indiana, North Carolina, etc.),

allow casino operations.

• Another major state, Texas, is considering a casino initiative.

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Growth of Racetrack Casinos

during this Century

Racetrack casinos continue to be the primary mode of expansion in the commercial casino industry.

State                 ApprovedNew York          2001 Maine                2004Oklahoma        2004Pennsylvania   2004Arkansas          2005Florida           2006Indiana            2007Maryland         2008

Source: 2008 American Gaming Association Survey of Casino Entertainment 

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Kentucky is at a Competitive DisadvantageKentucky purses have remained stagnant since

2001

16Source: Kentucky Horse Racing Commission Biennial Reports

Kentucky is at a Competitive Disadvantage

17Source: Thoroughbred Racing Associations

Landscape in 2000

• In 2000, only a few “red” racetracks—those which operated slot machines, such as Delaware Park, Mountaineer and Charles Town—existed.

• Purse money was generated in the traditional way—through handle.

• Kentucky could effectively compete in this environment because it was “horse vs. horse.”

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19Source: Thoroughbred Racing Associations, Comparative Study, November 2008

Kentucky is at a Competitive Disadvantage

Landscape in 2007/2013

• The “red” states—those which supplement purses through gaming operations—have taken

over.

• The only “blue” tracks to make the top 20 are Santa Anita, Hollywood (if they survive) and Churchill Downs. Keeneland has fallen off the

chart.

• Gaming has propelled Philadelphia Park, once irrelevant to the racing landscape, to the top of the list.

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Kentucky Faces an Unprecedented Threat

“We are in a fortunate position. We now have a solid foundation to move considerably forward and rival Kentucky in the breeding industry. We have the facilities here, we have the land here, and the right attitude is here.”

-- Mark McDermott, Executive Director of the Pennsylvania Horse Breeders Association, “Slots Solidify Pennsylvania Thoroughbred Industry,” Thoroughbred Times, February 2009

In 2006, before gaming, Pennsylvania paid $7.8 million in breeder incentives. In 2008, it paid $23 million.

Kentucky’s once prominent Standardbred industry was devastated by out-of-state competition. In 1986, 95 Standardbred stallions bred 2,270 mares. In 2004, 30 stallions bred 680 mares.

Source: USTA, KHRA

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What We Can Conclude

Of the 12 states closest to Kentucky that engage in horse racing, 11 offer some type of expanded gaming.

States include: Arkansas, Illinois, Indiana, West Virginia, Louisiana,

Florida, Maryland, Delaware, Pennsylvania, New Jersey and New York.

Gaming generates new state revenues while preserving existing jobs and creating new employment opportunities.

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Did You Know?Kentuckians spend more than $650 million at casinos in Indiana and Illinois, and an estimated $800 million at out of state casinos nationwide.

Not a change in behavior for Kentuckians.

Means for Kentucky to recapture those gaming dollars for the benefit of our state.

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Here Are Our Ideas• VLTs limited to eight Kentucky

racetracks where gaming already exists.

• Only one facility located in Lexington, jointly operated by Keeneland and the Red Mile.

• VLTs would be approved legislatively and operated through the Kentucky Lottery Corp.

• Bill would generate $700 million in new revenue; $235 million in new tax dollars for the state.

• Kentucky’s horse industry would be strengthened by increased purses,

breeder incentive funds and money for track improvements.

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Here Are Our IdeasKentucky’s proposed plan requires:

• No program cuts

• No involuntary tax increases

• No large government expenditures

• No geographic expansion of gaming; menu is simply expanded

Investment will be made by private sector; no government investment or risk.

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Kentucky Can Remain Competitive

Kentucky is on the verge of being overtaken by other states. They are out-spending us, they are out-building us, their purses are higher and they are creating new jobs for their citizens.

Other state governments recognize the wisdom of spending aggressively to take what we have.

Kentucky’s horse industry is worth fighting for. We’re asking you to help us fight back.

  

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