Is the Grass Greener? Investigating State Incentive Programs

By Caton Bredar

When lifelong horsemen Nancy and Harvey Vanier were married in 1960, state racing programs were barely in the discussion phase. The concept of millions of dollars allocated specifically to and for horses bred or raced in a particular state was at least a decade away. The closest thing to an Illinois-bred was Nancy herself.

A handful of Illinois champions, hundreds of winners and hundreds of thousands—if not a million purse dollars and breeder bonuses later, the Vaniers are virtually synonymous with the Illinois breeding and racing program. But with increasing complications in state oversight, increasing competition from states like Pennsylvania- with new or rapidly growing incentive programs and new found dollars from venues like casino wagering- the Vaniers and several others are wondering if the old adage no longer applies; “No place like home”.

     Finding specifics for state incentive programs is a little more complicated these days than clicking your heels together three times. Figuring out the ideal or best program, particularly for a trainer, is even tougher. With programs from Arizona and California extending across the country to Florida, New York and West Virginia … the choices are endless and extend not only from state to state, but in some cases, track to track.

     A quick internet search reveals at least a dozen web sites detailing specifics of breeding programs for Arizona, California, Florida, Indiana, Illinois, Louisiana, New York, Ohio, Pennsylvania and a host of others. Most of the websites are similar, focusing on the benefits of membership—everything from scholarships and educational programs, to discounts at gift shops, and free admission to the state’s racetracks. Most include at least an outline of rules and deadlines for registration of foals, stallions or broodmares. Some include news releases and political updates.   Many sites are outdated. No site that was discovered includes any mention of specific dollars to be given away.

     While there is no definitive history or record of the development of state incentive programs for Thoroughbred breeding and/or racing, the earliest programs appear to have come into existence in the early 1970’s, an offshoot of state farm or agricultural agencies.

     “I remember they were talking about it soon after we got married,” Nancy recalls. “The intent was to encourage people to raise horses that would help support agriculture and racing in Illinois.”

     Nancy’s father Dr. Louis Aiken had a farm in Illinois, so when the program was finally unveiled just a few years after her and trainer Harvey’s wedding, the decision to focus their efforts on the Land of Lincoln was a no-brainer.

     “We were racing at the time on the East Coast, and one of our main owners had died,” Nancy explains. “We pretty much had to start over. But I had been following the discussions and the program all along,” she continues. “Even though we weren’t racing there, and even though there weren’t any races for Illinois-breds at the time, I had been going through the Department of Agriculture and registering all our horses.”

     When the program finally got off the ground, the Vaniers were ready to be a part of it.   She remembers a misconception, though, that plagued the program in its earliest stages and continues, to at least some extent among state leaders and decision makers today.

     “They thought everyone would just breed to the horse next door, because it saved gasoline,” Vanier recalls. “I said; I’ll travel to California to breed to a stud if it means I can get a nice horse.”

     Similar to the incentive programs in most other states, the Illinois program was initially based around added-money or stakes events specifically for Illinois registered horses, along with daily restricted races “so Illinois horses could exceed” their usual earning potential, according to Vanier, and “we wanted to keep it closed to Illinois stallions.”

     Somewhere along the way, the program was opened up to include stallions outside Illinois, as is the case today in many, if not most, state programs. But the concept of a lucrative stakes program along with a restricted overnight schedule has existed to this day and is, in fact, the backbone of most state racing and breeding programs, for better or for worse.

     “The restricted races keep you alive,” Vanier says, although the current requirement of two restricted Illinois races a day is something many racing officials and some horsemen would argue- keeps at least one hand tied behind the back of the industry in terms of the fight for quality as well as diminishing gambling dollars. 

     While the core base of Illinois breeders and horses remains viable, the long-term vibrancy of the program is questionable.   In other states, such as Ohio where over-all purses have dropped to among the lowest in the nation, the core base of breeders’ isn’t even enough, long-term, to keep a program afloat.

     In Illinois, as is the case even in New York and California, state-restricted races generally prove less attractive to gamblers thus generating fewer dollars in handle. Vanier points to a combination of factors, including a reduced number of racing dates in Illinois along with an uninformed state government and a troubled economy as reasons for uncertainty.

     As budgets have tightened in Illinois and most states throughout the nation, and culture has shifted from farming and agriculture to industry and technology, the importance of Thoroughbred incentive programs has become increasingly difficult to maintain or justify.

     “I don’t know about the program needing tweaking, so much as the state needs tweaking,” Vanier concludes. The same could be said in New York, arguably one of the more successful state breeding programs in the U.S., but where the New York Breeders’ Association increasingly finds themselves in the position of defending their program against political assault.

     While the home page for the N.Y. Breeders’ Association website proclaims the group’s vision, to “create an environment which maximizes the opportunity for New York’s Thoroughbred breeders to produce horses competitive at the highest levels of racing,” the latest news, as of June 1, was much more combative.

     In a self-proclaimed “strongly worded” letter to Governor Paterson, the breeders’ voiced opposition to a proposal to cut OTB payments to outside groups by 20 percent. Chief among OTB’s “partners” are the breeders.

     “This proposed cut represents a $1.2 million annual loss to New York’s Thoroughbred breeding programs,” wrote New York Breeders’ President, Michael McMahon. “It would have devastating effects on over 400 mostly small, family-owned and operated farms, and ultimately damage the entire horse racing industry in New York State.”

            An official statement from McMahon in response to a New York Post article in May detailing OTB’s plans for liquidation echoed the same sentiments.

     “Mayor Bloomberg should stop threatening and start thinking about how the city’s OTB can reform its ways, improve efficiencies and become more profitable, without hurting horseracing and taking money out of New York’s thoroughbred breeders’ who are the backbone of our state’s horseracing industry.”

     The statements, and the situation itself in New York, underscores the role government and politics directly play in state horse racing programs, even programs occurring under the most ideal of circumstances. But if government is the puppet master controlling incentive programs, revenue from casino gaming may turn out to be the strings from which everything dangles. Maybe nowhere is that more evident than in the state of Pennsylvania.

     At the start of 2007, Pennsylvania horses and horsemen may have met their messiah, at least for the time being, in the form of one-armed bandits. Coins from the slot machines started clinking in to the tracks by July of that year. For the breeders, the subsequent impact--$5.2 million in awards, up over 80 percent from the previous year, was obvious.

    The subsequent impact in racing, according to longtime racing official Sal Sinatra, is also nothing short of remarkable.

     “People are calling from all over the place,” Philadelphia Park’s Racing Secretary since 1999 explains. “Guys from New York are bringing in P.A.-breds now. There are big changes. The former President of Panama was at the track the other day. The Eagles coaching staff is putting together a string of horses. It’s definitely different.”

     Which is also the best way to describe the program, a program of incentives manifesting itself differently at each Pennsylvania track. According to Sinatra, track officials and horsemen at each location have worked to come up with a plan for distributing the new-found money, with the system varying by location.

     A glance at any of the condition books tells the story. On any given day, for every race in the Philadelphia Park condition book, there’s a 40 percent bonus for registered Pennsylvania horses, including lower level claiming races.

     “A decent P.A.-bred who breaks his maiden (in open company) then puts together a couple seconds or thirds,” Sinatra says, “can earn close to $200,000. That’s big.”

      Maybe not quite as big, but equally important: Penn National’s condition book lists a 25 percent bonus for every race, along with more races restricted to state-breds. With a smaller population base to draw from, the size of the slot revenue for Penn National is generally lower than Philadelphia Park. The base of Pennsylvania-bred horses, though, is solid on location, and the condition book caters to it, with more restricted races for state-breds. Generally, Penn National offers at least one state-bred restricted race a day, in addition to the bonus.

     And then there’s the newest track, Presque Isle. As soon as the track opened last year, horsemen from throughout the Midwest started making the trek to the sport’s newest, synthetic track facility, with the added slot money part of the jackpot.

     “They can’t spend the money fast enough,” Sinatra says. In addition to a 50 percent bonus on every race, Presque Isle offers an average of two restricted Pennsylvania-bred races every weekend, and a $1,000 guaranteed bonus for every Pennsylvania-bred that just makes a start.

     “Basically, the track makes a proposal,” Sinatra offers as to the process by which the program is set, “and then everyone tries to fit their horses into a program.”

     In addition to the overnight opportunities offered at each track, the stakes program is strong, too, with well over $3 million given out this year through events like Pennsylvania’s Day at the Races and other Pennsylvania stakes, the majority of which are $75,000 events. It’s the most stakes money ever offered in Pennsylvania, but something Sinatra says he would like to see changed.

     “I still think a championship race should be at least a $250,000 race,” he says. “Then, if there’s a Hard Spun out there, he might use one of those races as prep for a Triple Crown race or a Breeders’ Cup race.

     Hard Spun, who played a strong supporting role in the 2007 Triple Crown races before winning the King’s Bishop at Saratoga, was one of three Pennsylvania-breds to reach millionaire status, the first time in history Pennsylvania-breds have reached such lofty standards. Sinatra talks of a state head to head challenge with New York’s breeding program one day, similar to the Sunshine Millions, an annual event designed by Frank Stronach and his Magna Entertainment pitting California-breds against Florida-breds for over one million dollars in purses.

     “I think Pennsylvania-breds have gotten fairly competitive on most levels with New York-breds,” Sinatra says, adding that discussions with P.J. Campo, the racing secretary for the New York Racing Association, are already underway. “I’d hope we could have something by 2010 or so and think it would be a nice little challenge.”

     The concept of single day, big money events is not necessarily universally endorsed. Vanier says that while her family has been the beneficiary of Illinois showcase days, she, for one, would rather see bigger purses daily, and that the purpose of an incentive program should be about encouraging people to breed in the state and race in the state—not just for one day, for every day.

     Still, she has her eye on states like Kentucky, which in 2006 instituted the Kentucky Breeders Incentive Fund, which paid out $15.6 million in incentives last year, to breeders of Kentucky maiden and allowance winners.

     Or Indiana, where slot machines were scheduled to roll out this summer.

     Or Pennsylvania, where as of June, a Philly Park conditioned claiming race carried a purse of $18,000.    For a Pennsylvania-bred winner of such a race, that translates to $9,600 plus the 40 percent bonus, or over $14,000 for winning a $5,000 claiming race.

     “These days, a P.A.-bred has to run above what he’s worth,” Sinatra says. “We’re averaging eight claims a day.”

     The changing economy has led Sinatra to make some changes in his condition book. “We’re trying to keep the small guy in the game,” he says, and added starter allowance races to his menu, to give owners and trainers of winning claimers the opportunity to at least run once or twice more before risking the loss of the horse in the claiming box.

     “The bottom line is, we’ve tried to get the bottom claiming horse to at least be able to earn $25,000,” Sinatra says. “The goal -- that a horse, if he can run a little, could pay for his keep.”

    The end result, according to Sinatra and others, is a trickle up effect.

    “My guys,” he says referring to his local core of owners and trainers, “… are solid guys. These guys are doing okay now, and it’s nice to see.”

     “In the Fall, our guys were at first getting their heads beaten in…it was Todd Pletcher shipping in and winning by ten, Kiaran McLaughlin coming in from New York, winning by ten. And while it was nice for me to see those horses and horsemen, it wasn’t great for our horsemen.”

     With some minor changes, Sinatra says local horsemen can still protect their horses, and now some of the better horses are finding local places to stay.

     “Some of my guys used to get third string horses from major outfits. Now that the money is there, those outfits are sending better horses.”

      For the moment, it seems, even from loyal supporters of other state programs, Pennsylvania is worth looking at.

     “Everybody’s looking at Pennsylvania now, and it’s just nice to see.”