The Potential Economic Impact of Horse Racing in the State of Georgia

State lawmakers are currently contemplating a three budget scenario along with the governor’s office. Currently, the governor’s office budget is set at $47.8 million; the legislative budget is set at $41.8 million; and the fiscal budget for the state is much smaller at $21.2 million.

The judiciary, the legislature, and the governor’s office will all be developing a reduction attitude. Dismal revenue and increased spending numbers are constantly unfolding as the state gets deeper in debt.

The recession risk for Georgia has increased since 2007. The University of Georgia’s study placed Georgia in a risk situation the first six (6) moths of 2008. Georgia barely escaped the UGA Business School's prediction. Had it not been for the $1.5 billion in reserves, low unemployment, business-friendly tax structures and port growth, Georgia would not have pulled through the predicted tough times.

"More Trims Possible As State Revenues Dip," a fitting title for an article published in the Augusta Chronicle, September 13, 2008. State agencies were ordered to cut 6% from their budgets and to contemplate ever more. The state pulled out $600 million from the state reserves, while holding on to $428 million in homeowner tax relief grants, a move which is predicted to lead to higher property taxes. Even the state’s share of the fuel taxes have dipped from last year by 7%.

We could continue to paint a dismal picture of our state as it faces a poor economic future, which will impact schools, highways, waterways, infrastructure, legislative lawmaking, governmental functions, and the pockets of each citizen.

The Georgia Horse Racing committee offers the following economic impact projection for contemplation by our governing authority.

In today’s gaming industry, horse racing and casino gambling are becoming joint ventures for reasons of economics.

Revenues from gaming in Las Vegas, NV are $9.88 billion. Revenue from Indian Reservations (28 U.S. cities) is $18.5 billion.

The $18.5 billion was raised from 411 Native Americans casinos in 28 U. S. cities. That statistically means casino revenues are up 10%.

Mississippi Coastal Casinos Resorts: The state of Mississippi Gulf Coast as of June, 2006, in eleven months the state took in $473 million, an increase of $413.9million from the year, 2005. Mississippi has claimed gambling dominance over the state of Louisiana in the south.

Casinos have a definite impact upon a state’s economy; however, our main focus is horse racing and its impact upon the state of Georgia.

In the past, operating a racetrack was a risky business. Attendance suffered as the public better drifted from tracks to casinos. The Albany, N.Y. law school under a program coordinated by Attorney Bennett Leibman found that the equine industry is on the upswing. Race tracks are reinventing themselves as “racinos” offering slot machines and card rooms. Leibman recommends such a model for future ventures, relying largely on live race goers, however not exclusively.

Race tracks with the addition of casino gambling have seen an increase in revenues throughout the states. Jack Ketterer, administrator of the Iowa Racing and Gaming Commission, says race track revenues have grown about 12 percent overall. Two years prior to this increase in 2005, the legislators allowed table games at the race tracks, a decision which paid off.

The Delaware Park Race Track, which does not have a casino, earns approximately $2 million dollars per day.

The Louisiana State Racing Commission reported $399,855,236.00 in 2003; those figures have since increased.

A projection for racing only at the track does not take into consideration simul-casting throughout the state, a source of revenue equal to that of the statewide lottery. If one envisions the revenue derived from the lottery, one can see the potential revenues from simul-casting throughout each Georgia County (159 counties) and the tremendous daily revenues derived from such a venture.

Lottery sales in Georgia have increased from 2000 at 2.3 million to 2008 at 3.51 million, representing a steady yearly increase. The equine industry’s gaming results will no doubt be similar.

From the Delaware Park projection, as much as $480 million per year could be realized. However, if only ½ was realized, an increase to the states coffer of $280 million dollars would be a welcome upswing.

By example, I am enclosing a copy of the Economic Impact (summary version) commissioned in the state of Maine.

The Economic Impact upon the State of Georgia should be commissioned.

This study should consist of three components: the direct effects, the indirect effects and the induced effects.

The direct effects are the sales, income and employment created by equine related purchases in the state.

The indirect effects are the purchases by businesses up and down the supply chain.

The induced effects are the purchases made by employees of both the direct impact businesses and the indirect impact businesses.

Then there are the taxes generated and the land uses.

The Georgia Horse Racing Committee strongly urges legislative action regarding the funding of a study of the economic impact of horse racing upon the state of Georgia, with emphasis on both table gaming and non table gaming.

James A. Young, III
President, GA Horse Racing Committee

 

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