The Economic Impact of the Massachusetts

Transcription

hristiansen
apital
dvisors LLC
250 West 57th Street, Suite 432
New York, New York 10107
Phone: 212.779.9797
Email: [email protected]
170 Sawyer Road
New Gloucester, ME 04260
Phone: 207.688.4500
Email: [email protected]
The Economic Impact
of the
Massachusetts Thoroughbred Equine Industry
Prepared by: Christiansen Capital Advisors, LLC
Prepared for: Sterling Suffolk Racecourse, LLC
Tuesday, October 22, 2013
Table of Contents
Executive Summary .................................................................................................................................................. i
Scope of Work ...................................................................................................................................................... i
1.
The Massachusetts Thoroughbred Equine Industry ......................................................................................... 1
2.
The Equine Industry and Quality of Life in the Commonwealth..................................................................... 4
3.
Purses ............................................................................................................................................................... 9
4.
The Massachusetts Thoroughbred Breeding Industry.................................................................................... 11
5.
Where Massachusetts-Bred Thoroughbreds Race ......................................................................................... 17
6.
The Massachusetts Pari-mutuel Racing Industry ........................................................................................... 21
7.
Sterling Suffolk Racecourse........................................................................................................................... 23
8.
The Economic Impact of Thoroughbred Racing on the Commonwealth ...................................................... 32
The IMPLAN Modeling System ........................................................................................................................ 33
Direct Impacts on the Local Economy ............................................................................................................... 34
Indirect and Induced Impacts on the Local Economy ........................................................................................ 35
Impact Estimates: Horse Owners and Breeders ................................................................................................. 35
Impact Estimates: Racetrack operations ............................................................................................................ 37
9.
The Impact of Purse Supplements in Massachusetts ..................................................................................... 41
Christiansen Capital Advisors, LLC .............................................................................................................. 53
Disclaimer ...................................................................................................................................................... 54
Appendix I: Scope of Work ................................................................................................................................... 55
Appendix II: Law Governing Purse Supplements in Massachusetts ..................................................................... 57
Appendix III: Purse Supplements in the United States .......................................................................................... 60
Appendix IV: U.S. and Selected State Handle 2000-2012 .................................................................................... 62
Appendix V : U.S. Thoroughbred Purses 2000-2012 ............................................................................................ 65
Appendix VI: Purse Supplements in Delaware...................................................................................................... 67
Appendix VII: Purse Supplements and Equine Breeding in New York ................................................................ 72
Appendix VIII : Purse Supplements and Equine Breeding in Pennsylvania ......................................................... 78
Bibliography .......................................................................................................................................................... 91
Table of Figures
Exhibit ES.1: Thoroughbred Racing Compared to other Massachusetts Activities ....................................................................................... iii
Exhibit ES.2: Summary of Findings .............................................................................................................................................................. iv
Exhibit 1.1: The Equine Industry Value Chain ............................................................................................................................................... 2
Exhibit 2.1: Pembury House Farm, Massachusetts ......................................................................................................................................... 5
Exhibit 2.2: Huckins Farm, Massachusetts ..................................................................................................................................................... 6
Exhibit 2.3: North Pembroke Horse Farm, Massachusetts.............................................................................................................................. 7
Exhibit 2.4: Map of Four Boston Metropolitan Area Horse Farms ................................................................................................................. 8
Exhibit 3.1: Suffolk Downs Purses Paid 2000-2012 ....................................................................................................................................... 9
Exhibit 4.1: Horse Farm Distribution in Massachusetts................................................................................................................................ 11
Exhibit 4.2: Horse Farm Distribution in the Boston Area ............................................................................................................................. 12
Exhibit 4.3: Website links ............................................................................................................................................................................. 13
Exhibit 4.4: Thoroughbred Breeding in Massachusetts (May 2013)............................................................................................................. 14
Exhibit 4.5: Massachusetts Thoroughbred Population .................................................................................................................................. 15
Exhibit 4.6: Massachusetts Registered Foal Crop (Massachusetts-Breds) 1991-2011 .................................................................................. 16
Exhibit 5.1: Massachusetts-Bred Starters and Starts: In-State/Out-of-State 1991-2010 ............................................................................... 17
Exhibit 5.2: Massachusetts-Bred In-State Starts and Total Starts ................................................................................................................. 18
Exhibit 5.3: Massachusetts-Bred In-State Starters and Total Starters 1991-2010 ......................................................................................... 19
Exhibit 5.4: Percentage of Massachusetts-Bred In-State Starters and Starts 1991-2010............................................................................... 20
Exhibit 6.1: Location Map of Boston Area Race Tracks .............................................................................................................................. 21
Exhibit 6.2: Current Status of Massachusetts Racetracks ............................................................................................................................. 22
Exhibit 7.1: Suffolk Downs Ownership History ........................................................................................................................................... 23
Exhibit 7.2: The Suffolk Downs Location in East Boston ............................................................................................................................ 24
Exhibit 7.3: Detailed Map of the Suffolk Downs Location in East Boston................................................................................................... 25
Exhibit 7.4: Suffolk Downs Handle 2000-2012 ............................................................................................................................................ 26
Exhibit 7.5: Suffolk Downs Handle Trend 2000-2012, $s in millions .......................................................................................................... 27
Exhibit 7.6: Suffolk Downs Operating Losses 2007-2011 ............................................................................................................................ 29
Exhibit 7.7: Suffolk Downs Handle Projection w/o Purse Supplements, 2013-2017.................................................................................... 30
Exhibit 7.8: Suffolk Downs Handle Projection Trend .................................................................................................................................. 31
Exhibit 8.1: Estimated Total Economic Impact of Thoroughbred Breeding ................................................................................................. 35
Exhibit 8.2 Estimated Direct Economic Impact Horses Racing at Suffolk Downs ....................................................................................... 36
Exhibit 8.3 Estimated Direct Economic Impact of Horses no Longer Racing or Breeding .......................................................................... 37
Exhibit 8.4: Estimated Total Economic Impact of Thoroughbred Ownership .............................................................................................. 37
Exhibit 8.5 Estimated Pari-mutuel and Other Revenues at Suffolk Downs .................................................................................................. 38
Exhibit 8.6: Estimated Total Economic Impacts of Thoroughbred Racing ................................................................................................... 38
Exhibit 8.7 Estimated Area Spending by Suffolk Downs Patrons ................................................................................................................ 39
Exhibit 8.8 Estimated Total Economic Impact of Area Spending by Suffolk Downs Patrons ...................................................................... 39
Exhibit 8.9 Total Economic Impact of Thoroughbred Racing, Ownership and Breeding on the Massachusetts Economy .......................... 40
Exhibit 8.10 Total Tax Impact of Thoroughbred Racing, Ownership and Breeding on the Massachusetts Economy .................................. 40
Exhibit 9.1: Massachusetts Race Horse Development Fund ......................................................................................................................... 42
Exhibit 9.2: Massachusetts Race Horse Development Fund Annual Distributions ($) ................................................................................. 42
Exhibit 9.3: Pro Forma Projection of Suffolk Downs Purses with Casino Supplements.............................................................................. 43
Exhibit 9.4: Suffolk Downs Handle Projection with Purse Supplements, 2013-2019................................................................................... 47
Exhibit 9.5: Suffolk Downs Handle Projection 2013-2019........................................................................................................................... 48
Exhibit 9.6: Estimated Economic Impacts of Thoroughbred Track Operations in 2019 ............................................................................... 49
Exhibit 9.7: Estimated Economic Impacts of Breeding and Horse Ownership in 2019 ................................................................................ 49
Exhibit 9.8 Total Economic Impact of Thoroughbred Equines on the Massachusetts Economy (2019) ...................................................... 50
Exhibit 9.9 Total Estimated Tax Impact of the Thoroughbred Industry on the Massachusetts Economy (2019) ......................................... 51
Exhibit III.1: Pari-mutuel and Casino Gaming Components of U.S. Thoroughbred Purses 1993-2009 ($ Millions) ................................... 60
Exhibit III.2: Pari-mutuel and Casino Gaming Components of U.S. Thoroughbred Purses 1993-2009 ....................................................... 61
Exhibit IV.1: U.S. Thoroughbred Handle 2000-2012 ................................................................................................................................... 62
Exhibit IV.2: U.S. Thoroughbred Handle 2000-2012 ($ Millions) ............................................................................................................... 63
Exhibit IV.3: U.S. and Selected States Total Pari-Mutuel Handle Year-Over-Year Growth Rates 2000-2012 ............................................ 64
Exhibit V.1: U.S. Thoroughbred Gross Purses 2000-2012 ........................................................................................................................... 65
Exhibit V.2: U.S. Thoroughbred Gross Purses 2000-2012 ........................................................................................................................... 66
Exhibit VI.1: Delaware Average Daily Live Thoroughbred Handle and Simulcast Delaware Park Export ................................................. 67
Exhibit VI.2: Delaware Average Daily Live Thoroughbred Handle and Simulcast Delaware Park Export ................................................. 68
Exhibit VI.3: Delaware Average Daily Live and Simulcast Thoroughbred Handle ..................................................................................... 69
Exhibit VI.4: Delaware Average Daily Total Thoroughbred Purse .............................................................................................................. 70
Exhibit VI.5: Delaware Average Daily Total Thoroughbred Purse .............................................................................................................. 71
Exhibit VII.1: New York Average Daily Thoroughbred Handle .................................................................................................................. 72
Exhibit VII.2: New York Average Daily Thoroughbred Handle .................................................................................................................. 73
Exhibit VII.3: New York Average Daily Thoroughbred Purses ................................................................................................................... 74
Exhibit VII.4: New York Average Daily Purse ............................................................................................................................................ 75
Exhibit VII.5: New York Mares Bred ........................................................................................................................................................... 76
Exhibit VII.6: Active New York State Thoroughbred Horse Farms 2000-2012 ........................................................................................... 76
Exhibit VII.7: Active New York State Farms 2000-2012 ............................................................................................................................. 77
Exhibit VIII.1: Pennsylvania Total In-State Pari-Mutuel Handle 2000-2011 ............................................................................................... 78
Exhibit VIII.2: Pennsylvania Total In-State Pari-Mutuel Handle Trends 2000-2011 ................................................................................... 79
Exhibit VIII.3: Pennsylvania Total Pari-Mutuel Handle on Pennsylvania Races 2006-2012 ....................................................................... 80
Exhibit VIII.4: Pennsylvania Total Pari-Mutuel Handle Trends 2000-2011................................................................................................. 81
Exhibit VIII.5: Pennsylvania Average Daily Total Purses Paid 2006 - 2012 ................................................................................................ 82
Exhibit VIII.6: Pennsylvania Average Daily Total Purses Paid 2006-2012 .................................................................................................. 83
Exhibit VIII.7: Pennsylvania Racing Overview 1991-2012.......................................................................................................................... 84
Exhibit VIII.8: The Pennsylvania Race Horse Development Fund Distributions 2006 -2012 ...................................................................... 85
Exhibit VIII.9: Fund Money Allocation into Purses ..................................................................................................................................... 86
Exhibit VIII.10: Purse Earned 2006-2012 .................................................................................................................................................... 87
Exhibit VIII.11: Backstretch Improvements 2006-2012 ............................................................................................................................... 88
Exhibit VIII.12 Pennsylvania Thoroughbred Foals. Mares Bred and Stallions registered 2000-12 .............................................................. 89
Exhibit VIII.12 Pennsylvania Thoroughbred Foals. Mares Bred and Stallions registered 2000-12 .............................................................. 90
Executive Summary
Scope of Work
Christiansen Capital Advisors, LLC ("CCA") has been asked to prepare a study of the economic impact of
the Massachusetts Thoroughbred equine industry. Specifically, CCA has been asked to estimate the
economic impacts associated with racing and wagering at Suffolk Downs and the Thoroughbred
agricultural economy in Massachusetts which Suffolk Downs supports. An itemized list of the tasks CCA
was asked to complete in conducting this study is presented in Appendix I.
To measure the economic impacts of the Massachusetts Thoroughbred equine industry on the
Commonwealth of Massachusetts, CCA constructed an input-output (I-O) model, using proprietary
modeling techniques it has developed over decades of professional work in assessing the economic
impacts associated with various industries and IMPLAN economic models and data. The direct,
indirect, and induced impacts of the Massachusetts Thoroughbred equine industry have been estimated
on the basis of reported expenditures by stakeholders (where available) and estimates for direct inputs
(where hard data was unavailable). The methodology used to arrive at our results is described in detail
in the body of this report.
Current Economics
The Massachusetts Thoroughbred equine industry comprises approximately 62 Thoroughbred breeding
farms, which breed Thoroughbred horses that race at Suffolk Downs (and to a limited extent at
racetracks in other States); an additional 71 farms that are affiliated with Thoroughbreds, which
collectively account for more than 6,650 acres of open space in the Commonwealth; investors, who
provide the capital for breeding farms and racetracks; one racetrack (Suffolk Downs, the last remaining
active Thoroughbred racetrack in New England) which conducts Thoroughbred racing; bettors, who
form the consumer base for pari-mutuel horse racing; owners, who purchase Thoroughbreds produced
by breeders for the purpose of racing them; trainers, who train Thoroughbreds for racing; jockeys;
veterinarians; various suppliers of equine goods and services (feed, farriers, and so forth); and the
Commonwealth of Massachusetts, which through its Gaming Commission licenses and regulates parimutuel racing and the individuals involved in the conduct of pari-mutuel racing and derives direct
revenue from it in the form of license fees and taxes levied on pari-mutuel betting. Indirectly, the
Commonwealth benefits from the contribution made by all of the components of its Thoroughbred
equine industry to its economy.
The current direct, indirect and induced employment generated by the Massachusetts Thoroughbred
equine industry totals 1,486 persons, with associated annual labor income totaling $61.6 million. Total
value added is $72.3 million. 1 Total annual output of the Massachusetts Thoroughbred equine industry
is $107.8 million. Adding the total taxes and fees ($8.45 million) paid by the various industries and
1
Total value added is defined by IMPLAN as the difference between an industry’s total output and the cost of its intermediate inputs. It
equals gross output (sales or receipts and other operating income, plus inventory change) minus intermediate inputs (consumption of
goods and services purchased from other industries or imported). Value added consists of compensation of employees, taxes on
production and imports less subsidies (formerly indirect business taxes and nontax payments), and gross operating surplus (formerly
“other value added”).
i
stakeholders that support Thoroughbred racing in Massachusetts, the net positive economic impact of
the Massachusetts Thoroughbred equine industry is $116.25 million.
Purses are the essential driver of the Thoroughbred race horse economy. They constitute revenue for
horsemen, which is the incentive to enter horses in races at Suffolk Downs. Bettors wager on races at
Suffolk Downs and on Suffolk Downs races at other locations in Massachusetts and at out-of-State
locations, generating revenue for Suffolk Downs, horse owners in Massachusetts, and Massachusetts’s
Thoroughbred breeding farms. Currently, purses awarded at Suffolk Downs are funded almost wholly
with revenue generated by pari-mutuel betting. As purses increase, the number of foals, yearlings, and
associated blood stock likewise increases. Ultimately, increased purses should attract new capital
investment in breeding farms, thereby preserving green space in the Commonwealth.
Projected Growth
An increasing number of States that license pari-mutuel horseracing as well as casino gaming at
racetracks supplement purses with revenue generated from casino gaming. According to Thoroughbred
Racing Associations (TRA), a trade association of Thoroughbred racetracks, 14 States supplemented
purses with revenue generated from casino gaming in 2009, the most recent year for which TRA
provides these data. 2
Massachusetts will soon become the 15th State to supplement Thoroughbred purses with gaming
revenue. For the purposes of the report we have assumed that Suffolk Downs is successful in efforts to
obtain the Region A gaming license. We estimate that these supplements will increase available
Thoroughbred purse awards by more than 180%, from $9.4 million to $26.9 million, the end result
being a larger breeding industry in the Commonwealth; more horsemen entering their horses in
Massachusetts races and training in the Commonwealth; and increased pari-mutuel revenues at Sterling
Suffolk Racecourse. We estimate that by 2019 direct, indirect and induced employment generated by
the Massachusetts Thoroughbred equine industry will grow to 3,631 persons, with associated annual
labor income totaling $93.5 million. Total value added will increase to $111.8 million. The estimated
total annual output of the Massachusetts Thoroughbred equine industry in 2019 will increase to $171
million. Adding the total taxes and fees ($12 million) paid by the various industries and stakeholders
that support Thoroughbred racing in Massachusetts, the net positive economic impact of the
Massachusetts Thoroughbred equine industry will increase to $183 million. In Exhibit ES.1 we
compare these results with published statistics regarding the annual economic impact of other
Massachusetts industries.
2
The 14 States that supplemented purses with revenue generated from casino gaming in 2009 are Arkansas, Delaware, Florida, Iowa,
Indiana, Louisiana, Maryland, Minnesota, New Jersey, New Mexico, New York, Oklahoma, Pennsylvania, and West Virginia.
Thoroughbred Racing Associations, Non-Pari-mutuel Revenues to US Thoroughbred Purses, 2009.
ii
Exhibit ES.1: Thoroughbred Racing Compared to Other Massachusetts Activities ($s in millions)
$180.0
$171.0
$160.0
$137.5
$140.0
$120.0
$107.8
$100.0
$80.0
$60.0
$46.0
$54.7
$40.0
$20.0
$0.0
Head of the Snowmobiling Thoroughbred
Charles Regatta
Racing
(Current)
Boston
Marathon
Thoroughbred
Racing (2019)
Sources: Boston Business Journal, Boston Athletic Association, Snowmobile Association of Massachusetts, and Christiansen Capital
Advisors, LLC.
In addition to the positive impacts described above, the purse supplements—both restricted and
unrestricted—stipulated in the Massachusetts Expanded Gaming Act are likely to have non-quantifiable
(in dollar terms) positive impacts on the Commonwealth, including maintaining existing farms,
preserving existing green space and devoting additional acreage to Thoroughbred breeding. The
Massachusetts Expanded Gaming Act provides that supplemented purses totaling an estimated $4.7
million will be allocated to purses restricted to Massachusetts-bred horses (i.e., purses only horses bred
in Massachusetts are eligible to win). Extrapolating this $4.7 million in restricted purses to current
ratios of horse farm acreage to horse farms (approximately 50 acres per farm), and all things being
equal, this $4.7 million in supplemented restricted purses could result in an increase of 3,325 acres in
green space devoted to breeding Thoroughbred horses in the Commonwealth, either by an expansion of
existing farms and/or the establishment of new breeding farms in Massachusetts.
An unknowable percentage of the total (i.e., unrestricted as well as restricted) supplemented purses
awarded at Suffolk Downs will be won by horses owned or bred outside Massachusetts. 3 If we assume
that half of the estimated total purse funds ($12.8 million) are won by Massachusetts-bred horses, this
improvement in the earnings prospects for Thoroughbred racehorses bred in the Commonwealth could
result in an additional 4,500 acres being devoted to Thoroughbred breeding in Massachusetts.
3
For this reason, increased purse awards in the Commonwealth could lead to an expansion of Thoroughbred breeding in nearby States
such as Maine, New Hampshire, and Vermont.
iii
In the aggregate, therefore, the implementation of casino gaming in the Commonwealth and the large
increase in purse funds that the Massachusetts Expanded Gaming Act ensures could lead to a doubling
of the green space provided by breeding Thoroughbred horses in the Commonwealth over the long
term.
Exhibit ES.2 presents a summary of our findings.
Exhibit ES.2: Summary of Findings
Total economic impact
Economic impact from breeding activities
State and local taxes
Purses
Jobs
Acres
$
$
$
$
Current
Values
116.3
22.9
8.5
9.4
1,486
6,650
$
$
$
$
Future
Values
183.0
51.8
12.0
26.9
3,631
14,475
%
Change
57.4%
126.5%
42.0%
186.2%
144.3%
117.7%
Source: Christiansen Capital Advisors, LLC.
iv
1.
The Massachusetts Thoroughbred Equine Industry
The Massachusetts Thoroughbred equine industry is a complex entity. Its principal components are
Thoroughbred breeding farms, which breed Thoroughbred horses that race at Suffolk Downs (and to a
limited extent at racetracks in other States); investors, who provide the capital for breeding farms and
racetracks; racetracks (currently, only Suffolk Downs), which conduct Thoroughbred racing and betting
4
on Thoroughbred horse races; bettors, who form the consumer base for pari-mutuel horse racing;
owners, who purchase Thoroughbreds produced by breeders for the purpose of racing them; trainers,
who train Thoroughbreds for racing; jockeys; veterinarians; various suppliers of equine goods and
services (feed, farriers, and so forth); and the Commonwealth of Massachusetts, which through its
Gaming Commission licenses and regulates pari-mutuel racing and the individuals involved in the
conduct of pari-mutuel racing and derives direct revenue from it in the form of license fees and taxes
levied on pari-mutuel betting. Indirectly, the Commonwealth benefits from the contribution made by
all of the components of its Thoroughbred equine industry to its economy.
The agri-business and pari-mutuel racing components of the Massachusetts Thoroughbred industry are
mutually dependent and connected by complex inter-relationships. Exhibit 1.1 presents a schematic
diagram of the inter-related pari-mutuel and agri-business components of the Thoroughbred equine
industry.
4
Massachusetts permits pari-mutuel betting only. Other jurisdictions permit fixed odds betting (bookmaking) and exchange wagering.
The United Kingdom, for example, licenses and regulates all three of these methods of betting on horse races.
PAGE 1
Exhibit 1.1: The Equine Industry Value Chain
Bettors
$
Pari-mutuel Racing
(Suffolk Downs)
Regulated by
Massachusetts
Gaming
Commission
$
Owners & Trainers
(Racehorse Trainers, Veterinarians)
$
$
Equine Agri-business
Breeders & Equine Services
( Feed, Veterinarian Care, etc. )
$
Capital Investment
Source: Christiansen Capital Advisors, LLC.
PAGE 2
While the pari-mutuel racing and equine breeding components of the Massachusetts Thoroughbred
equine industry are separate entities—bettors, for example, have no direct relationship with breeders or
professional contact with veterinarians and so forth—each is essential for the equine industry’s
continued operation. As the diagram in Exhibit 1.1 shows, bettors inject money into the Massachusetts
pari-mutuel economy, which flows through its Thoroughbred racetrack, Sterling Suffolk Racecourse
(Suffolk Downs); to owners in the form of purses, which are primarily funded from pari-mutuel
revenue; to jockeys and trainers; to persons who feed and care for Thoroughbreds; and, indirectly, to
Thoroughbred breeders, which are largely dependent on owners who purchase the output of
Massachusetts Thoroughbred breeding farms for the purpose of racing these horses at Suffolk Downs
which, in total, supports 1,486 jobs in the Commonwealth. Capital investment flows into the
Thoroughbred equine industry to establish and maintain breeding farms. Horses flow upward from
breeding farms to owners, trainers, and Suffolk Downs. The output of all of this complex economic
activity contributes to the gross domestic product of the Commonwealth.
PAGE 3
2.
The Equine Industry and Quality of Life in the Commonwealth
Equine farms preserve green space in an increasingly urban- and suburbanized Commonwealth
landscape. Equine farms are also agri-tourist attractions. Suffolk Downs is an important regional
provider of racing and related kinds of entertainment. Although not quantifiable benefits within the
scope of this study, the equine industry makes manifold contributions to the quality of life in the
Commonwealth.
Exhibits 2.1 – 2.3 present photographs of three equine farms located in eastern Massachusetts
(Pembury House Farm, 5 Huckins Farm, and North Pembroke Horse Farm) together with photographs
of nearby landscapes. The green space of these equine farms contrasts sharply with urban/suburban
landscapes in which these farms are situated. Exhibit 2.4 presents a map showing the locations of these
three farms in relation to the City of Boston.
5
Pembury House Farm is currently listed for sale as a residence, an indication of the deteriorating economic environment for equine
farming that threatens horse farms in Massachusetts.
PAGE 4
Exhibit 2.1: Pembury House Farm, Massachusetts
Address: 488 Boston Road, Sutton, Massachusetts 01590
Source: http://www.pemburyhousefarm.com/ ;
https://www.google.com/search?newwindow=1&hl=en&biw=1600&bih=756&tbm=isch&sa=1&q=Pembury+MA&oq=Pembury+MA&g
s_l=img.3..0i24l8.2456548.2457758.0.2458648.7.7.0.0.0.1.154.702.3j4.7.0....0...1c.1.24.img..3.4.502.cnlkIePxPSA
PAGE 5
Exhibit 2.2: Huckins Farm, Massachusetts
Address: 49 Dudley Road, Bedford, Massachusetts 01730
Source: http://www.huckinsfarm.com/;
https://www.google.com/search?newwindow=1&hl=en&biw=1600&bih=756&tbm=isch&sa=1&q=Bedford+MA&oq=Bedford+MA&gs
_l=img.3..0l10.110157.111617.0.111837.7.7.0.0.0.0.109.643.6j1.7.0....0...1c.1.24.img..2.5.470.1tNB6zZKtJA
PAGE 6
Exhibit 2.3: North Pembroke Horse Farm, Massachusetts
Address: North Pembroke, Massachusetts
Source: http://www.city-data.com/picfilesc/picc9491.php;
https://www.google.com/search?newwindow=1&hl=en&biw=1600&bih=756&tbm=isch&sa=1&q=Pembroke+MA&oq=Pembroke+MA
&gs_l=img.3..0l10.129885.130354.0.130508.4.4.0.0.0.0.98.367.4.4.0....0...1c.1.24.img..2.2.192.G8JaTHobMP4
PAGE 7
Exhibit 2.4 presents a map showing the locations of four horse farms in or near the Boston metropolitan
area. Horse farms are located in the Town of Bedford, North Pembroke, and Sutton (see also Exhibit
4.2).
Exhibit 2.4: Map of Four Boston Metropolitan Area Horse Farms
Source: MapPoint; http://www.city-data.com/picfilesc/picc9491.php; http://www.huckinsfarm.com/; http://www.pemburyhousefarm.com/
In urbanizing areas like the northeastern seaboard of the United States, equine farms function like
parkland: they are the lungs of these congested landscapes. Especially in the urbanized Eastern United
States, States 6 with significant investment in equine breeding have found that a contraction of a State’s
pari-mutuel racing industry threatens the continuation of equine farming and the preservation of the
green space equine farms provide.
6
There is an extensive literature concerning the economic impact of the equine industry. See for example Karyn Malinowski, Ph.D. and
Ryan Avenatti, M.S., “Impact of Slot Machines/Video Lottery Terminals (VLTs) on the Economy, Horse Racing and Breeding Industry,
Agriculture and Open Space in States/Provinces where they Exist: Why is this Important for New Jersey?”, Rutgers Equine Science
Center, 2009. Table 14: 2007 NJ Horse Farms Under Farmland Preservation, p. 30; The Innovation Group, “New York State Equine
Industry Economic Impact Study”, 2012; Tripp Umbach, “Economic Impact Act 71 on the Pennsylvania Equine Industry, Past, Current
and Potential Impact”, prepared for Pennsylvania Equine Coalition, September 17, 2009; Amy Godfrey, Tess Meinert, Tom S. Witt, “The
Economic Impact of the Charles Town Thoroughbred Horse Racing Industry on the Jefferson County and West Virginia Economies,
2010”, Bureau of Business and Economic Research, College of Business and Economics, West Virginia University, November 2011; Jay
M. Lillywhite and Mark Wise, “Economic Impacts of Racehorse Ownership, Breeding, and Training on New Mexico’s Economy”,
Agricultural Experiment Station, College of Agricultural, Consumer and Environmental Sciences, New Mexico State University,
Research Report 765; the annual Racetrack/Casino Benchmark Report issued by Pennsylvania Gaming Control Board; D'Arcy Egan,
“Ohio horse-breeding farms enjoying boom as racinos open”, The Plain Dealer, March 30, 2013.
PAGE 8
3.
Purses
Purses, which in Massachusetts are currently funded almost wholly from revenue generated from parimutuel betting, are a key driver of the Massachusetts equine Thoroughbred economy.
Exhibit 3.1 presents purses paid at Suffolk Downs for the years 2000 through 2012, in current or
nominal dollars. Purses paid at Suffolk Downs increased from approximately $12 million in the year
2000 to a series high of nearly $16 million in 2003 and then declined, almost steadily, to a series low of
$8.7 million in 2010 before recovering slightly to $9.3 million in 2012.
Exhibit 3.1: Suffolk Downs Purses Paid 2000-2012
$18,000,000.00
$16,000,000.00
$14,000,000.00
$12,000,000.00
$10,000,000.00
$8,000,000.00
$6,000,000.00
$4,000,000.00
$2,000,000.00
$0.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Purses Paid
Source: Suffolk Downs, Massachusetts Racing Commission, The Jockey Club
The decline in purses paid at Suffolk Downs has grave implications for the Commonwealth’s
Thoroughbred equine industry. Smaller purses attract poorer quality race horses, meaning the quality
of racing deteriorates. Bettors, like fans of other sports, are acutely sensitive to the quality of racing,
and if this deteriorates pari-mutuel handle (the amount wagered) likewise declines. In a vicious circle,
declining handle further reduces purses paid (assuming purses are funded from pari-mutuel revenue, as
is the case in Massachusetts today), which further lowers the quality of racing and further depresses
handle and so forth. Most seriously, from the Commonwealth’s perspective, decreasing purses reduce
the earnings prospects of Massachusetts-bred Thoroughbreds that race at Suffolk Downs. This in turn
depresses the value of Massachusetts equine breeding farms, discourages investment in Thoroughbred
breeding, and ultimately endangers the continuation of Thoroughbred breeding in the Commonwealth
and the green space breeding farms contribute to the quality of life in Massachusetts.
PAGE 9
Conversely, if purses increase this cycle is reversed. Larger purses attract higher quality race horses.
Higher quality racing stimulates increased betting. Larger purses improve the earnings prospects of
Massachusetts-bred Thoroughbreds that race at Suffolk Downs. The aggregate output of the
Massachusetts equine industry rises, and an expanding equine economy would preserve the green space
breeding farms provide. Ultimately, larger purses would stimulate new capital investment in breeding
farms and, if sufficiently robust, new or refurbished racetracks. (The relationship of purses to other
components of the Thoroughbred industry is discussed in more detail in Section 9.)
While there may seem to be no obvious connection between the number of horseplayers at Suffolk
Downs and the green space acreage of equine farms in the Commonwealth, the inter-dependence of the
components that together comprise the Massachusetts Thoroughbred equine industry make this
connection a material one. Weaken or remove any one of the Massachusetts Thoroughbred equine
industry components and the industry’s other components would be unable to function. Without
Massachusetts breeders Suffolk Downs would be unable to fill its racing cards; without bettors the
economic input to the industry’s value chain would cease; without Suffolk Downs as a marketplace in
which the foals produced by Massachusetts breeding farms can compete for purses the
Commonwealth’s Thoroughbred breeding industry would undergo severe contraction.
PAGE 10
4.
The Massachusetts Thoroughbred Breeding Industry
Although not usually thought of as an equine industry State, Massachusetts has an extensive equine agribusiness economy. In 2013 there were more than 5,000 horse-related businesses in Massachusetts. Of
these horse-related businesses, 62 Massachusetts farms were directly involved in Thoroughbred breeding.
An additional 71 Massachusetts farms (“affiliated farms”) were engaged in Thoroughbred-related
operations: renting stables (temporarily), providing veterinary services, farriers (horse shoes and related
blacksmithing), trainer/handler facilities, "rescue" farms that take Thoroughbreds which do not meet
criteria for competitive racing. 7
Exhibit 4.1 presents a map of the Commonwealth of Massachusetts depicting the location of the
Commonwealth’s horse farms. As the map in Exhibit 4.1 shows, horse farms are concentrated in the
urbanized eastern half of the Commonwealth.
Exhibit 4.1: Horse Farm Distribution in Massachusetts
Note: Pinpoints indicate horse farms in the Commonwealth of Massachusetts. Massachusetts Equine Study, Dr. Lorri Krebs, Salem State
University, 2013, lists 62 horse farms. We were unable to determine the address of four of these 62 farms: Crystal Bell Farm, Marissa's
Bit o' Luck Stable, The Stables at Greenfield Farm, and Lantern Lane Farm, which do not appear to be in Massachusetts.
Source: MapPoint; Massachusetts Equine Study, Dr. Lorri Krebs, Salem State University, 2013.
7
The formal "lines of business" in U.S. Census that relate to equine business are: "other animal food manufacturing";" horses and other
equines"; "animal specialty services"; "repair services"; "amusement and recreation"; and "racing, including track operation". Any
farm/service/business that deals with Thoroughbreds is required to list “Thoroughbreds” separately in its line(s) of business. Any
business that does not meet these criteria or which does not wish to be counted as involved in the equine industry indicates via a
disclaimer under the U.S. Census North American Industry Classification System (NAICS): "not including Thoroughbreds". In preparing
its report Salem State manually removed all of such farms or service businesses from the list of over 5000 horse-related businesses in
Massachusetts.
PAGE 11
Exhibit 4.2 presents a map depicting the locations of horse farms in eastern Massachusetts, in rough
proximity to the Boston metropolitan area (see also Exhibit 2.4).
Exhibit 4.2: Horse Farm Distribution in the Boston Area
Note: Pinpoints indicate horse farms in the Commonwealth of Massachusetts. Massachusetts Equine Study, Dr. Lorri Krebs, Salem State
University, 2013, lists 62 horse farms. We were unable to determine the address of five of these 62 farms: Crystal Bell Farm, Marissa's
Bit o' Luck Stable, The Stables at Greenfield Farm, Lantern Lane Farm and Lands End Farm, which do not appear to be in Massachusetts.
Source: MapPoint; Massachusetts Equine Study, Dr. Lorri Krebs, Salem State University, 2013.
Exhibit 4.3 presents links to the Websites of those Massachusetts horse farms we were able to identify
using an Internet browser.
PAGE 12
Exhibit 4.3: Website links
www.equinenow.com/riding/dunstable-massachusetts.htm
www.bellewoodstables.com/contact.asp
www.briarhillfarmthoroughbreds.com/index.html
www.massbreds.com/farms.htm
www.century-oak-equine-training.com/
www.centurymillstables.com/
www.wickedlocal.com/mansfield/news/x1295922742#axzz2Vq332cOr
www.equinenow.com/riding/north+andover-massachusetts.htm
www.crowleyshorses.com/
customchromefarm.webs.com/
www.edingerfarm.com/Location---Directions.html
amygurney.net/
www.gastonfarm.zoomshare.com/0.html
www.greatoakequestriancenter.com/index.html
greenfield-farm.com/The_Stables_at_Greenfield_Farm/Welcome.html
www.hightailacres.com/HTA%20-%20Home.htm
www.google.com/search?q=Indian+Rock+Stables&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a
www.lanternlanefarm.com/directions.htm
www.landsendfarm.org/
www.equinenow.com/farm/ledgebrook_farm.htm
littlebrookfarm.com/
www.maplegrove1horsefarm.com/
www.maplewoodfarm.com/
www.nestallions.com/
www.manta.com/c/mmlp934/nine-maple-farm-inc
www.orchardhillequestriancenter.com/
pinenookfarm.com/
www.merchantcircle.com/business/Prime.Equine.Thoroughbred.Management.Services.978-257-0121
www.merchantcircle.com/business/Prime.Equine.Thoroughbred.Management.Services.978-257-0121w.satuckethillstable.com/
shepleyhillfarminc.net/directions.htm
www.sffarm.com/contact/
summerhillfarmri.com/home
www.sbn.com/Massachusetts/Harvard/Listing/WHITNEY-LANE-FARMS-LLC/_LOI7E
www.equinenow.com/fieldhuntermassachusettsclinics.htm
www.winthropfarm.com/
Source: Salem State University, Christiansen Capital Advisors
Exhibit 4.4 presents summary statistics for the agri-business component of Massachusetts’s
Thoroughbred equine industry. The data presented in Exhibit 4.4 do not include horses or other equine
economic activity at Suffolk Downs, which is reviewed in Section 5.
PAGE 13
Exhibit 4.4: Thoroughbred Breeding in Massachusetts (May 2013)
Value
Number of Thoroughbred Breeding Farms
Number of Farms Affiliated with Thoroughbreds
Revenue Reported by Farms
Acreage of Farms
Square Footage of Farms
Direct Employees of Farms
62
71
$15,086,483
6,650 acres
330,441
356
Note:
The total number of direct and indirect Massachusetts jobs supported by Thoroughbred breeding in Massachusetts
as of May 2013 was 1,486 jobs.
The annual contribution of each Thoroughbred racehorse at a Massachusetts racetrack to the Massachusetts
economy as of May 2013 is estimated at $35,000. Salem State University, 2013 Massachusetts Equine Study.
Retired racehorses that board at Massachusetts farms contribute to the Massachusetts economy for the duration
of their lives (typically 20 years). Salem State University, 2013 Massachusetts.
Industries supported by Thoroughbreds include: hay, feed, veterinarians, farriers, trainers, handlers, farm labor,
farm machinery and associated maintenance.
Source: Salem State University, 2013 Massachusetts Equine Study
Exhibit 4.5 presents summary statistics for the Massachusetts Thoroughbred horse population. A 2005
survey of the United State horse industry prepared for the American Horse Council by Deloitte
Consulting LLP determined that there were 37,000 recreational and commercial horses (of all breeds)
in Massachusetts. 8
In 2013 there were approximately 937 racing related resident Thoroughbred horses in Massachusetts,
this figure includes Massachusetts resident horses only and not the approximately 650 nonresident
horses that are in the State for the 6 months that Suffolk Downs in running; in other words, for half the
year there are 1,587 Thoroughbreds in the State during the racing season and 937 year round.
In 2011, 32 Thoroughbred foals were bred at Massachusetts farms. According to The Jockey Club, in
2012, there were 46 registered Thoroughbred mares bred and nine registered active Thoroughbred
stallions in the Commonwealth.
8
Deloitte Consulting LLP, 2005 Economic Impact Analysis of the U.S. Horse Industry, prepared for American Horse Council, June 28,
2005. Table 5.
PAGE 14
Exhibit 4.5: Massachusetts Thoroughbred Population
Value
Number of Foals 2011
Number of Mares Bred 2012
Number of Active Stallions 2012
Gross Sales of 2-Year-Olds 2006*
32
46
9
$14,000
* Gross sales activities of 2-year-olds from 2000 to 2011 fluctuate greatly. Only the years 2000,
2005, 2006 and 2008 show measureable sales, with no more than four horses sold in each of
these years. The highest annual gross sales occurred in 2000 with a total value of $32,500.
Note:
The number of foals, mares and stallions in this exhibit include only the 24 farms that are
registered with the Commonwealth and participate in the Massachusetts-bred program. There are
38 additional farms involved in breeding and/or other Thoroughbred services that are registered
with various other agencies.
Source: Salem State University, 2013 Massachusetts Equine Study; The Jockey Club, The 2013 Massachusetts Fact Book, Deloitte
Consulting LLP
Exhibit 4.6 presents the number of Massachusetts foals (Massachusetts-bred Thoroughbreds) each year
for the years 1991 through 2011. This statistic is a measure of the output of the Thoroughbred breeding
component of Massachusetts equine agri-business. As Exhibit 4.6 shows, Massachusetts Thoroughbred
foal production remained at or above 120 a year between 1993 and 1996 and then declined, nearly
steadily, to a series low of 25 registered Thoroughbred foals in 2006. Since 2006 foal production has
recovered slightly, to 32 foals in 2011, the most recent year for which these data are available.
PAGE 15
Exhibit 4.6: Massachusetts Registered Foal Crop (Massachusetts-Breds) 1991-2011
140
120
100
80
60
40
20
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
0
Number of Foals
Source: 2013 The Jockey Club Fact Book Massachusetts
PAGE 16
5.
Where Massachusetts-Bred Thoroughbreds Race
Where Massachusetts-bred Thoroughbreds compete is a critical measure of the dependence of
Massachusetts Thoroughbred breeders on Massachusetts Thoroughbred racetracks (currently, only
Suffolk Downs).
Exhibit 5.1 presents total starters, in-State starters, percent of in-State starters to total starters, total
starts, in-State starts, and percent of in-State starts to total starts for Massachusetts-bred Thoroughbreds
that raced during the years 1991 through 2010 in table format.
Exhibit 5.1: Massachusetts-Bred Starters and Starts: In-State/Out-of-State 1991-2010
Foaling Total
Year
Starters
1991
48
1992
64
76
1993
1994
86
1995
83
1996
86
71
1997
1998
71
1999
49
2000
44
40
2001
2002
58
2003
52
2004
37
2005
34
2006
18
2007
11
2008
26
2009
28
2010
8
In-State
Starters
44
58
70
80
78
81
67
68
42
44
39
56
47
35
31
16
11
24
26
7
Pct. of InState
Starters
91.7
90.6
92.1
93
94
94.2
94.4
95.8
85.7
100
97.5
96.6
90.4
94.6
91.2
88.9
100
92.3
92.9
87.5
Total
Starts
1,003
1,597
2,074
1,977
1,894
1,933
1,572
1,823
957
838
904
833
937
814
584
319
155
259
160
10
In-State
Starts
673
1,045
1,399
1,387
1,381
1,414
1,162
1,331
685
591
676
702
699
643
491
231
147
234
136
9
Pct. of InState
Starts
67.1
65.4
67.5
70.2
72.9
73.2
73.9
73
71.6
70.5
74.8
84.3
74.6
79
84.1
72.4
94.8
90.3
85
90
Note: In-State starters include any Thoroughbred that made at least one start in its native State.
Source: The Jockey Club, Massachusetts Jockey Club Fact Book 2013.
Exhibit 5.2 presents Massachusetts-bred in-State starts and total starts for the years 1991 through 2010
in graph format. The total number of Massachusetts-bred starts (that is, a Massachusetts-bred
PAGE 17
Thoroughbred race start) rose from 673 in 1991 to a series high of 1,414 in 1996 and subsequently
declined, reaching a series low of nine in 2010.
Exhibit 5.2: Massachusetts-Bred In-State Starts and Total Starts
2,500
2,000
1,500
1,000
500
0
Total Starts
In-State Starts
Exhibit 5.3 presents Massachusetts-bred Thoroughbred total starters (i.e., a Massachusetts-bred
Thoroughbred that started a race) and in-State starters (i.e., a Massachusetts-bred Thoroughbred that
started a race in Massachusetts) for the years 1991 through 2010 in graph format. In-State starters
accounted for almost all race starts by Massachusetts-bred Thoroughbreds throughout this period.
PAGE 18
Exhibit 5.3: Massachusetts-Bred In-State Starters and Total Starters 1991-2010
100
90
80
70
60
50
40
30
20
10
0
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Total Starters
In-State Starters
Note: In-State starters include any Thoroughbred that made at least one start in its native state.
Source: Massachusetts Jockey Club Fact Book 2013, The Jockey Club.
Exhibit 5.4 presents the percentages of Massachusetts-bred in-State starts (i.e., a race start) to total
starts and in-State starters (i.e., a Thoroughbred starting a race) to total starters in graph format. The
percent of in-State starters to total starters is a measure of the dependence of Massachusetts breeders on
Massachusetts Thoroughbred racetracks (currently, only Suffolk Downs). The percent of in-State
starters to total starters ranges from a series low of 85.7% in 1999 to a series high of 100% in 2000 and
2007. In other words, nearly all Massachusetts-bred Thoroughbreds that raced between 1991 and 2010
raced in Massachusetts. Only a handful of Massachusetts-bred Thoroughbreds raced in other States or
countries. Exhibit 5.4 illustrates an important fact: Massachusetts Thoroughbred breeders are almost
wholly dependent on Suffolk Downs for opportunities to sell racehorses.
PAGE 19
Exhibit 5.4: Percentage of Massachusetts-Bred In-State Starters and Starts 1991-2010
120
100
80
60
40
20
0
19911992199319941995199619971998199920002001200220032004200520062007200820092010
Pct. of In-State Starters
Pct. of In-State Starts
PAGE 20
6.
The Massachusetts Pari-mutuel Racing Industry
Exhibit 6.1 presents a map showing the locations of currently or formerly operating Boston metropolitan
area racetracks. Suffolk Downs, the Commonwealth’s only currently operating Thoroughbred racetrack,
is located in East Boston.
Exhibit 6.1: Location Map of Boston Area Race Tracks
Note: Wonderland Greyhound Park is currently closed. The map shows its former location.
Source: MapPoint; Google Map; www.raynhampark.net/, www.suffolkdowns.com/
Exhibit 6.2 presents the status (i.e., currently operating or closed) of Massachusetts racetracks.
Currently, only two racetracks conduct racing in Massachusetts: Sterling Suffolk Race Course
(Thoroughbred), in East Boston, and Plainridge Racecourse (Standardbred or harness racing), in
Plainville.
Rockingham Park, although located in New Hampshire, was historically a regional Thoroughbred
racetrack. Rockingham Park opened in 1906, making this facility the eighth oldest Thoroughbred track
in the United States. It last conducted a live Thoroughbred meet in 2002. From 2003 to 2009
Rockingham Park conducted Standardbred (harness) racing. Effective July 1, 2009, the New
Hampshire legislature no longer required racetracks to offer live racing of any breed (horse or dog) as a
requirement for the conduct of simulcast racing. At the same time, funding for the regulation of live
racing was eliminated from the New Hampshire State budget. As a consequence of these actions,
PAGE 21
Rockingham discontinued all live racing following the completion of its 2009 season. Suffolk Downs
is thus the sole surviving racetrack conducting live Thoroughbred racing in New England.
Exhibit 6.2: Current Status of Massachusetts Racetracks
Name
Raynham-Taunton Greyhound Park
Wonderland Greyhound Park
Massaoit Greyhound Association
Plainridge Racecourse
Suffolk Downs
Current Status
Simulcast only
Closed
Closed
Active
Active
Address
1958 Broadway, Raynham, MA 02767
190 VFW Parkway, Revere, MA 02151
NA
301 Washington Street, Plainville, MA 02762
525 McClellan Highway, East Boston, MA 02128
Source: Website links as bellow:
www.prcharness.com/
www.raynhampark.net/
www.suffolkdowns.com/
PAGE 22
7.
Sterling Suffolk Racecourse
Suffolk Downs opened in East Boston in 1935 as Suffolk Racecourse, following the legalization of
pari-mutuel wagering and the creation of a State racing commission by the Commonwealth of
Massachusetts in 1934.
The racetrack has conducted Thoroughbred racing each year since 1935 except for the years 19901991, when the property was closed until the current ownership completely renovated the facility and
reopened the track in 1992. 9 Pari-mutuel Thoroughbred racing continued uninterrupted at Suffolk
Downs during World War II. In the post-war period the racetrack’s offerings were expanded to include
non-gambling entertainment, the August 18, 1966 concert by the Beatles, which attracted more than
25,000 fans, being an example. Following the completion of extensive renovations, Suffolk Downs reopened as a pari-mutuel racing facility in 1992. With the return of the Massachusetts Handicap in 1995
the racetrack continued its long tradition as a popular Boston sports and entertainment venue, hosting
the world-renowned Cirque du Soleil in October, 2006 and a large charitable event, Walk Now for
Autism, in October, 2009. 10
In 2008, Suffolk Downs became the first track in the United States to initiate a zero-tolerance policy on
selling horses from the facility for slaughter, barring participants in such transactions from the facility
for life. Suffolk Downs has a longstanding commitment to conducting high quality Thoroughbred
racing and is known within the Thoroughbred industry for hosting overnight handicaps and stakes
events. 11
Suffolk Downs has undergone several changes in ownership since it opened in 1935. Exhibit 7.1
summarizes the property’s ownership history.
Exhibit 7.1: Suffolk Downs Ownership History
Period
Ownership
th
1935 – June 20 , 1968
Equity Racing Association
June 20th, 1968 – February 17th, 1971 Real Equities, Inc.
February 17th, 1971 – June 26th, 1986 Ogden Suffolk Downs, Inc.
June 26th, 1986 – June 6th, 1991
Belle Isle Limited Partnership
th
st
June 6 , 1991 - September 1 , 1996
Belle Isle leases to Sterling Suffolk Race Course LLP.
September 1st, 1996 – April 3rd, 2007 Sterling Suffolk Race Course, LLC.
April 3rd, 2007 – Present
Coastal Development Massachusetts, LLC becomes
majority owner
Source(s):
http://www.suffolkdowns.com/history.html
http://en.wikipedia.org/wiki/Suffolk_Downs
http://www.coastaldevelopmentllc.com/suffolk.html
9
http://www.suffolkdowns.com/history.html.
10
11
PAGE 23
Suffolk Downs is managed by Chip Tuttle, Chief Operating Officer of Sterling Suffolk Racecourse,
LLC. Richard Fields is Chairman and CEO of Coastal Development LLC.
Exhibits 7.2 and 7.3 present maps of the area in which the Suffolk Downs is situated. Suffolk Downs is
located in the eastern part of the Boston Metropolitan Area (which includes East Boston) approximately
three miles, or 10 minutes travel time, from Logan International Airport. Suffolk Downs is accessible
by Interstates I-93, and I-90, U.S. Routes 1 and 1A, and the Massachusetts public transportation
system.
Exhibit 7.2: The Suffolk Downs Location in East Boston
Source: Christiansen Capital Advisors, Microsoft MapPoint©
PAGE 24
Exhibit 7.3: Detailed Map of the Suffolk Downs Location in East Boston
Source: Christiansen Capital Advisors, Microsoft MapPoint©
Exhibit 7.4 presents Suffolk Downs handle (or gross wagering) by category and the number of live
racing days for the years 2000 through 2012.
PAGE 25
Exhibit 7.4: Suffolk Downs Handle 2000-2012
Year
Number
of Live
Days
Live Handle
Simulcast
Handle
2000
145
$27,555,803
$142,214,814
2001
149
24,402,478
145,302,304
169,704,782
2002
150
24,278,850
140,398,788
2003
148
21,672,633
2004
119
2005
Onsite Handle
Transmitted
(Export) Handle
$169,770,617
$104,861,162
All Sources
Handle
ADW
Handle
Total
$274,631,779
$274,631,779
101,801,542
271,506,324
271,506,324
164,677,638
138,300,647
302,978,285
302,978,285
131,484,948
153,157,581
136,392,704
289,550,285
5,778,788
295,329,073
17,347,549
128,713,475
146,061,024
114,535,169
260,596,193
8,359,317
268,955,510
116
14,745,024
119,613,147
134,358,171
109,187,183
243,545,354
12,791,711
256,337,065
2006
103
11,060,701
112,840,486
123,901,187
82,943,733
206,844,920
17,096,290
223,941,210
2007
100
12,270,182
104,399,657
116,669,839
78,113,286
194,783,125
27,433,318
222,216,443
2008
102
11,624,781
88,582,631
100,207,412
90,425,446
190,632,858
30,233,000
220,865,858
2009
101
9,053,766
75,618,350
84,672,116
99,727,711
184,399,827
55,346,926
239,746,753
2010
101
7,833,438
69,184,640
77,018,078
98,435,570
175,453,648
64,601,024
240,054,671
2011
80
6,729,713
64,626,699
71,356,413
64,224,602
135,581,014
64,696,913
200,277,927
2012
80
6,478,074
59,571,017
66,049,091
69,202,672
135,251,764
76,716,748
211,968,512
$195,052,993
$ 1,382,550,955
$1,577,603,948
$1,288,151,427
$2,865,755,375
$363,054,034
$3,228,809,409
Total
Note: Live Handle is wagering on live races by patrons at Suffolk Downs; Simulcast Handle is wagering on races at other facilities by
patrons at Suffolk Downs; Onsite Handle is the total of Live and Simulcast Handle; Transmitted Handle (Export Handle) is wagering on
live races at Suffolk Downs by patrons at facilities outside Massachusetts (including wagering on Suffolk races at Plainridge and
Raynham); All Sources Handle is Onsite plus Transmitted Handle; ADW Handle is online wagering by Massachusetts residents through
TVG, Xpress Bet, You Bet and Twin Spires. These pools are not maintained by Suffolk Downs;
Source: Suffolk Downs
Exhibit 7.5 presents the data presented in Exhibit 7.4 in line chart format.
PAGE 26
Exhibit 7.5: Suffolk Downs Handle Trend 2000-2012, $s in millions
$350.00
$300.00
$250.00
$200.00
$150.00
$100.00
$50.00
$0.00
2000
2001
2002
Live Handle
2003
2004
In-State Simulcast
2005
ADW
2006
2007
2008
Out Of State Simulcast
2009
2010
2011
2012
All Sources Handle
The number of Suffolk Downs live racing days declined from a series high of 150 days in 2002 to a
series low of 80 days in 2011 and 2012. Handle on live events (i.e., wagering on live races) similarly
declined, from a series high of $27.6 million in the year 2000 to a series low of $6.5 million in 2012.
The reduction in live racing days and handle on live races at Suffolk Downs mirrors a long-term
industry shift from live to simulcast and ADW (advance deposit wagering, including wagering through
telephone and Internet channels) wagering: handle on live events is a relatively small component of
aggregate pari-mutuel handle at most North American racetracks. A long term contraction in the U.S.
pari-mutuel racing industry is also a contributing factor in the decline of live racing at Suffolk Downs.
As is true of most U.S. racetracks today, the bulk of Suffolk Downs’s handle is generated from
simulcast (i.e., closed circuit television signals) racing and through Internet and/or telephone betting
services (ADW betting services). Like racetracks elsewhere, Suffolk Downs imports simulcast signals
of races at other tracks (necessarily from racetracks outside the Commonwealth in the case of
PAGE 27
Thoroughbred races) and exports simulcast signals of its own races to Standardbred or harness (and
formerly to Greyhound) tracks within Massachusetts and to Thoroughbred racetracks and betting
outlets of various kinds in other jurisdictions. Exhibit 7.4 separates wagering on Suffolk Downs racing
that takes place in Massachusetts (and is economic activity within the Commonwealth) from wagering
on Suffolk Downs racing that takes place in other jurisdictions (and is not economic activity within the
Commonwealth. 12)
Simulcast handle on Suffolk Downs racing inside Massachusetts declined from a series high of $145.3
million in 2001 to a series low of $59.6 million in 2012. To some extent the decline was offset by
wagering on Suffolk Downs racing through telephone and Internet betting services by persons in
Massachusetts (which was initiated in 2003), which increased explosively, from $5.8 million in 2003 to
a series high of $76.7 million in 2012. 13 Total onsite handle on Suffolk Downs racing contributed by
bettors in the Commonwealth (i.e., handle on Suffolk Downs live and simulcast racing) declined from a
series high of $169.8 million in the year 2000 to a series low of $66 million in 2012, a decline of $81.7
million or 48%.
The financial impact of the contraction in the market for Suffolk Downs racing on Suffolk Downs and
Massachusetts horsemen, which share in the revenue generated from the sale of Suffolk Downs
simulcast signals to wagering locations outside the Commonwealth, has been ameliorated by Suffolk
Downs’s ability to exploit the North American market for its live racing (i.e., by exporting its simulcast
signal to racetracks and off-track and/or ADW services in other jurisdictions). Wagering on Suffolk
Downs racing in other jurisdictions reached a series high of $138.3 million in 2002; subsequently, this
export handle steadily declined, reaching a series low of $64.2 million in 2011, recovering slightly to
$69.2 million the following year. A principal factor in the decline of Suffolk Downs’s export handle is
the reduction in the number of live racing days, which as noted fell from 150 days in 2002 to 80 days in
2012. The reduction in the number of its live racing days means Suffolk Downs has less racing to sell
to buyers in other jurisdictions. In part, however, the decline in wagering on Suffolk Downs racing
inside and outside the Commonwealth reflects a general contraction of pari-mutuel racing in the United
States. In reviewing the export handle presented in Exhibit 7.4 it is important to bear in mind that the
percentage of export handle retained by Suffolk Downs and Massachusetts horsemen is significantly
lower than the percentages they retain from wagering on Suffolk Downs racing within the
Commonwealth.
The addition of transmitted (or export) handle raised total (all sources) wagering to $274.6 million in
the year 2000, rising to a series high of nearly $303 million in 2002. Thereafter total or all sources
handle steadily declined, reaching a series low of $135.3 million in 2012. In 2012 Massachusetts
residents wagered $76.7 million through ADW services, bringing total handle in 2012 to nearly $212
million. In other words, the re-structuring of Suffolk Downs’s market by simulcasting and ADW
betting services has not prevented a steady deterioration of Suffolk Downs’s market economics. In
other words, the complex changes in Suffolk Downs’s marketplace since the year 2000 should not
12
Wagering on Suffolk Downs racing in other jurisdictions generates revenue for Suffolk Downs and Massachusetts
horsemen in that the contracts and the Federal Interstate Horseracing Act which govern inter-State wagering stipulate that
host racetracks (i.e., Suffolk Downs) and horsemen share in the pari-mutuel revenue generated from inter-State wagering.
13
ADW betting services serving Commonwealth horseplayers are located in other jurisdictions, and typically process these
wagers through servers (“hubs”) located in Oregon and other States. Exhibit 5.4 tabulates only ADW handle on Suffolk
Downs contributed by bettors located inside Massachusetts.
PAGE 28
obscure the fact that the market for Suffolk Downs horseracing is shrinking. The contraction of Suffolk
Downs’s horseracing business has adverse implications not only for Suffolk Downs but for
Massachusetts Thoroughbred breeders, who are, as the preceding and following sections of this report
demonstrate, almost wholly dependent on Suffolk Downs as an outlet for the Thoroughbred horses bred
in Massachusetts.
The overall decline in pari-mutuel handle presented in Exhibit 7.5 has resulted in significant operating
losses at Suffolk Downs. Exhibit 7.6 presents these operating losses for the past five years. As shown
in this Exhibit, these losses ranged from $11.8 million to $18 million per year (excluding 2011, which
includes losses associated with the acquisition of Wonderland).
Exhibit 7.6: Suffolk Downs Operating Losses 2007-2011
Year
2011
2010
2009
2008
2007
Operating
Losses
$26,431,903*
$13,523,593
$11,764,057
$13,785,649
$17,994,890
* includes Wonderland Transaction
Absent an infusion of revenue from casino gaming in the Commonwealth, Suffolk Downs operating
losses are likely to increase substantially in coming years. Exhibit 7.7 presents CCA’s projection for
Suffolk Downs handle, by category, for the years 2013 through 2017. The projections assume no
change in Suffolk Downs’s pari-mutuel business, a continuation of trends in this business observed
between the years 2000 and 2012, and no supplements for Suffolk Downs purses funded from casino
gaming. An underlying assumption is that there will be essentially no growth in the Massachusetts
consumer base for pari-mutuel horseracing, an assumption which is consistent with the observed
experience in the U.S. market for pari-mutuel racing in recent decades.
PAGE 29
Exhibit 7.7: Suffolk Downs Handle Projection w/o Purse Supplements, 2013-2017
Live Handle
Simulcast
Handle
Onsite Handle
Transmitted
Handle
All Source
Handle
2013
6,110,767.58
56,193,340.15
62,304,107.73
69,500,243.97
127,582,988.68
76,831,823.12
199,949,897.07
2014
5,764,287.06
53,007,177.76
58,771,464.82
69,799,095.02
120,349,033.22
76,947,070.86
188,612,737.90
2015
5,437,451.98
50,001,670.78
55,439,122.77
70,099,231.13
113,525,243.04
77,062,491.46
177,918,395.66
2016
5,129,148.46
47,166,576.05
52,295,724.50
70,400,657.82
107,088,361.76
77,178,085.20
167,830,422.63
2017
4,838,325.74
44,492,231.19
49,330,556.93
70,703,380.65
101,016,451.65
77,293,852.33
158,314,437.67
ADW Handle
Total
Source: Christiansen Capital Advisors
Assumptions:
1. Except for Transmitted (Export) Handle and ADW wagering, handle declines at a rate reflecting observed rates of decline between
2000 and 2012, adjusted for what is assumed to be the non-recurring negative impact of the financial crisis and recession that began in
2007 and continued through late 2009 or early 2010. The projection assumes that the negative impact of the 2008 financial crisis was
temporary; consequently the negative growth rates during 2008 and 2010 are not taken into consideration when generating the projections.
2. The number of live days remains constant at 80 from 2013 to 2017.
3. ADW handle data starts in 2003. ADW handle grew rapidly through 2010. This growth process matured in 2010 2011. The projection
assumes that ADW handle has now stabilized.
PAGE 30
Exhibit 7.8 presents the data presented in Exhibit 7.7 in line chart format.
Exhibit 7.8: Suffolk Downs Handle Projection Trend
$250,000,000.00
$200,000,000.00
$150,000,000.00
$100,000,000.00
$50,000,000.00
$2013
2014
2015
Live Handle
Simulcast Handle
Onsite Handle
All Source Handle
ADW Handle
Total
2016
2017
Transmitted Handle
Source: Christiansen Capital Advisors, LLC
The handle projections presented in Exhibit 7.7 paint a bleak future for Suffolk Downs and by
implication for the Massachusetts Thoroughbred industry that is largely dependent on Suffolk Downs,
the only Thoroughbred racetrack in the Commonwealth. While the number of Suffolk downs racing
days is assumed to remain constant at 80 days a year, live handle is projected to fall from $6.1 million
in 2013 to $4.8 million in 2017. Simulcast handle is projected to decline from $56.2 million in 2013 to
$44.5 million in 2017. Combined, live handle and simulcast handle are projected to decline from $62.3
million in 2013 to $49.3 million in 2017. Transmitted (export) handle is projected to increase
marginally from $69.5 million in 2013 to $70.7 million in 2017, reflecting CCA’s assumption that
during this period there will be moderate growth in the U.S. market for pari-mutuel Thoroughbred
racing. All source handle is projected to decline from $127.6 million in 2013 to $101 million in 2017.
ADW handle is projected to increase from $76.8 million in 2013 to $77.3 million in 2017, reflecting
CCA’s assumption that while the initial growth phase in Massachusetts ADW wagering ended in 2011
(i.e., the Commonwealth’s ADW market matured in that year; see Exhibit 7.7) moderate growth in
ADW wagering will continue, as will a continued restructuring of the Massachusetts pari-mutuel
horseracing market caused by ADW betting services. Total handle, including ADW handle, is
projected to decline from $200 million in 2013 to $158.3 million in 2017.
PAGE 31
8. The Economic Impact of Thoroughbred Racing on the
Commonwealth
To measure the economic impacts of Suffolk Downs on the Commonwealth, CCA employed an inputoutput (I-O) model. Input-output systems were originally developed by Wassily Leontief to assist in
planning the national economy; input-output models are the most frequently used method of measuring
economic impacts. Input-output modeling is an equilibrium approach based on an accounting system
of injections and leakages in a given economy or economic system. Models of these systems
incorporate three basic tables. The Transactions Table measures inter-industry sales and purchases
within a pre-defined region; the Direct Requirements Table measures intermediate requirements to
produce a dollar of gross output for any given industry, 14 and the combination of these two tables
creates the Industrial Multiplier Table. Input-output models allow analysts to remove an industry from
the rest of the economy and assess the impacts of an impending change (in this case, the construction
and operation of a large casino hotel complex) in isolation.
At a minimum, the economic impact of any industry or activity is the output produced by that business,
or its direct expenditures. However, since other segments of the local and regional economy (the
suppliers to, and spending by the employees of, that business) will be supported, at least in part, by the
new business, the total economic impact is greater than the new business’s direct expenditures. Inputoutput models estimate the total economic impacts of new businesses or new economic activities.
The initial change created by any new economic activity is the direct effect. Direct effects are primarily
output, employment and personal (labor) income generated by this economic activity; as used here,
these terms have the following meanings: output is the value of goods and services produced at the
identified business or construction project; employment is the number of people employed, including
wage and salaried employees and self-employed persons; and personal income is the wages, benefits,
and other income derived from that employment. The IMPLAN modeling system used in this report
measures total employment, including full and part-time workers. For some industries and activities,
the construction and operation of a gaming facility for example, the level of partial or part-time
employment can be significant. Full-time employment or FTEs will be less than the employment
figures presented herein.
As noted above, a racetrack’s relationship to other businesses and consumers in the area is not fully
described by its direct effect or impact, however. Secondary effects are generated from this primary
spending; economic impacts also include indirect impacts, induced impacts, and total impacts.
Indirect impacts derive primarily from off-site economic activities that are attributable to the
racetrack. These economic activities occur mainly as a result of non-payroll expenditures by the
business (racetrack) within a region. For example, racing facilities spend significant sums on suppliers,
vendors, and utility services, including water and electricity, cleaning, landscaping, legal services and
so forth, which become revenue for the suppliers of these services and goods, who in turn purchase
goods and services from their suppliers and so on. In short, the indirect effect derives from a business
purchasing goods and services from other businesses. Indirect impacts differ from direct impacts
14
Which can be quite different for different industries. Producing $1 dollar of gross output from the manufacture of shoes has different
intermediate requirements than the intermediate requirements to produce $1 dollar of gross output in restaurant sales, and so forth.
PAGE 32
insofar as they originate entirely off-site, although the indirect impacts would not have occurred in the
absence of the newly created business.
Induced impacts are the multiplier effects of the direct and indirect impacts created by successive
rounds of spending by employees and proprietors. 15
Total impacts are the sum of the direct, indirect, and induced impacts.
THE IMPLAN MODELING SYSTEM
Although there are several sets of multipliers that can be used to obtain estimates of the total economic
contribution of any economic activity (including RIMS, RIMS II and REMI), CCA employed local and
regional data from IMPLAN for this study.
The Forestry Service of the United States Department of Agriculture developed the IMPLAN
multipliers in the 1980s. IMPLAN divides regional economies into 440 industrial sectors. Industries
that do not exist in the region are automatically eliminated by the model. The primary sources for the
IMPLAN data are County Business Patterns 16 and Bureau of Economic Analysis (BEA) input-output
benchmarks. 17 Incorporated in input-output models, these data explain quantitative relationships
between businesses and between businesses and final consumers. From these data, we can examine the
effects of a change in one or several economic activities and predict its effect on a specific State,
regional, or local economies.
IMPLAN also includes social accounting data (e.g., personal income and gross State product) that
make it possible to measure non-industrial transactions, such as the payment of indirect taxes by
businesses and households. The IMPLAN database provides data for the entire United States by county
or ZIP code and has the ability to incorporate user-supplied data at each stage of the model-building
process to insure that estimates of economic impacts are both up-to-date and specific to an economic
impact area.
IMPLAN’s Regional Economic Accounts and Social Accounting Matrices are used to construct local,
county, or State-level multipliers specific to an impact area. As noted, these multipliers describe an
economy’s response to a change in demand or production. The multipliers allow economic impact
analysis to move from a descriptive input-output model to a predictive model. Each business or
industry that produces goods or services generates demand for other goods and services and this
demand is multiplied through a particular economy until it dissipates through “leakage” to economies
15
As would be expected, a great deal (considerably more than the indirect effect) of this income of employees is spent locally. This in
turn becomes income to local business and individuals who provide goods and services to these employees. These successive rounds of
spending continue to ripple through the economy and expand throughout the region. This phenomenon is commonly referred to as the
“multiplier effect.”
16
United States Census Bureau. http://www.census.gov/econ/cbp/index.html
17
The IMPLAN input-output accounts capture all monetary market transactions for consumption in a given time period. The IMPLAN
input-output accounts are based on industry survey data collected periodically by the U.S. Bureau of Economic Analysis and follow a
balanced account format recommended by the United Nations.
PAGE 33
outside the specified area. Thus, multipliers calculate the response of the economic impact area to a
change in demand or production.
IMPLAN models discern and calculate leakage from local, regional, and State economic areas based
on workforce configuration, the inputs required by specific types of businesses, and the availability of
these specific kinds of inputs in the economic area. 18 Economic impacts that accrue to other regions as
a consequence of a change in demand in the defined economic area are not counted as impacts within
that economic area.
Within the defined economy, new businesses or industries can cause substitution and/or displacement
impacts. The IMPLAN model adjusts for some of the substitution and displacement impacts by
deflating industry-specific multipliers. In addition, multipliers are applied only to personal disposable
income to obtain a more realistic estimate of the multiplier effects from increased demand.
A predictive model of impacts is constructed by specifying a series of new expenditures in a specific
economic area, which is then applied to the industry multipliers for that particular region. Based on
these calculations, the model estimates final demand, which includes employment, employee
compensation (excluding benefits), and point-of-work personal income (including benefits).
The initial IMPLAN data detail all purchases in a given area, including all goods and services
(including imported goods and services). Next, IMPLAN’s regional economic accounts exclude
imports to an economic area so the calculation of economic impacts identifies only those impacts
specific to the economic impact area. IMPLAN makes this distinction by means of regional purchase
coefficients (RPC), which predict regional purchases based on an economic area’s particular
characteristics. The regional purchase coefficient represents the proportion of goods and services that
will be purchased regionally under normal circumstances, based on the area’s economic characteristics
described in terms of actual trade flows within the area.
CCA constructed input-output models for the Commonwealth using the IMPLAN Professional 3.0
model-building software and data packages. The underlying data used in the models are for 2011,
which is the latest available. All inputs were converted to current dollars (2013) using appropriate
deflators (producer price indices for industrial commodities and the personal consumption expenditure
deflator for personal income). Model outputs are reported in current or nominal dollars.
DIRECT IMPACTS ON THE LOCAL ECONOMY
CCA allocated employment and expenditures among the 440 IMPLAN industry sectors (account subcodes) by assigning racetrack-related expenditures to IMPLAN sub-code 403. The horse owners and
breeders expenditures were assigned to IMPLAN sub-code 14 (animal production, except cattle and
poultry and eggs).
18
Inputs that are essential to the business or industry but not available within the defined region must, necessarily, be imported from
outside the region.
PAGE 34
INDIRECT AND INDUCED IMPACTS ON THE LOCAL ECONOMY
Indirect and Induced Employment is defined as total wage-and-salary employees and self-employed full
and part-time jobs in a region. It includes both full-time and part-time workers. The data sets used to
calculate total employment are the ES202 (county business patterns) and the Regional Economic
Information System. Personal Income is wages, benefits, and other income derived from employment
linked geographically to the workplace site.
IMPACT ESTIMATES: HORSE OWNERS AND BREEDERS
Breeders
The survey conducted by Salem State University determined that there were close to 1,000 farms with
stables (self-reporting) in Massachusetts in 2012, of which 133 farms have some level of affiliation
with Thoroughbreds and 62 farms are directly involved with Thoroughbred breeding. The Salem State
survey also provided us with the number of direct employees (356) and the total revenue ($15.1
million) of these 62 directly affiliated farms.
Utilizing the data provided by Salem State as inputs to the IMPLAN model, Exhibit 8.1 presents the
resulting total economic impact of Thoroughbred breeding on the Commonwealth.
Exhibit 8.1: Estimated Total Economic Impact of Thoroughbred Breeding
Direct Effect
Indirect Effect
Induced Effect
Total Effect
Employment
356
29
35
420
Labor Income
$5,512,444.4
$960,554.9
$1,824,337.1
$8,297,336.4
Total Value Added
$7,670,856.3
$1,813,555.1
$3,249,460.6
$12,733,871.9
Output
$15,086,483.2
$2,773,553.8
$4,985,052.6
$22,845,089.6
Source: Salem State University, Minnesota IMPLAN Group, Inc.
As shown in Exhibit 8.1, the estimated direct, indirect and induced employment generated by
Thoroughbred breeding in the Commonwealth totals 420 persons, with associated labor income totaling
$8.3 million. Total value added is $12.7 million. Total output of Thoroughbred breeding in the
Commonwealth of Massachusetts is $22.8 million.
Horsemen (owners and trainers)
To estimate the economic impact of Thoroughbred race horse ownership on the Commonwealth, CCA
calculated total direct expenditures as average expenditures per horse from the survey conducted by
Salem State and similar per horse data from other studies conducted in other U.S. Thoroughbred
markets. 19
19
Lorri Krebs, PhD, et al., Massachusetts Equine Study, Salem State University, 2013. Other studies referenced include Thalheimer
Research Associates, Inc., The Economic Impact of the Iowa Race Horse Industry on the Iowa Economy, December 2008 and David W.
Hughes, Jean M. Woloshuk, Alison C. Hanham, David J. Workman, David W. Snively, Paul E. Lewis, Thomas E. Walker, West Virginia
Equine Economic Impact Study, West Virginia University Extension Service . WVU Davis College of Agriculture, Forestry, & Consumer
Sciences, http://www.wvu.edu/~agexten/youth/equinesumry.pdf.
PAGE 35
With the assistance of Suffolk Downs’s management, the Massachusetts Department of Agriculture,
and the Massachusetts Thoroughbred Breeders Association CCA estimates that there are 937 “racing
related” Thoroughbreds resident in Massachusetts. Racing related horses include horses currently
racing, broodmares, stallions, foals, horses in-training, lay ups (horses recovering from injuries),
turnouts and retirees.
We also included approximately 650 horses from outside Massachusetts that stable at Suffolk Downs
during the racing season and have adjusted the average expenditure to reflect the approximately half
year they are resident in Massachusetts. Multiplying the estimated direct expenditures by this number
of racing horses returns an estimated $6.475 million in direct impact of race horses running at Suffolk
Downs.
Exhibit 8.2 Estimated Direct Economic Impact Horses Racing at Suffolk Downs
Mass. Horses at Suffolk Downs
Out of State Horses
Race Horses at Suffolk Downs (2013)
Horses
150
650
800
Per Horse
Direct
Expenditures
$14,000
$7,000
$8,355
Total
Direct
Impact
$2,100,000
$4,375,000
$6,475,000
Source: Suffolk Downs, Massachusetts Department of Agriculture, Massachusetts Thoroughbred Breeders Association, Christiansen
Capital Advisors estimates.
Exhibit 8.3 presents our estimate of the number of Thoroughbred horses in Massachusetts no longer
racing, and the direct impact of those horse on the Commonwealth’s economy. Training a racehorse is
by far the largest expense for Thoroughbred horse owners; thus the average annual expenditure per
horse is substantially lower for horses no longer racing. Utilizing data provided by Salem State we
estimate that these horses contribute $3.5 million in direct spending in the Massachusetts economy
(Exhibit 8.3).
PAGE 36
Exhibit 8.3 Estimated Direct Economic Impact of Horses no Longer Racing or Breeding
Thoroughbreds no Longer Racing or Breeding
Horses
787
Per Horse
Direct
Expenditures
$ 4,435
Total
Direct
Impact
$ 3,490,345
Source: Suffolk Downs, Salem State University, Massachusetts Department of Agriculture, Massachusetts Thoroughbred Breeders
Association, Christiansen Capital Advisors estimates.
Utilizing the revenue estimates presented in Exhibit 8.2 and 8.3 as inputs to the IMPLAN model,
Exhibit 8.4 presents the resulting total economic impact on the Commonwealth of live racing and
simulcast betting at Suffolk Downs.
Exhibit 8.4: Estimated Total Economic Impact of Thoroughbred Ownership
Direct Effect
Indirect Effect
Induced Effect
Total Effect
Employment
476
8
46
530
Labor Income
$8,070,188.0
$550,978.8
$2,418,232.5
$11,039,399.3
Total Value Added
$6,525,380.5
$841,843.1
$4,306,344.5
$11,673,568.1
Output
$9,965,344.5
$1,706,483.2
$6,608,218.4
$18,280,046.2
Sources: Christiansen Capital Advisors, LLC, Minnesota IMPLAN Group, Inc.
Thoroughbred horse ownership in the Commonwealth totals 530 persons, with associated labor income
totaling $11 million. Total value added is $11.7 million. Total output of Thoroughbred horse
ownership in the Commonwealth of Massachusetts is $18.3 million.
IMPACT ESTIMATES: RACETRACK OPERATIONS
Racing operations at Suffolk Downs are vital to the Thoroughbred equine industry in Massachusetts.
The conduct of racing at Suffolk Downs produces employment and spending by the racetrack, by parimutuel bettors, by the persons who train horse there, and generates revenue for the purses for horses
that win or place in Suffolk Downs races.
Exhibit 8.5 presents current estimates of revenues (or sales) at Suffolk Downs. Consumer expenditures
at Suffolk Downs and/or on Suffolk Downs’s racing product totals approximately $32.7 million.
PAGE 37
Exhibit 8.5 Estimated Pari-mutuel and Other Revenues at Suffolk Downs
$s
(in millions)
$27.6
$5.1
Source
Pari-mutuel revenue
Other Revenue
Total
$32.7
Sources: Christiansen Capital Advisors, LLC estimates.
Utilizing the revenue estimates presented in Exhibit 8.5 as inputs to the IMPLAN model, Exhibit 8.6
presents the resulting total economic impact on the Commonwealth of live racing and simulcast betting
at Suffolk Downs.
As shown in Exhibit 8.6 the estimated direct, indirect and induced employment generated by
Thoroughbred race track operations in the Commonwealth totals 507 persons, with associated labor
income totaling $41.3 million. Total value added is $46.4 million. Total output of Thoroughbred race
track operations in Massachusetts is $64.3 million.
Exhibit 8.6: Estimated Total Economic Impacts of Thoroughbred Racing
Direct Effect
Indirect Effect
Induced Effect
Total Effect
Employment
279
54
173
507
Labor Income
$28,674,521.0
$3,628,456.9
$9,033,994.0
$41,336,971.8
Total Value Added
$25,736,903.7
$4,607,061.4
$16,085,027.4
$46,428,992.5
Output
$32,699,998.8
$6,889,315.6
$24,687,736.0
$64,277,050.3
Although Thoroughbred racing no longer attracts the crowds that were present in horseracing’s heyday,
roughly 440,000 persons attended live races or bet on simulcast races at Suffolk Downs in 2012. These
patrons incur travel costs such as gasoline and transit fares, and spend money on food and other goods
while betting on horse racing at Suffolk Downs. A small percentage will seek lodging in the area,
particularly on big race days.
Exhibit 8.7 presents CCA’s estimates of the direct spending of Suffolk Downs patrons in the local
economy by category. We estimate that such spending was approximately $1.4 million (Exhibit 8.7)
PAGE 38
Exhibit 8.7 Estimated Area Spending by Suffolk Downs Patrons
Spending
$87,740
$548,375
$438,700
$329,025
Motel/Hotel
Restaurants
Transportation
Retail shops/Convience Stores
Total
$1,403,840
Assumptions:
438,700 patrons visited Suffolk Downs in 2012
.25% of patrons stay in a motel/hotel for average price of $80
25% of Suffolk Downs patrons bought food in area for average price of $5.00
50% of all in-state patrons buy gas for the trip or take the "T", averaging $2.00 per trip
Area shops attract 25% of patrons for an average sale of $3.00
Sources: Suffolk Downs, Christiansen Capital Advisors, LLC estimates.
Incorporating the $1.4 million spending by Suffolk Downs patrons presented in Exhibit 8.7 in our
IMPLAN model, Exhibit 8.8 presents the resulting total economic impact area spending at other local
business by patrons of Suffolk Downs.
Exhibit 8.8 Estimated Total Economic Impact of Area Spending by Suffolk Downs Patrons
Direct Effect
Indirect Effect
Induced Effect
Total Effect
Employment
22
3
4
29
Labor Income
$558,809.0
$165,181.4
$204,042.8
$928,033.2
Total Value Added
$799,764.9
$297,640.4
$363,425.8
$1,460,831.1
Output
$1,403,840.0
$469,925.4
$557,555.4
$2,431,320.8
As Exhibit 8.8 shows, the direct, indirect and induced area employment generated from this spending
by Suffolk Downs patrons totals 29 persons, with associated area labor income totaling $928 thousand.
Total value added by this area spending is $1.4 million. The total output of this area spending $2.4
million.
Exhibit 8.9 presents the total impacts presented in Exhibits 8.1, 8.4, 8.6 and 8.8. As Exhibit 8.9 shows,
the direct, indirect and induced employment generated by Thoroughbred race track, horse ownership
and breeding operations in the Commonwealth totals 1,486 persons, with associated labor income
totaling $61.6 million. Total value added is $72.3 million. Total output of Thoroughbred race track,
horse ownership and breeding operations in the Commonwealth of Massachusetts is $107.8 million.
PAGE 39
Exhibit 8.9 Total Economic Impact of Thoroughbred Racing, Ownership and Breeding on the
Massachusetts Economy
Direct Effect
Indirect Effect
Induced Effect
Total Effect
Employment
1,133
94
259
1,486
Labor Income
$42,815,962.4
$5,305,172.1
$13,480,606.4
$61,601,740.8
Total Value Added
$40,732,905.4
$7,560,100.0
$24,004,258.2
$72,297,263.6
Output
$59,155,666.5
$11,839,278.1
$36,838,562.4
$107,833,506.9
Exhibit 8.10 presents the total tax impact of Thoroughbred racing, ownership, and breeding in
Massachusetts. As presented in Exhibit 8.10 we estimate that total tax impact on the Commonwealth of
Massachusetts, including local property taxes, payroll, and pari-mutuel taxes as well license revenues
and fees of Thoroughbred Racing, Ownership and Breeding is $8.45 million.
Exhibit 8.10 Total Tax Impact of Thoroughbred Racing, Ownership and Breeding on the
Massachusetts Economy
Employee
Tax on Production
Compensation
and Imports
Dividends
Social Ins Tax- Employee Contribution
Social Ins Tax- Employer Contribution
Tax on Production and Imports: Sales Tax
Tax on Production and Imports: Property Tax
Tax on Production and Imports: Motor Vehicle Lic
Tax on Production and Imports: Severance Tax
Tax on Production and Imports: Other Taxes
Tax on Production and Imports: S/L NonTaxes
Pari-mutuel Taxes
Corporate Profits Tax
Personal Tax: Income Tax
Personal Tax: NonTaxes (Fees)
Personal Tax: Motor Vehicle License
Personal Tax: Property Taxes
Personal Tax: Other Tax
Total State and Local Tax
Households
Corporations
$1,925
$35,824
$63,507
$1,519,981
$2,872,671
$36,356
$200,506
$211,562
$1,472,955
$61,643
$1,702,167
$186,885
$45,588
$31,330
$4,444
$99,331
$6,314,031
$1,970,414
$63,568
Total
$1,925
$35,824
$63,507
$1,519,981
$2,872,671
$36,356
$0
$200,506
$211,562
$1,472,955
$61,643
$1,702,167
$186,885
$45,588
$31,330
$4,444
$8,447,344
PAGE 40
9.
The Impact of Purse Supplements in Massachusetts
As discussed in Section 3, purses are the essential driver of the Thoroughbred race horse economy.
They constitute revenue for horsemen, which is the incentive to enter horses in races at Suffolk Downs.
Bettors wager on races at Suffolk Downs and on Suffolk Downs races at other locations in
Massachusetts and out-of-State locations, generating revenue for Suffolk Downs, horse owners in
Massachusetts, and Massachusetts’s Thoroughbred breeding farms. As purses increase, the number of
foals, yearlings, and associated blood stock likewise increases. 20
An increasing number of States that license pari-mutuel horseracing as well as casino gaming at
racetracks supplement purses with revenue generated from casino gaming. According to Thoroughbred
Racing Associations (TRA), a trade association of Thoroughbred racetracks, 14 States supplemented
purses with revenue generated from casino gaming in 2009, the most recent year for which TRA
provides these data. 21 Appendix III presents an overview of the U.S. Thoroughbred purse structure for
the years 1993 through 2009, showing the increasing importance of casino revenue supplements to
Thoroughbred purses during this period.
Exhibit 9.1 presents a pro forma estimate of the annual sum that would be allocated from the gross
gaming revenue generated by all Massachusetts casinos to the Massachusetts Race Horse Development
Fund pursuant to the Massachusetts Expanded Gaming Act. 22 For the purposes of this report, we have
assumed that Suffolk Downs is successful in efforts to obtain the Region A gaming license, 23 that a
commercial casino opens in Region C, and that all Massachusetts gaming facilities are up and running
by 2017 (although one or more of the proposed facilities may open earlier). The relevant sections of
this law are excerpted in Appendix II. In this pro forma estimate, approximately $29.3 million of the
Category 1 gross gaming revenue generated by Massachusetts casinos would be allocated to the Race
Horse Development Fund in 2017.
20
Neibergs, J.S. and Thaheimer, R. (1997) “Price Expectations and Supply response in the Thoroughbred Yearling Market”, Journal of
Agricultural and Applied Economics.
21
The 14 States that supplemented purses with revenue generated from casino gaming in 2009 are Arkansas, Delaware, Florida, Iowa,
Indiana, Louisiana, Maryland, Minnesota, New Jersey, New Mexico, New York, Oklahoma, Pennsylvania, and West Virginia.
Thoroughbred Racing Associations, Non-Pari-mutuel Revenues to US Thoroughbred Purses, 2009.
22
§§ 59 and 60 of Chapter 194 of the Sessions Laws of 2011. See Appendix II.
23
Suffolk Downs’s management asserts that if they are not awarded a gaming license, the owners will cease racing operations.
PAGE 41
Exhibit 9.1: Massachusetts Race Horse Development Fund
Statutory Rates
Estimated Category 1 GGR
Gaming Privilege Tax
Race Horse Development Fund
Estimated Category 2 Contribution
25% of 100%
2.5% of 25% of 100%
9% of GGR
Estimated Dollar Amount ($s in millions)
$1,800.0
$450.0
$11.3
$18.0
Total
$29.3
Source: Christiansen Capital Advisors; Commonwealth of Massachusetts
Exhibit 9.2 presents pro forma estimates of the annual distributions from the Race Horse Development
Fund as provided by the Massachusetts Expanded Gaming Act.
Exhibit 9.2: Massachusetts Race Horse Development Fund Annual Distributions ($)
Race Horse Development Fund
Horsemen (Purses)
Massachusetts Thoroughbred Breeding Program
Health and Pensions for Horsemen
Distribution (%)
100%
80%
16%
4%
Distribution ($)
$29,250,000
$23,400,000
$4,680,000
$1,170,000
Source: Christiansen Capital Advisors; Commonwealth of Massachusetts
Of the Race Horse Development Fund’s estimated $29.3 million in revenue from casinos in
Massachusetts, 80%, or approximately $23.4 million, would be distributed to Massachusetts purses.
Pursuant to discussion with the management of Suffolk Downs, CCA assumes that 75% of this $23.4
million, or approximately $17.5 million, would be allocated by the Race Horse Development Fund to
Thoroughbred purses (i.e., $17.5 million would be used to supplement purses at Suffolk Downs).
Annual purse supplements of $17.5 million would dramatically increase the purses paid at Suffolk
Downs. Exhibit 9.3 shows the impact that supplementing Suffolk Downs purses with $17.5 million of
revenue generated from casinos in Massachusetts would have on purses paid at Suffolk Downs.
PAGE 42
Exhibit 9.3: Pro Forma Projection of Suffolk Downs Purses with Casino Supplements
$30.000000
$25.000000
Purse Paid (in millions)
$20.000000
186.9% Increase
$15.000000
$10.000000
$5.000000
$0.000000
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Source: Suffolk Downs, Massachusetts Racing Commission, The Jockey Club, Christiansen Capital Advisors, LLC
Supplementing Suffolk Downs purses with $17.5 million in revenue generated from casinos in
Massachusetts would increase purses paid at Suffolk Downs from $ 9.4 million in 2012 to $26.9
million, an increase of 187%.
Purse supplements of this magnitude would significantly improve the quality of horses that race at
Suffolk Downs. In a positive feedback cycle, larger purses, particularly if some or all of the
supplemented purses were restricted to horses bred in Massachusetts, would improve the business
prospects for Massachusetts Thoroughbred breeding farms, thus preserving the threatened green space
Thoroughbred breeding farms provide throughout the Commonwealth. If the experience with casino
revenue purse supplements in other jurisdictions is a guide (the experience with purse supplements in
other jurisdictions is reviewed in Appendices V –VII), purse supplements, by improving the quality of
racing Suffolk Downs offers, would stimulate wagering on Suffolk Downs racing, reversing the
downward trend in Suffolk Downs handle (Section 5). In the long term, these developments would
attract new capital investment in Massachusetts’s equine industry.
PAGE 43
As the data presented in Appendix III demonstrate, purses for Thoroughbred racing in the United States
increasingly depend on revenue generated from casino gaming at racetracks and other activities, including
poker and other card room gambling, unrelated to horseracing. In 1993 casino gaming at racetracks
contributed about $530,000 to U.S. Thoroughbred purses, or less than 0.1% of total U.S. Thoroughbred
purses that year. In nominal dollar and percentage-of-total-purse terms the casino gaming contribution
to U.S. Thoroughbred purses has increased steadily since 1993. In 2009, the most recent year for
which these data are available, casino gaming at racetracks contributed almost $319 million to U.S.
Thoroughbred purses, or 29% of total U.S. Thoroughbred purses that year. Appendix III provides an
overview of the increasing importance of casino supplements to the U.S. Thoroughbred purse structure
between the year 1993 and 2009.
CCA reviewed the experience with casino purse supplements and/or breeding funds in Delaware,
Florida, Iowa, Louisiana, Ohio, Maryland, New Jersey, New Mexico, New York and Pennsylvania.
We also reviewed the experience with purse supplements and equine breeding funds in the United
States overall.
In some of the States we reviewed we were unable to gather satisfactory time series pari-mutuel
statistics data sets and/or equine industry information. In other States the initiation of purse
supplements coincided with unrelated structural changes in racetrack markets, or operations, or with the
onset of the severe contraction of the general economy that began in late 2007, which precipitated a
significant decrease in both U.S. handle and the number of equine breeding farms; the decrease in U.S.
Thoroughbred handle that was a consequence of this recession was so large—nearly a third of prerecession levels—as to imply structural changes in the consumer base for pari-mutuel horse racing.
Negative changes of this magnitude obscure smaller positive effects like improvements in quality of
racing caused by purse supplements.
Generally, however, our findings were consistent with the thesis of a virtuous cycle in which when
purses are supplemented with casino revenue (i.e., an exogenous source of revenue unrelated to horse
race betting or the pari-mutuel economy per se) the larger purses attract better horses, which stimulates
increased pari-mutuel betting, which, especially in the case when only horses bred in-State are eligible
to win a portion of the supplemented purses, improves the business prospects for equine breeders and
thus helps to preserve equine farming green space, which, in the congested Eastern Seaboard, is
endangered by real estate development pressures. 24
Purse supplements and equine breeding fund programs in three States, Delaware, New York, and
Pennsylvania, yield data that may be used to quantify the likely impact the purse supplements provided
24
The importance of purse supplements in preserving racetracks and equine breeding is the subject of a recent academic study, Karyn
Malinowski, Ph.D. and Ryan Avenatti, M.S., Impact of Slot Machines/Video Lottery Terminals (VLTs) on the Economy, Horse Racing
and Breeding Industry, Agriculture and Open Space in States/Provinces where they Exist: Why is this Important for New Jersey?,
Rutgers, 2009. Regarding New Jersey’s horseracing and equine breeding industries the authors conclude that
“The Garden State stands to lose its premier agribusiness [equine breeding] which generates $780 million of economic impact annually,
7,000 jobs, $110 million in federal, state and local taxes and 57,000 acres of working agricultural landscape and open space if racingrelated training and breeding farms leave New Jersey. An analysis by Goundrey and Malinowski in 2007 of preserved farmland in the
state showed that a small portion of preserved farmland is in equine-related activity (Table 14). Only eight percent of acreage in the
Farmland Preservation Program is used for horse related activities and 11 percent of preserved farms are in the horse business. Currently,
acreage supported by equine interests makes up more than 20 percent of the total farmland in New Jersey (Gottlieb, 2007). This
reinforces the argument that the state stands to lose this farmland to development if racing is no longer viable.”. p.29
PAGE 44
for in Massachusetts’s Expanded Gaming Act are likely to have on handle at Suffolk Downs and on the
equine industry in the Commonwealth.
In Delaware, purse supplements increased average daily Thoroughbred purses from $156,348 in 1996
to $301,342 in 2002, an increase of $144,994 or nearly 93%. Average live handle continued a longterm decline following the inception of racetrack VLT operations, but average daily simulcast (or
export) handle shot upwards, rising from $64.6 million in 1994 to a series high of $264.4 million in the
year 2000, an increase of $199.8 million or 309%. Total (i.e., live plus simulcast) handle increased
from $91.8 million in 1995 to $289.9 million in the year 2000, an increase of $199.8 million or 215%.
Thus, while purse supplements did not reverse a long-term downward trend in live wagering on
Thoroughbred racing in Delaware, purse supplements, by attracting higher quality horses, made the
simulcast signal of Delaware Thoroughbred racing more attractive to bettors in the North American
simulcast market (and more valuable to Delaware Park and horsemen in Delaware), stimulating
enormous increases in wagering on Delaware Thoroughbred racing. (The Delaware experience is
presented in Appendix VI.)
The effects of purse supplements on pari-mutuel wagering and equine breeding in New York are
obscured by the circumstance that the build-out of racetrack VLT operations in New York coincided
with the onset of the fiscal crisis and the ensuing recession, which began in late 2007; both had severe
negative impacts on Thoroughbred handle and horse farming in New York State. Although average
daily Thoroughbred handle trended generally downward between 2002 and 2011, average daily
Thoroughbred purses, supplemented with growing VLT revenues, moved upwards, reaching $372,058
in 2005. As noted, average daily handle and average daily purses were both adversely impacted by the
recession that began in 2007. The start of VLT operations at Aqueduct, in New York City, in
November 2011 increased average daily Thoroughbred purses dramatically, from $305,749 in 2011 to
$414,252 in 2012, an increase of $108,503 or 35.5%. Reversing a long-term downward trend, average
daily Thoroughbred handle likewise increased, rising from $5,256,736 in 2011 to $5,745,567 in 2012, a
gain of $488,831 or 9.3%. In spite of a sharp decline in the number of active Thoroughbred breeding
farms caused by the recession that began in late 2007, the number of Thoroughbred mares bred in New
York increased by 43% in 2012 over 2011. (The New York experience is presented in Appendix VIII.)
In Pennsylvania, despite a long-term downward trend in pari-mutuel handle, purses supplemented with
revenue from racetrack casino games (which started in 2006) have $55.9 million in 2006, of which
$52.9 million, or 94.6%, was derived from pari-mutuel betting, with casino supplemental revenue
contributing $3 million, or 5.4 %, to $209 million in 2012, of which $33.6 million, or 16.1%, was
derived from pari-mutuel betting, with casino supplemental revenue contributing $175.5 million, or
83.9 %. Although Pennsylvania handle, like handle elsewhere in the United States, was severely
impacted by the recession that began in 2007, purse supplements appear to have reversed the down
trend in Pennsylvania handle in 2012, enabling the Commonwealth’s racetracks to post a 10% yearover-year handle gain, driven in large part by a 49% increase in export simulcasting. Casino revenue
allocated to Pennsylvania’s racing industry also contributed to a total of $57.8 million in capital
improvements to the backstretch areas of Pennsylvania’s racetracks, an expenditure on an oft-neglected
aspect of horseracing that compares favorably to that of many, if not most, racing States.
PAGE 45
Exhibit 9.4 presents projections of Suffolk Downs handle by category for the years 2013 through 2019
assuming that the purse supplements estimated in Exhibit 9.3 go into effect. Exhibit 9.6 presents these
data in line chart format.
In these projections, purse supplements reverse the downward trending projections for Suffolk Downs
handle presented in Exhibits 7.7 and 7.8. Live handle continues to decline, albeit more slowly, falling
from $6.1 million in 2013 to $5.4 million in 2019. Simulcast handle declines from $56.2 million in
2013 to $50 million in 2015 and then starts to increase, rising to $55 million in 2019. The combined
effect of these changes is to stabilize onsite handle at approximately $60 million. Transmitted (i.e.,
export) handle, however, more than doubles, from $69.5 million in 2013 to $154.2 million in 2019, an
increase of $84.7 million or 121%. The driver of this increase in export handle is the increased
attractiveness of simulcast signals of Suffolk Downs’s improved quality of racing—improved due to
purse supplements—to horseplayers in the North American simulcast market. For the same reason,
ADW handle on Suffolk Downs racing also increases, from $76.8 million in 2013 to $93.2 million in
2019. The combined result of these complex changes in Suffolk Downs handle is to increase total
wagering by nearly half (47%), from $208.6 million in 2013 to $307.9 million in 2019. Purse
supplements would thus transform the outlook for Suffolk Downs’s pari-mutuel racing business, from
the bleak picture implied by the handle trends presented in Section 7 to a future of robust growth. In
turn, purse supplements would significantly improve the business prospects for Massachusetts horse
owners and horse farms, ensuring the preservation of the many Massachusetts jobs horse owning and
breeding currently provide and the endangered green space of the Commonwealth’s Thoroughbred
horse farms.
PAGE 46
Exhibit 9.4: Suffolk Downs Handle Projection with Purse Supplements, 2013-2019
Year
Live Handle
S imulcast Handle
Onsite Handle
Transmitted Handle
All S ource Handle
ADW Handle
Total
2013
$6,110,768
$56,193,340
$62,304,108
$69,500,244
$131,804,352
$76,831,823
$208,636,175
2014
$5,764,287
$53,007,178
$58,771,465
$69,799,095
$128,570,560
$76,947,071
$205,517,631
2015
$5,437,452
$50,001,671
$55,439,123
$70,099,231
$125,538,354
$77,062,491
$202,600,845
2016
$5,437,452
$55,001,838
$60,439,290
$77,109,154
$137,548,444
$84,768,740
$222,317,184
2017
$5,437,452
$55,001,838
$60,439,290
$84,820,070
$145,259,360
$93,245,614
$238,504,974
2018
$5,437,452
$55,001,838
$60,439,290
$140,198,462
$200,637,752
$93,245,614
$293,883,366
2019
$5,437,452
$55,001,838
$60,439,290
$154,218,308
$214,657,598
$93,245,614
$307,903,212
Source: Suffolk Downs; Christiansen Capital Advisors
Assumptions:
1. Between 2013 and 2015, handle grows at a constant rate, which is the average growth rate between 2000 and 2012. The projection
assumes that the negative impact of the 2008 financial crisis was temporary; consequently the negative growth rates during 2008 and 2010
are not taken into consideration when generating the projections. We assume that some purse supplements begin to trickle in sometime
2015 from the Category 2 license stabilizing track handle from 2016 to 2019. We assume that by 2017 all Massachusetts gaming facilities
are up and running and contributing to purses at Suffolk Downs.
2. The number of live racing days: 80 in 2014 and 15, 105 in 2016, 115 in 2017, 125 in 2018 and 100 in 2019.
PAGE 47
Exhibit 9.5: Suffolk Downs Handle Projection 2013-2019
$350,000,000
$300,000,000
$250,000,000
$200,000,000
$150,000,000
$100,000,000
$50,000,000
$0
2013
2014
Live Handle
2015
Simulcast Handle
2016
Transmitted Handle
2017
ADW Handle
2018
2019
Total
Source: Christiansen Capital Advisors, LLC
Assuming a takeout rate of 4% on export handle and 20% on the imported and on track handle
presented in Exhibit 9.5 and using the results as inputs to the IMPLAN model, Exhibit 9.6 presents the
estimated total economic impact on the Commonwealth of live racing and simulcast betting at Suffolk
Downs in 2019, assuming that the purse supplements projected in Exhibit 9.3 go into effect.
Thoroughbred race track operations in the Commonwealth under these assumptions would total 651
persons, with associated labor income totaling $53.1 million. Total value added is $59.6 million.
Total output of Thoroughbred race track operations in Massachusetts is $82.6 million.
PAGE 48
Exhibit 9.6: Estimated Economic Impacts of Thoroughbred Track Operations in 2019
Direct Effect
Indirect Effect
Induced Effect
Total Effect
Employment
359
69
223
651
Labor Income
$36,834,027
$4,660,956
$11,604,671
$53,099,654
Total Value Added
$33,060,493
$5,918,028
$20,662,118
$59,640,639
Output
$42,004,978
$8,849,711
$31,712,778
$82,567,468
Using the projections presented in Section 8 as a baseline, Exhibit 9.7 estimates the total economic
impact of the breeding and horse owning sector in 2019.
Estimated horse owning sector employment increases from a current 530 to 992 in 2019. Horse
owning sector labor income increases from $11 million currently to $20.7 million in 2019. Horse
owning sector value added increases from $11.7 million currently to $21.9 million in 2019. Horse
owning sector output increases from $18.3 million currently to $34.2 million in 2019.
Breeding sector employment increases from 420 currently to 1,959 in 2019. Breeding sector labor
income increases from $8.3 million currently to $18.8 million in 2019. Breeding sector value added
increases from $12.7 million currently to $28.8 million in 2019. Breeding sector output increases from
$22.845 million currently to $51.7 million in 2019.
Exhibit 9.7: Estimated Economic Impacts of Breeding and Horse Ownership in 2019
Horsemen
Direct Effect
Indirect Effect
Induced Effect
Total Effect
Employment
891
15
87
992
Labor Income
$15,103,241
$1,031,149
$4,525,687
$20,660,077
Total Value Added
$12,212,156
$1,575,497
$8,059,262
$21,846,915
Output
$18,649,999
$3,193,659
$12,367,186
$34,210,844
Breeders
Direct Effect
Indirect Effect
Induced Effect
Total Effect
1,814
66
79
1,959
$12,486,447
$2,175,789
$4,132,375
$18,794,612
$17,375,548
$4,107,952
$7,360,477
$28,843,977
$34,172,966
$6,282,482
$11,291,832
$51,747,281
Although an unknowable percentage of purses awarded at Suffolk Downs will go to horses owned or
bred outside Massachusetts, the Massachusetts Expanded Gaming Act ensures that purses totaling $4.7
million will be allocated to Massachusetts-bred Thoroughbreds, while $1.2 million will be allocated for
health and pensions for horsemen. Further, even though some purse awards will go to horses bred
outside the Commonwealth, these horses will be in Massachusetts running and training for at least part
PAGE 49
of the year. If we assume that half of the new Thoroughbred purse supplement funds find their way
into the Massachusetts economy, either as direct payments to Massachusetts breeders and horsemen or
in spending by owners from other States who race at Suffolk Downs for training, feed, and veterinary
services while they are in Massachusetts, our IMPLAN model returns the following economic impact
of horse ownership and Thoroughbred breeding in the Commonwealth.
Exhibit 9.8 sums the data presented in Exhibits 9.5, 9.6, and 8.8 (from the previous Section). 25
With purse supplements from casino gaming in Massachusetts the total direct, indirect and induced
employment generated by Thoroughbred racing, horse ownership and breeding operations in the
Commonwealth will total 3,631 persons in 2019. Associated labor income will total $93.5 million.
Total value added will be $111.8 million. Total output of Thoroughbred race track, horse ownership
and breeding operations in Massachusetts will be $170.9 million.
Exhibit 9.8 Total Economic Impact of Thoroughbred Equines on the Massachusetts Economy
(2019)
Total
Direct Effect
Indirect Effect
Induced Effect
Total Effect
Employment
3,086
153
393
3,631
Labor Income
$64,982,524
$8,033,076
$20,466,776
$93,482,376
Total Value Added
$63,447,962
$11,899,118
$36,445,282
$111,792,362
Output
$96,231,784
$18,795,778
$55,929,352
$170,956,914
Exhibit 9.9 presents the projected tax impact of Thoroughbred racing, horse owning, and breeding
operations in Massachusetts in 2019. As Exhibit 9.9 shows, we estimate that the total tax impact on the
Commonwealth of Massachusetts, including local property taxes, payroll, and pari-mutuel taxes as well
as license revenues and fees generated from of Thoroughbred racing, ownership and breeding, would
be $12 million.
25
The experience in other jurisdictions indicates that on track handle is unlikely to be meaningfully impacted by purse supplements, thus
spending at other area business is likewise unlikely to be materially affected.
PAGE 50
Exhibit 9.9 Total Estimated Tax Impact of the Thoroughbred Industry on the Massachusetts
Economy (2019)
Employee
Tax on Production
Compensation
and Imports
Dividends
Social Ins Tax- Employee Contribution
Social Ins Tax- Employer Contribution
Tax on Production and Imports: Sales Tax
Tax on Production and Imports: Property Tax
Tax on Production and Imports: Motor Vehicle Lic
Tax on Production and Imports: Severance Tax
Tax on Production and Imports: Other Taxes
Tax on Production and Imports: S/L NonTaxes
Pari-mutuel Taxes
Corporate Profits Tax
Personal Tax: Income Tax
Personal Tax: NonTaxes (Fees)
Personal Tax: Motor Vehicle License
Personal Tax: Property Taxes
Personal Tax: Other Tax
Total State and Local Tax
Households
Corporations
$4,181
$56,219
$99,661
$2,123,537
$4,013,355
$50,793
$280,123
$295,569
$1,974,673
$133,837
$2,591,854
$284,566
$69,416
$47,706
$6,768
$155,880
$8,738,050
$3,000,310
$138,018
Total
$4,181
$56,219
$99,661
$2,123,537
$4,013,355
$50,793
$0
$280,123
$295,569
$1,974,673
$133,837
$2,591,854
$284,566
$69,416
$47,706
$6,768
$12,032,258
In addition to the positive tax impacts estimated in Exhibit 9.9, the purse supplements stipulated in the
Massachusetts Expanded Gaming Act are likely to have positive impacts on Thoroughbred breeding in
the Commonwealth.
As noted above, the Massachusetts Expanded Gaming Act provides that supplemented purses totaling
an estimated $4.7 million will be allocated to purses restricted to Massachusetts-bred horses (i.e.,
purses only horses bred in Massachusetts are eligible to win). Extrapolating this $4.7 million in
restricted purses to current ratios of horse farm acreage to horse farms (approximately 50 acres per
farm), and all things being equal, this $4.7 million in supplemented restricted purses could result in an
increase of 3,325 acres in green space devoted to breeding Thoroughbred horses in the Commonwealth,
either by an expansion of existing farms and/or the establishment of new breeding farms in
Massachusetts.
An unknowable percentage of the total (i.e., unrestricted as well as restricted) supplemented purses
awarded at Suffolk Downs will be won by horses owned or bred outside Massachusetts. 26 If we
assume that half of the estimated total purse funds ($12.8 million) are won by Massachusetts-bred
horses, this improvement in the earnings prospects for Thoroughbred racehorses bred in the
Commonwealth could result in an additional 4,500 acres being devoted to Thoroughbred breeding in
Massachusetts.
In the aggregate, therefore, the implementation of casino gaming in the Commonwealth and the large
increase in purse funds that the Massachusetts Expanded Gaming Act ensures could lead to a doubling
26
For this reason, increased purse awards in the Commonwealth could lead to an expansion of Thoroughbred breeding in nearby States
such as Maine, New Hampshire, and Vermont.
PAGE 51
of the green space provided by breeding Thoroughbred horses in the Commonwealth over the long
term.
PAGE 52
Christiansen Capital Advisors, LLC
Christiansen Capital Advisors, LLC has been advising leisure industries, governments that authorize
and regulate various forms of gambling, investment banks and other financial institutions, law firms
and other entities domestically and abroad since 1985. Representative domestic clients include Caesars
Entertainment (Harrah’s Entertainment), Penn National Gaming, Boyd Gaming, Isle of Capri Casinos,
Inc., The State of Rhode Island, The Massachusetts Lottery, The State of Kansas/The Kansas Lottery,
The State of New Jersey Office of the Treasurer, Sterling Suffolk Racecourse LLC, The New York
Racing Association (NYRA), Churchill Downs Inc., Shefsky & Froelich Ltd., Constantine Cannon
LLP, and Merrill Lynch (now Bank of America Merrill Lynch).
PAGE 53
Disclaimer
This report contains forward-looking estimates, projections, and/or statements. These projections,
estimates and/or statements are based upon our current expectations about future events, and reflect our
existing beliefs and knowledge regarding the operating environment, trends, plans, objectives, goals,
expectations, anticipation, actual results of operations, future performance and business plans discussed
in this report.
Further, statements that include the words "may," "could," "should," "would," "believe," "expect,"
"anticipate," "estimate," "intend," "plan," “project,” or other words or expressions of similar meaning
occur in this report. These statements reflect our judgment on the date they are made and we undertake
no duty to update such statements in the future.
In preparing this report, CCA has relied on data, information, projections and forecasts provided by
others. CCA has relied on sources for these data it considers reliable and has made its best effort to
ensure the accuracy of such data, information, projections and forecasts, but has not conducted audits of
the sources used.
CCA has included estimates and assumptions made by CCA that CCA believes are appropriate, but
CCA makes no representation that there will be no variances between actual outcomes and such
estimates and assumptions. Although we believe that the expectations presented here are reasonable,
any or all of the estimates or projections in this report may prove to be incorrect. Inevitably, some
assumptions underlying this report will not materialize, and, as a result, the projections made in this
report may deviate from actual occurrences.
CCA relied on data provided by the Minnesota IMPLAN Group in order to generate estimates of
indirect employment, induced employment and economic output. CCA reviewed the data provided by
Minnesota IMPLAN Group and third parties and utilized such data in good faith, but assumes no
liability resulting from errors, omissions or any other inaccuracies with respect to the information
provided by such third parties. Consequently, actual results achieved during the period covered by our
analysis may vary from our estimates and the variations may be material. CCA accepts no liability in
relation to the estimates provided herein.
PAGE 54
Appendix I: Scope of Work
In performing this study of the Massachusetts Thoroughbred equine industry CCA was asked to
perform the following specific tasks:
1) Undertake an economic impact analysis to include the operations of racing, wagering and ancillary
activities at Suffolk Downs. This analysis will include:
A. A description of the number and kinds of jobs created directly and indirectly by Suffolk Downs;
B. The wages generated directly and indirectly at Suffolk Downs;
C. The total aggregate economic activity in Massachusetts associated with racing at Suffolk Downs
including direct, indirect, and induced employment and wages;
D. An estimate of investment impacts of racing and ancillary activities at Suffolk Downs;
E. An estimate of the State and local tax revenue and other sources of public revenue (breakage,
e.g.) generated from operations at Suffolk Downs.
2) Undertake an analysis of current and historical racing statistics associated with racing and wagering
at Suffolk Downs. This analysis will include:
A.
B.
C.
D.
E.
F.
G.
Wagering (handle);
Takeout;
Purse distributions;
Breakage;
Number of racing days;
Pari-mutuel tax contributions;
Revenues generated from non-racing activities at Suffolk Downs.
3) Undertake an analysis of the current agricultural economic contribution associated with breeding,
raising, and training Thoroughbred horses in Massachusetts. This analysis will include an analysis
of the following data:
A.
B.
C.
D.
E.
F.
Number of Massachusetts Thoroughbred stallions, mares, and yearlings,
Number of Thoroughbred farms/training facilities in the Commonwealth, with acreage,
Associated expenditures (farriers, transportation services, feed, veterinarian services);
Expenditures on equipment in support of the Thoroughbred agricultural economy;
Expenditures on Thoroughbred transportation services;
Expenditures on feed, and for other equine care.
4) Using statistics characterizing the Massachusetts Thoroughbred agricultural economy output from
Tasks 1-3, CCA will describe and estimate the aggregate Thoroughbred agricultural economic
contribution in Massachusetts. This will include:
A. A description of the kinds of jobs created directly and indirectly associated with the
Thoroughbred agricultural economy;
B. A estimate of the wages generated directly and indirectly from the Thoroughbred agricultural
economy;
PAGE 55
C. An estimate of the direct, indirect, and induced employment and wages associated with the
Thoroughbred agricultural economy in Massachusetts;
D. An estimate of output of farm operations in Massachusetts;
E. The number, extent, and economic impact of Massachusetts racing breeding farm operations
and training facilities;
F. An estimate of impacts of Massachusetts horse producers and the Suffolk Downs racing
operation on the Commonwealth;
G. An analysis identifying the extent to which purses paid at Suffolk Downs are a source of income
to Massachusetts horse owners, and spinoff impacts resulting from the payment of those purses.
5) An analysis of equine industry-related tourism and open space contributions to the quality of life for
Massachusetts residents. This will include:
A. An evaluation of the extent to which racing, breeding farms, and training operations contribute
to preserving open space within the Commonwealth;
B. An estimate of tourist (non-Massachusetts residents) visitation, spending, and related effects
associated with the operation of Suffolk Downs.
6) An estimate of the projected economic and measureable non-economic impacts of racing and
wagering at Suffolk Downs on the Massachusetts economy assuming a casino at Suffolk Downs is
licensed and operational.
PAGE 56
Appendix II: Law Governing Purse Supplements in Massachusetts
Appendix II presents the provisions of the Massachusetts law allocating 2.5% of the revenue received
from a Category I casino license to the Massachusetts Race Horse Development Fund (§§ 59 and 60 of
Chapter 194 of the Sessions Laws of 2011). Pertinent language is highlighted in yellow.
An Act establishing expanded gaming in the Commonwealth
Chapter 194 of the Sessions Laws of 2011 Sections 59 and 60
Section 55. Imposes a tax of 25% on gross gaming revenues at category 1 casino establishments, a tax
of 40% on gross gaming revenues at category 2 establishments and an additional 9% on gross gaming
revenues to the Massachusetts Race Horse Development Fund from category 2 establishments.
Section 59. There shall be established and set up on the books of the commonwealth a Gaming
Revenue Fund which shall receive revenues collected from the tax on gross gaming revenue received
from gaming licensees. The commission shall be the trustee of the fund and shall transfer monies in the
fund as follows:
(1) 100 per cent of the revenue received from a category 2 licensee shall be transferred to the Gaming
Local Aid Fund established in section 63; and
(2) 100 per cent of the revenue received from a category 1 licensee shall be transferred as follows:
(a) 2 per cent of revenues to the Massachusetts cultural council of which one-quarter of the revenues
received shall be dedicated to the organization support program of the Massachusetts cultural council
and three-quarters of revenues shall be dedicated to support not-for-profit and municipally-owned
performing arts centers impacted as a result of the operation of gaming facilities; provided, however,
that funds dedicated to such performing arts centers shall be to subsidize fees paid to touring shows or
artists; and provided further, that funding shall be appropriated through a competitive grant process to
be developed and administered by the Massachusetts cultural council;
(b) 1 per cent to the Massachusetts Tourism Fund to fund tourist promotion agencies under clause (c) of
section 35J of chapter 10;
(c) 6.5 per cent to the Community Mitigation Fund established in section 61;
(d) 4.5 per cent to the Local Capital Projects Fund, established in section 2EEEE of chapter 29;
(e) 20 per cent to the Gaming Local Aid Fund, established in section 63;
(f) 10 per cent to the Commonwealth Stabilization Fund established in section 2H of chapter 29;
provided, however, that in any fiscal year in which the amount appropriated in line-item 7061-0008 of
the general appropriation act, paid from the General Fund, or the amount of unrestricted general
government aid paid from the General Fund, including lottery aid distribution to cities and towns as
paid from the General Fund under clause (c) of the second paragraph of section 35 of said chapter 10
and the amount of additional funds distributed to cities and towns as additional assistance paid from the
General Fund, is less than that of the previous fiscal year, up to 1/2 of the funds otherwise directed to
the Commonwealth Stabilization Fund under this section, up to an amount equal to the deficiency
between said appropriations for the current and previous fiscal years, shall be transferred to the Gaming
Local Aid Fund in addition to the 25 per cent under clause (e);
(g) 14 per cent to the Education Fund established in section 64; (h) 9.5 per cent to the Gaming
Economic Development Fund established in section 2DDDD of said chapter 29;
(i) 10 per cent shall be used for debt reduction through a program of debt defeasance and accelerated
debt payments; provided, however, that this program shall be developed jointly by the state treasurer
PAGE 57
and the secretary of administration and finance and shall be implemented in compliance with state
finance law; provided further, that this program shall prioritize the reduction of risk in the
commonwealth's debt portfolio, but may also include payments to decrease the unfunded pension
liability of the Pension Reserves Investment Trust Fund; and provided further, that the secretary of
administration and finance and the state treasurer shall provide a written description of the program to
the finance advisory board established in section 97 of chapter 6 for the board's review and comment
before the program is implemented and shall file a copy of that description with the house and senate
committees on ways and means and the house and senate committees on bonding, capital expenditures
and state assets when it is submitted to the finance advisory board;
(j) 15 per cent to the Transportation Infrastructure and Development Fund established in section 62;
(k) 5 per cent to the Public Health Trust Fund established in section 58; and
(l) 2.5 per cent to the Race Horse Development Fund established in section 60.
Section 60. (a) There shall be established and set up on the books of the commonwealth a Race Horse
Development Fund to be administered by the commission. The fund shall consist of monies deposited
under subsection (c) of section 55. The commission shall make distributions from the Race Horse
Development Fund to each licensee under chapter 128A.
(b) There shall be a horse racing committee consisting of 5 members, 1 of whom shall be the governor
or the governor’s designee who shall serve as chair, 1 of whom shall be the treasurer and receiver
general or the treasurer’s designee, 1 of whom shall be the chair of the commission or the chair’s
designee, 1 of whom shall be appointed by the New England Horsemen’s Benevolent & Protective
Association and the Massachusetts Thoroughbred Breeding Program and 1 of whom shall be appointed
by the Harness Horseman’s Association of New England and the Massachusetts Standardbred Breeding
Program. The horse racing committee shall make recommendations on how the funds received in
subsection (a) shall be distributed between thoroughbred and standardbred racing facilities to support
the thoroughbred and standardbred horse racing industries under this section. In making its
recommendations, the committee shall consider certain criteria including, but not limited to: (i) the
average purses awarded at thoroughbred and standardbred racing facilities; (ii) the total employment
numbers, both direct and indirect, attributable to each horse racing industry; (iii) the relative needs of
each horse racing industry for increased purses; (iv) the amount of the live racing handle generated by
each horse racing industry; and (v) the number of breeding and training farms of each industry that are
located in the commonwealth. The committee shall submit distribution recommendations to the clerks
of the senate and house of representatives not later than 30 days before submitting the
recommendations to the commission for final approval. The commission shall only change the
distribution percentage upon a recommendation by the committee.
(c) Funds received from the Race Horse Development Fund shall be distributed between thoroughbred
and standardbred accounts, as approved by the commission, as follows:
(i) 80 per cent of the funds approved by the commission shall be deposited weekly into a separate,
interest-bearing purse account to be established by and for the benefit of the horsemen; provided,
however, that the earned interest on the account shall be credited to the purse account; and provided
further, that licensees shall combine these funds with revenues from existing purse agreements to fund
purses for live races consistent with those agreements with the advice and consent of the horsemen; (ii)
16 per cent of the funds approved by the commission shall be deposited as follows: (A) for a
thoroughbred track, into the Massachusetts Thoroughbred Breeding Program authorized by the
commission; or (B) for a standardbred track, into the Massachusetts Standardbred Breeding Program
PAGE 58
authorized by the commission; (iii) 4 per cent shall be used to fund health and pension benefits for the
members of the horsemen’s organizations representing the owners and trainers at a horse racing facility
for the benefit of the organization’s members, their families, employees and others under the rule and
eligibility requirements of the organization, as approved by the commission; provided, however, that
this amount shall be deposited within 5 business days of the end of each month into a separate account
to be established by each respective horsemen’s organization at a banking institution of its choice; and
provided further, that of this amount, the commission shall determine how much shall be paid annually
by the horsemen’s organization to the thoroughbred jockeys or standardbred drivers organization at the
horse racing facility for health insurance, life insurance or other benefits to active and disabled
thoroughbred jockeys or standardbred drivers under the rules and eligibility requirements of that
organization.
http://malegislature.gov/Laws/SessionLaws/Acts/2011/Chapter194
PAGE 59
Appendix III: Purse Supplements in the United States
Exhibit III.1 presents the pari-mutuel and casino gaming components of U.S. Thoroughbred purses
between the years 1993 and 2009. Exhibit III.2 presents the underlying data in table format and
calculates the percentage of total U.S. Thoroughbred purses contributed by pari-mutuel betting and
casino gaming. 27
Exhibit III.1: Pari-mutuel and Casino Gaming Components of U.S. Thoroughbred Purses 19932009 ($ Millions)
$1,600
2007 recession begins
The 2001
recession
$1,400
$1,200
$1,000
$800
$600
$400
$200
$0
1993
1994
1995
1996
1997
1998
1999
2000
Non-Pari-mutuel Revenue to Purses
2001
2002
2003
2004
2005
2006
2007
2008
2009
Pari-mutuel Revenue to Purses
Note:
On July 17, 2003 the NBER determined that the 2001 recession lasted eight months, beginning in March 2001 and ending in November
2001 (http://www.nber.org/cycles/july2003/recessions.html).
The National Bureau of Economic Research (NBER) announced on December 1st 2008 that the U.S. economy entered a recession in
December 2007 (http://www.nber.org/dec2008.html).
Source:
Thoroughbred Racing Associations, State racing commissions, The Jockey Club, Christiansen Capital Advisors, LLC.
27
Direct subsidies paid by casinos to the racing industry in New Jersey and Indiana are included in Exhibits 8.5 and 8.6.
PAGE 60
Exhibit III.2: Pari-mutuel and Casino Gaming Components of U.S. Thoroughbred Purses 19932009
Year
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Total U.S.
Total Non-PariTotal Pari-mutuel
Percentage of Purses
Purses
mutuel Revenue to Revenue to Purses
Derived from
($ Millions) Purses ($ Millions)
($ Millions)
Non-Pari-mutuel Sources
$
692.1
$
0.53
$ 691.57
0.08%
718.4
1.07
717.33
0.15%
761.6
4.37
757.23
0.57%
792.7
23.54
769.16
2.97%
851.5
38.62
812.88
4.54%
904.0
51.18
852.82
5.66%
962.9
66.04
896.86
6.86%
1,030.9
96.27
934.63
9.34%
1,067.5
121.13
946.37
11.35%
1,074.2
142.51
931.69
13.27%
1,055.5
149.47
906.03
14.16%
1,092.1
177.92
914.18
16.29%
1,085.0
199.66
885.34
18.40%
1,120.4
208.18
912.22
18.58%
1,180.6
255.82
924.78
21.67%
1,165.0
297.21
867.79
25.51%
1,098.2
318.58
779.62
29.01%
Percentage of
Pari-mutuel Handle
Allocated to Purses
7.20%
7.25%
7.26%
6.62%
6.48%
6.50%
6.53%
6.53%
6.48%
6.19%
5.97%
6.05%
6.08%
6.17%
6.28%
6.36%
6.33%
Source:
Thoroughbred Racing Associations, State racing commissions, The Jockey Club, Christiansen Capital Advisors, LLC.
Exhibits III.1 and III.2 record the increasing dependency of U.S. Thoroughbred purses on casino
gaming at racetracks and other activities, including poker and other card room gambling, unrelated to
Thoroughbred horseracing. In 1993 casino gaming at racetracks contributed about $530,000 to U.S.
Thoroughbred purses, or less than 0.1% of total U.S. Thoroughbred purses that year. In nominal dollar
and percentage of total purse terms the casino gaming contribution to U.S. Thoroughbred purses has
increased steadily since 1993. In 2009 casino gaming at racetracks 28 contributed almost $319 million
to U.S. Thoroughbred purses, or 29% of total U.S. Thoroughbred purses that year.
28
Includes direct subsidies paid by Atlantic City casinos to New Jersey racetracks and horsemen.
PAGE 61
Appendix IV: U.S. and Selected State Handle 2000-2012
Exhibit IV.1 presents U.S. Thoroughbred handle for the years 2000 through 2012. Exhibit IV.2
presents these data in table format.
U.S. Thoroughbred handle reached a series high of $15.2 billion in 2003, declining to $14.7 in 2007.
Following 2007 U.S. Thoroughbred handle declined precipitously, falling to a series low of $10.8
billion in 2011. Between 2003 and 2011 U.S. Thoroughbred shrank by $4.4 billion, or 29%,
Exhibit IV.1: U.S. Thoroughbred Handle 2000-2012
U.S. Thoroughbred Handle
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
U.S. Thoroughbred Handle
Source: The Jockey Club
PAGE 62
Exhibit IV.2: U.S. Thoroughbred Handle 2000-2012 ($ Millions)
Year
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
U.S.
Thoroughbred
Handle
14,321
14,599
15,062
15,180
15,099
14,561
14,785
14,725
13,662
12,315
11,419
10,770
10,882
Exhibit IV.3 presents year-over-year pari-mutuel handle growth rates for selected States and for the
United States for the years 2000 through 2011. Year-over-year handle growth rates cluster around zero,
falling into negative territory after 2006, reflecting the severe adverse impact of the recession that
began in 2007 on the pari-mutuel racing industry. Some of the outliers in this exhibit are due to
apparent anomalies in ARCI and/or State racing commission handle data.
PAGE 63
Exhibit IV.3: U.S. and Selected States Total Pari-Mutuel Handle Year-Over-Year Growth Rates
2000-2012
100.00%
80.00%
60.00%
40.00%
20.00%
0.00%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
-20.00%
-40.00%
US YOY* Rate
DL YOY Rate
FL YOY Rate
IA YOY Rate
LA YOY Rate
MD YOY Rate
NJ YOY Rate
NM YOY Rate
NY YOY Rate
OH YOY Rate
PA YOY Rate
Note: Data for Pennsylvania 2010 and 2012 is from 2011 and 2012 Racetrack Casino Benchmark Report by Pennsylvania Gaming
Control Board
Source: ARCI Reports 2000-2011; 2011 and 2012 Racetrack Casino Benchmark Report by Pennsylvania Gaming Control Board
PAGE 64
Appendix V : U.S. Thoroughbred Purses 2000-2012
Exhibit V.1 presents U.S. Thoroughbred purses for the years 2000 through 2012.
Exhibit V.1: U.S. Thoroughbred Gross Purses 2000-2012
Year
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
U.S.
Thoroughbred
Gross Purses
1,030.90
1,067.50
1,074.20
1,055.50
1,092.10
1,085.00
1,120.40
1,180.60
1,165.00
1,098.20
1,031.30
1,061.20
1,127.80
Exhibit V.2 presents these data in bar chart format.
PAGE 65
Exhibit V.2: U.S. Thoroughbred Gross Purses 2000-2012
U.S. Thoroughbred Gross Purses
1,200.00
1,150.00
1,100.00
1,050.00
1,000.00
950.00
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
U.S. Thoroughbred Gross Purses
PAGE 66
Appendix VI: Purse Supplements in Delaware
Exhibit VI.1 presents number of race days, live handle, simulcast (Delaware Park export) handle, total
handle, average daily live handle, and average daily simulcast (export) handle for Delaware for the
years 1994 through 2012.
Exhibit VI.1: Delaware Average Daily Live Thoroughbred Handle and Simulcast Delaware Park
Export
Year
Live
Handle
Simulcast
Delaware
Park
Export
Total
Handle
1994 $35,610,116 $21,422,110 $57,032,226
1995
27,251,269 64,589,960
91,841,229
1996
28,442,006 107,368,067 135,810,073
1997
30,379,849 177,445,871 207,825,720
1998
25,012,926 205,023,148 230,036,074
1999
26,313,188 254,768,865 281,082,053
2000
25,455,446 264,338,726 289,794,172
2001
22,965,700 259,539,722 282,505,422
2002
22,228,588 260,456,580 282,685,168
2003
19,671,990 252,378,766 272,050,756
2004
18,233,483 230,272,674 248,506,157
2005
18,569,775 216,709,900 235,279,675
2006
17,167,868 211,195,699 228,363,567
2007
14,419,478 198,360,276 212,779,754
2008
11,915,673 153,917,895 165,833,568
2009
11,016,130 157,961,748 168,977,878
2010
10,200,237 170,871,062 181,071,299
2011
8,835,560 141,026,874 149,862,434
2012
7,025,291 109,746,624 116,771,915
Live
Race
Days
Daily
Live
Handle
Daily
Simulcast
Export
Daily Total
135 $263,779
129 211,250
139 204,619
149 203,892
143 174,916
143 184,008
149 170,842
139 165,221
141 157,650
141 139,518
134 136,071
139 133,596
136 126,234
137 105,252
136
87,615
116
94,967
116
87,933
106
83,354
100
70,253
$158,682
500,697
772,432
1,190,912
1,433,728
1,781,600
1,774,085
1,867,192
1,847,210
1,789,920
1,718,453
1,559,064
1,552,910
1,447,885
1,131,749
1,361,739
1,473,026
1,330,442
1,097,466
$422,461
711,948
977,051
1,394,803
1,608,644
1,965,609
1,944,927
2,032,413
2,004,859
1,929,438
1,854,524
1,692,660
1,679,144
1,553,137
1,219,364
1,456,706
1,560,959
1,413,797
1,167,719
Note: Delaware’s video lottery (i.e., VLTs at racetracks) began in 1995-1996
Source: Delaware Thoroughbred Racing Commission, Annual Report, 2012
PAGE 67
Exhibit VI.2 presents average daily live handle, and average daily simulcast (export) handle for
Delaware for the years 1994 through 2012 in line chart format.
Exhibit VI.2: Delaware Average Daily Live Thoroughbred Handle and Simulcast Delaware Park
Export
2000000
1800000
1600000
1400000
1200000
1000000
800000
600000
400000
200000
0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Daily Live Handle
Daily Simulcast Export
Note: Delaware’s video lottery began in 1995-1996
Exhibit VI.3 presents average daily live and simulcast Thoroughbred handle in Delaware for the years
1996 through 2012. Delaware video lottery operations, (i.e., VLTs at racetracks, operating under law
allocating shares of VLT revenue to purses) started in 1995-1996. While average live handle continued
a long-term decline following the inception of racetrack VLT operations, average daily simulcast (or
export) handle shot upwards, rising from $64.6 million in 1994 to a series high of $264.4 million in the
year 2000, an increase of $199.8 million or 309%. Total (i.e., live plus simulcast) handle increased
from $91.8 million in 1995 to a series high of $289.9 million in the year 2000, an increase of $199.8
million or 215%.
PAGE 68
Exhibit VI.3: Delaware Average Daily Live and Simulcast Thoroughbred Handle
2,500,000.00
2,000,000.00
1,500,000.00
1,000,000.00
500,000.00
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Daily Total Handle
Exhibit VI.4 presents Delaware average daily Thoroughbred purses for the years 1996 through 2012.
Exhibit VI.5 presents these data in line chart format. Purse supplements increased average daily
Thoroughbred purses from $156,348 in 1996 to a series high of $301,342 in 2002, an increase of
$144,994 or nearly 93%. While purse supplements did not reverse a long-term downward trend in live
wagering on Thoroughbred racing in Delaware the supplements, by attracting higher quality horses,
made the simulcast signal of Delaware Thoroughbred racing more attractive to bettors in the North
American simulcast market (and more valuable to Delaware Park and horsemen in Delaware),
stimulating enormous increases in wagering on Delaware Thoroughbred racing.
PAGE 69
Exhibit VI.4: Delaware Average Daily Total Thoroughbred Purse
Year
Live Race Days
1996
139
1997
149
1998
143
1999
143
2000
149
2001
139
2002
141
2003
141
2004
134
2005
139
2006
136
2007
137
2008
136
2009
116
2010
116
2011
106
2012
100
Total Purse
$21,732,478
27,463,148
28,721,805
35,041,049
38,008,914
36,885,891
42,489,261
34,876,227
35,858,103
39,609,315
35,871,319
38,160,160
34,829,455
25,995,010
26,854,841
23,761,088
19,989,738
Daily Purse
$156,348
184,316
200,851
245,042
255,093
265,366
301,342
247,349
267,597
284,959
263,759
282,667
256,098
238,486
237,653
235,258
212,656
PAGE 70
Exhibit VI.5: Delaware Average Daily Total Thoroughbred Purse
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Delaware Average Daily Purse
PAGE 71
Appendix VII: Purse Supplements and Equine Breeding in New York
Exhibit VII.1 presents average daily Thoroughbred handle in New York for the years 2002 through
2012.
Exhibit VII.1: New York Average Daily Thoroughbred Handle
Year
NYRA
Finger Lakes
Total
2002 $2,868,029,932 $ 150,443,046 $ 3,018,472,978
2003
2,742,460,451
142,061,793
2,884,522,244
2004
2,762,214,047
140,525,925
2,902,739,972
2005
2,573,250,873
134,204,736
2,707,455,609
2006
2,564,170,436
131,763,864
2,695,934,300
2007
2,543,810,529
148,719,700
2,692,530,229
2008
2,489,112,152
158,609,570
2,647,721,722
2009
2,218,864,748
165,146,981
2,384,011,729
2010
2,114,131,129
173,178,507
2,287,309,636
2011
1,959,924,467
153,283,352
2,113,207,819
2012
2,186,522,901
157,668,483
2,344,191,384
Race
Days
421
409
412
415
408
406
409
415
407
402
408
Daily
Handle
$7,169,770
7,052,622
7,045,485
6,523,989
6,607,682
6,631,848
6,473,647
5,744,607
5,619,925
5,256,736
5,745,567
Source: New York State Racing and Wagering Board Annual Simulcast Reports, 2002 to 2012; The Jockey Club 2013 New York Fact
Book
Exhibit VII.2 presents these data in line chart format.
PAGE 72
Exhibit VII.2: New York Average Daily Thoroughbred Handle
Resorts World Casino
Aqueduct opened on
November, 2011
8000000
7000000
6000000
5000000
4000000
3000000
2000000
1000000
0
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Average Daily Total Live Handle
Source: New York State Racing and Wagering Board Annual Simulcast Reports, 2002 to 2012; The Jockey Club 2013 New York Fact
Book
New York authorized racetrack video lottery terminals under law allocating shares of video lottery
revenue to racetracks and horsemen (purses) in its Omnibus Gambling Act of 2001. The start of VLT
operations was delayed by legal challenges to the Omnibus Gaming Act, and until 2011 racetrack VLTs
were confined to relatively small racetracks in the Catskills and Upstate New York. In November 2011,
however, VLTs began operating at the Genting Resorts World Casino at Aqueduct, a racetrack operated
by the New York Racing Association (NYRA) in Queens.
Exhibit VII.3 presents average daily Thoroughbred purses in New York for the years 1991 through
2012. Exhibit VII.4 presents these data in line chart format. Although average daily Thoroughbred
handle trended generally downward between 2002 and 2011, average daily Thoroughbred purses,
supplemented with VLT revenues, moved, in an irregular fashion, upwards, reaching $372,058 in 2005.
PAGE 73
Average daily handle and average daily purses were both adversely impacted by the recession that
began in 2007. The start of VLT operations at Aqueduct, in New York City, in November 2011
increased average daily Thoroughbred purses dramatically, from $305,749 in 2011 to $414,252 in 2012,
an increase of $108,503 or 35.5%. Reversing a long-term downward trend, average daily
Thoroughbred handle likewise increased, rising from $5,256,736 in 2011 to $5,745,567 in 2012, a gain
of $488,831 or 9.3%.
Exhibit VII.3: New York Average Daily Thoroughbred Purses
Year
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Race
Days
483
485
464
471
446
424
437
431
438
427
424
421
409
412
415
408
406
409
415
407
402
408
Purses
$101,492,638
102,852,893
96,728,798
93,256,530
118,598,094
115,909,149
109,858,396
111,417,066
125,649,530
131,455,175
145,115,346
132,369,472
131,413,851
137,029,850
154,404,075
132,618,831
142,120,921
145,473,050
133,196,550
119,800,835
122,911,228
169,014,751
Average Daily
Purse
$210,129
212,068
208,467
197,997
265,915
273,371
251,392
258,508
286,871
307,858
342,253
314,417
321,305
332,597
372,058
325,046
350,052
355,680
320,956
294,351
305,749
414,252
Source: The Jockey Club 2013 New York Fact Book
PAGE 74
Exhibit VII.4: New York Average Daily Purse
450000
Resorts World Casino
Adueduct opened on
November, 2011.
400000
350000
300000
250000
200000
150000
100000
50000
0
1991199219931994199519961997199819992000200120022003200420052006200720082009201020112012
Average Daily Purse
Source: The Jockey Club 2013 New York Fact Book
Exhibit VII.5 presents the number of mares bred in New York and Florida, two important equine
breeding States, in 2011 and 2012. The number of mares bred in New York increased by 43% far
outpacing the increase in the number of Florida-bred mares (+6.75%).
PAGE 75
Exhibit VII.5: New York Mares Bred
State
New York
Florida
2011
Mares
Bred
1147
2876
2012
Mares
Bred
1641
3070
Pct.
Change
43.07%
6.75%
Source: P.101, New York Thoroughbred Breeding and Development Fund Corporation, 2012 Annual Report
Exhibit VII.6 presents the number of active New York State Thoroughbred horse farms for the years
2000 through 2012. Exhibit VII.7 presents these data in line chart format. Although the number of
active Thoroughbred farms was stable between the year 2000 and 2008, fluctuating around 400 farms,
the number of active Thoroughbred farms decreased precipitously after that year, falling to a series low
of 273 active Thoroughbred farms in 2012. The contraction reflects the negative impact of the severe
recession that began in late 2007, which adversely impacted Thoroughbred horse farming in New York
and in other States.
Exhibit VII.6: Active New York State Thoroughbred Horse Farms 2000-2012
Year
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Numbers
of Farms
397
410
397
394
401
407
403
402
400
378
307
287
273
Source: New York Thoroughbred Breeding and Development Fund Corporation, 2010, 2011, 2012 Annual Reports
PAGE 76
Exhibit VII.7: Active New York State Farms 2000-2012
On set of recession December 2007
Active New York State Farms 2000-2012
450
400
350
300
250
200
150
100
50
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Year
Source: New York Thoroughbred Breeding and Development Fund Corporation, 2010, 2011, 2012 Annual Reports
PAGE 77
Appendix VIII : Purse Supplements and Equine Breeding in
Pennsylvania
Exhibit VIII.1 presents total in-State Pennsylvania handle for the years 2000-2011.
Exhibit VIII.1: Pennsylvania Total In-State Pari-Mutuel Handle 2000-2011
Year
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Total Pari-Mutuel
Handle
$1,216,700,739
1,201,181,623
1,178,477,636
1,110,930,863
1,047,440,661
1,001,786,691
975,854,264
934,200,853
824,104,540
733,842,627
621,719,195
555,274,290
Source: Association of Racing Commissioners International, Inc., Annual Pari-Mutuel Racing Report 2000-2011
Exhibit VIII.2 presents these data in line chart format. Total (all breeds and all platforms) Pennsylvania
handle steadily declined during this period.
PAGE 78
Exhibit VIII.2: Pennsylvania Total In-State Pari-Mutuel Handle Trends 2000-2011
Total Pari-Mutuel Handle
1,400,000,000
1,200,000,000
1,000,000,000
800,000,000
600,000,000
400,000,000
200,000,000
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Total Pari-Mutuel Handle
Source: Association of Racing Commissioners International, Inc., Annual Pari-Mutuel Racing Report 2000-2011
Exhibit VIII.3 presents total Pennsylvania handle on Pennsylvania races for the years 2006 through
2012.
PAGE 79
Exhibit VIII.3: Pennsylvania Total Pari-Mutuel Handle on Pennsylvania Races 2006-2012
On Track
Off Track
Phone Wagering
In-State Export
Out-of-State Export
2006
$41.3
$27.5
$13.8
$42.1
$455.5
2007
$40.9
$24.2
$14.7
$42.4
$503.1
2008
$43.6
$22.0
$13.9
$44.2
$605.5
2009
$44.7
$20.1
$12.7
$43.3
$644.1
2010
$40.5
$17.6
$11.3
$39.5
$660.7
2011
$38.3
$15.0
$8.5
$34.3
$594.2
2012
$40.7
$14.5
$8.1
$33.9
$679.7
Total
$580.3
$625.3
$729.3
$765.0
$769.6
$690.3
$776.9
Source: 2012 Racetrack Casino Benchmark Report by Pennsylvania Gaming Control Board
Exhibit VIII.4 presents Pennsylvania total pari-mutuel handle on Pennsylvania Races for the years 2006
through 2012 in line chart format. On average Pennsylvania handle was flat to down over this period,
but out of state wagering on Pennsylvania races grew substantially (49.2%) over this period from
$455.5 million to $679.7 million.
PAGE 80
Exhibit VIII.4: Pennsylvania Total Pari-Mutuel Handle Trends 2000-2011
$900.0
$800.0
$700.0
$600.0
$500.0
$400.0
$300.0
$200.0
$100.0
$0.0
2006
2007
On Track
Off Track
2008
Phone Wagering
2009
2010
In-State Export
2011
Out-of-State Export
2012
Total
Source: 2012 Racetrack Casino Benchmark Report by Pennsylvania Gaming Control Board
Exhibit VIII.5 presents average daily total Pennsylvania purses paid for the years 2006 through 2012.
Casino purse supplements began in 2006, and reflecting this steadily increasing injection of funds as
Pennsylvania’s racetrack casino industry completed its build-out, increased sharply, reaching a series
high of $220,241 in 2012, and increase of $137,834 or 167%.
PAGE 81
Exhibit VIII.5: Pennsylvania Average Daily Total Purses Paid 2006 - 2012
Year
Purse Paid
Live
Race
Days
Daily
Purse
Paid
2006
$62,300,000
756
$82,407
2007
117,200,000
838
139,857
2008
117,912,000
937
125,840
2009
195,607,000
999
195,803
2010
192,803,000
981
196,537
2011
216,164,000
989
218,568
2012
218,699,000
993
220,241
Note: 2006-2007 Purse Paid and Live Days data are from 2006-2007 The Economic Impact of Slot Machines on Pennsylvania’s PariMutuel Wagering Industry report. 2008-2012 Purse Paid data is from 2012 Racetrack/Casino Benchmark Report by Pennsylvania
Gaming Control Board. Purse Paid is the subsequent distribution of prize money actually paid to the winning horses after a race takes
place.
Source: Pennsylvania Gaming Control Board, Racetrack/Casino Benchmark Report, 2012; The Economic Impact of Slot Machines on
Pennsylvania’s Pari-Mutuel Wagering Industry, 2006-2007
Exhibit VIII.6 presents these data in line chart format.
PAGE 82
Exhibit VIII.6: Pennsylvania Average Daily Total Purses Paid 2006-2012
Pennsylvania Average Daily Purse Paid
250000
200000
150000
100000
50000
0
2006
2007
2008
2009
2010
2011
2012
Pennsylvania Average Daily Purse Paid
Note: 2006-2007 Purse Paid and Live Days data are from 2006-2007 The Economic Impact of Slot Machines on Pennsylvania’s PariMutuel Wagering Industry report. 2008-2012 Purse Paid data is from 2012 Racetrack/Casino Benchmark Report by Pennsylvania
Gaming Control Board. Purse Paid is the subsequent distribution of prize money actually paid to the winning horses after a race takes
place.
Source: Pennsylvania Gaming Control Board, Racetrack/Casino Benchmark Report, 2012; The Economic Impact of Slot Machines on
Pennsylvania’s Pari-Mutuel Wagering Industry, 2006-2007
Exhibit VIII.7 presents summary statistics for Pennsylvania Thoroughbred racing for the years 1991
through 2012. Despite a relatively constant number of racing days during this period, the number of
starters (horses starting a race) increased from 26,978 in 2006, the year in which racetrack slot
machines began operating, to 35, 294 in 2012, an increase of 8,316 starters, or 30.8%. Supplemented
with casino revenue, Pennsylvania’s larger purses are attracting more horses.
PAGE 83
Exhibit VIII.7: Pennsylvania Racing Overview 1991-2012
Year
Races
4,827
1991
4,758
1992
4,597
1993
4,081
1994
4,008
1995
3,983
1996
4,166
1997
4,157
1998
3,528
1999
3,886
2000
3,992
2001
3,844
2002
3,851
2003
3,825
2004
3,681
2005
3,374
2006
3,748
2007
4,427
2008
4,585
2009
4,519
2010
4,464
2011
4,459
2012
Purses
Starters Starts
Race Days
30,743,979
7,595
39,918
525
34,750,369
7,470
40,437
521
35,181,164
7,281
39,287
502
30,290,347
6,395
33,212
441
34,852,063
6,180
33,086
420
38,829,008
6,139
32,399
410
41,574,849
6,011
33,190
434
43,440,043
5,888
31,960
430
41,437,720
5,650
27,450
377
49,336,506
5,918
28,680
417
50,873,989
6,364
31,207
428
47,429,957
6,215
30,598
415
45,735,528
6,215
30,598
411
47,629,851
6,683
31,335
415
49,313,112
6,278
30,348
402
42,903,619
5,460
26,978
367
76,277,854
7,400
30,214
408
110,225,084
9,256
35,409
498
115,231,435
9,867
38,421
511
116,402,057
9,414
36,969
501
123,470,108
8,723
34,761
502
127,997,497
8,359
35,294
499
Average
Field
Size
8.3
8.5
8.5
8.1
8.3
8.1
8.0
7.7
7.8
7.4
7.8
8.0
7.9
8.2
8.2
8.0
8.1
8.0
8.4
8.1
7.8
7.9
Average
Purse
per Race
6,369
7,304
7,653
7,422
8,696
9,749
9,973
10,450
11,745
12,696
12,744
12,339
11,876
12,452
13,397
12,716
20,352
24,898
25,132
25,758
27,659
28,705
Source: the 2013 Pennsylvania Fact Book by The Jockey Club
Exhibit VIII.8 presents total funding for Pennsylvania’s two purse accounts (one for Thoroughbreds
and one for Standardbreds or harness), including the Commonwealth’s two breeding funds. With the
start of racetrack casino operations under law allocating portions of casino revenue to Pennsylvania
purses and it two equine breeding funds the resources allocated to purses increased from $124.7 million
in 2007 to $273.7 million in 2012, an increase of $149 million or 119.5%.
PAGE 84
Exhibit VIII.8: The Pennsylvania Race Horse Development Fund Distributions 2006 -2012
Total of the
Total value of
The Fund
2006
2007
2008
2009
2010
2011
2012
Average
PA Sire
Stakes
Fund
PA Breeding
Fund
PA
Standardbred
Development
Fund
Total of
the
four
funds
Health &
Pension
Benefits
four funds
(in %)
3,788,151
190,328
207,888
207,888
151,526
757,630
20.00%
124,683,708
8,399,133
5,775,130
5,775,130
4,987,348
24,936,741
20.00%
193,867,891
14,681,313
8,168,775
8,168,775
7,754,716
38,773,579
20.00%
235,707,247
18,235,972
9,738,594
9,738,594
9,428,290
47,141,450
20.00%
271,006,216
16,213,108
7,602,349
7,602,349
12,173,561
43,591,367
16.09%
276,974,931
18,634,739
8,814,756
8,814,756
11,368,571
47,632,822
17.20%
273,713,913
18,184,986
8,634,503
8,634,503
11,400,000
46,853,992
17.12%
250,254,039.60
17,190,023.60
8,591,795.40
8,591,795.40
10,425,027.60
44,798,642
18.08%
60,000
Distribution of the Pennsylvania Race Horse Development Fund 2006 2012
Value (in thousands)
50,000
40,000
30,000
20,000
10,000
0
2006
2007
2008
PA Breeding Fund
PA Standardbred Development Fund
2009
2010
2011
2012
Year
PA Sire Stakes Fund
Health & Pension Benefits
Total of the four funds
Note: Since 2010, the Fund starts to allocate revenue to General Fund and since 2012; the Fund starts to allocate revenue to Farm Products
Show Fund. General Fund and Farm Products Show Fund are categorized as “Non-horse racing distribution”
Exhibit VIII.9 presents summary statistics for Pennsylvania’s purse structure for the years 2006 through
2012. In 2006 total purses earned were $55.9 million, of which $52.9 million, or 94.6%, was derived
from pari-mutuel betting, with casino supplemental revenue contributing $3 million, or 5.4 %. In 2012
PAGE 85
total purses earned were $209 million, of which $33.6 million, or 16.1%, was derived from pari-mutuel
betting, with casino supplemental revenue contributing $175.5 million, or 83.9 %.
Exhibit VIII.9: Fund Money Allocation into Purses
Total value of
The Fund
2006
2007
2008
2009
2010
2011
2012
3,788,151
124,683,708
193,867,891
235,707,247
271,006,216
276,974,931
273,713,913
The total value
from the
Fund to purses
3,030,521
99,746,964
155,094,313
188,565,798
157,089,030
181,321,256
177,269,965
Purses earned
from
slots
3,031,000
99,747,000
155,094,000
188,566,000
159,116,000
178,661,000
175,469,000
Purses earned
from handle
52,933,000
51,940,000
45,957,000
41,895,000
37,333,000
34,052,000
33,572,000
Total purses
earned
(slot + handle)
55,964,000
151,687,000
201,051,000
230,461,000
196,449,000
212,713,000
209,041,000
Source: 2011 and 2012 Racetrack Casino Benchmark Report by Pennsylvania Gaming Control Board
Exhibit VIII.10 presents these data in bar graph format.
PAGE 86
Exhibit VIII.10: Purse Earned 2006-2012
Purses Earned 2006 - 2012
250,000
200,000
150,000
100,000
50,000
0
2006
2007
2008
Purses earned from handle
2009
2010
2011
Year
Purses earned from slots
2012
Source: 2011 and 2012 Racetrack Casino Benchmark Report by Pennsylvania Gaming Control Board
Exhibit VIII.11 presents the value of improvements made to the backstretch of Pennsylvania racetracks
since the start of racetrack casino gaming operations in 2006. A total of $57.8 million has been spent
on backstretch improvements over this period, a figure that compares very favorably with capital
spending on racetrack backstretch areas in many, if not most, racing States.
PAGE 87
Exhibit VIII.11: Backstretch Improvements 2006-2012
Year
11,918
2006
1,349
2007
10,358
2008
6,977
2009
6,217
2010
13,345
2011
7,664
2012
Backstretch improvements 2006 -2012
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
2006
2007
2008
2009
Year
2010
2011
2012
PAGE 88
Exhibit VIII.12 presents breeding data from the State of Pennsylvania for the years 2000-2012. As
shown in that Exhibit breeding activity picked up considerably in the State after slot machines were
added to the States racetracks, although it has noticeable tapered off since 2009 much like nearby New
York.
Exhibit VIII.12 Pennsylvania Thoroughbred Foals. Mares Bred and Stallions registered 2000-12
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Registered
Foals
923
914
873
1,039
984
1,257
1,266
1,281
1,431
1,536
1,526
1,158
Mares
Bred
1,016
976
1,026
1,027
1,027
1,210
1,159
1,173
1,414
1,753
1,650
1,311
1,089
Stallions
123
117
109
121
120
129
122
106
120
128
126
95
84
Exhibit VIII.13 presents theses data in line chart format.
PAGE 89
Exhibit VIII.12 Pennsylvania Thoroughbred Foals. Mares Bred and Stallions registered 2000-12
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
2000
2001
2002
2003
2004
2005
Registered Foals
2006
Mares Bred
2007
2008
2009
2010
2011
2012
Stallions
PAGE 90
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The Economic Impact of the Massachusetts

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