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Testimony Submitted by the Standardbred Owners Association of New York
to the NYS Assembly Committee on Racing & Wagering

December 2013

Thank you Chairman Pretlow for the opportunity to present testimony on behalf of the Standardbred Owners Association of New York, the Empire State Harness Horsemen's Alliance and harness horsemen from across New York regarding the incredibly positive economic impacts generated by our harness racing and agricultural industries across the state.

I thought I'd begin by reading a brief excerpt from a fact sheet submitted to state legislators in the spring of 2003 by harness horsemen detailing what we anticipated would be the positive future impacts of a New York video lottery terminal (VLT) initiative that was just about to come on-line. We predicted:

"if revenues from the VLTs are distributed equitably to horsemen, purses and breeders funds, then this new program will not only generate a major new revenue stream for education, but also will trigger a renaissance for the entire horse racing industry in the state. These funds will bring more high-quality horses to New York tracks and make breeding a more lucrative industry in the state. As more breeders come to New York and owners and trainers expand the number of horses in their stables, numerous related industries will benefit indirectly. Clearly, one of the major benefactors of the addition of VLT's at racetracks will be the agriculture industry."

Fast forward a decade later and virtually every one of those harness racing predictions higher purses, expanded agriculture, thriving breeding farms, and tens of thousands of racing related jobs across New York State -has come true. As the Assembly noted in its own notice for this hearing, a 2011 economic impact study commissioned by New Yorks racing and agriculture stakeholders concluded that our industry generated an overall $4.2 billion economic impact statewide and was responsible for 33,000 jobs. So, not only have VLTs generated hundreds of millions of dollars in critical funding for education across the state, but New York's harness industry has returned to its rightful place as a national leader and the promise of a New York racing renaissance has become a reality.

As New York State prepares to undergo major changes to our gaming environment in the wake of the recently-approved casino gaming amendment, it is critically important to fully understand the significant economic gains that have taken place in the NY harness industry as a direct result of the existing VLT initiative and, more significantly, to recognize the potential impacts that the amendment's enacting language could have on racing and agriculture. As you are aware, this enacting language includes provisions that mandate certain racing industry payments (derived from casino gaming) be maintained at 2013 levels (with a small cost of living adjustment based on the federal consumer price index). And while this provision has been characterized as a floor (ensuring that payments for purse support and breeding do not fall below 2013 levels), the fact is that the language, as written, also acts as an absolute "ceiling," capping these payments at a virtually static 2013 level and not allowing for any future growth.

Our concern is that this hard cap on payments to agriculture and racing from casinos will essentially serve as a hard cap on any future, additional growth in racing and agriculture. The message that this will send to potential investors who, as you will see from my testimony below, have absolutely flocked to our state in record numbers in recent years is that New York may be doing well now, but is closed for future business and has no horse breeding or racing investment opportunities available to them moving forward. Other competing racing states have recognized that racing and breeding should grow right along with casino gaming and the very real fear now resonating throughout farms, training facilities and racetracks across New York is that we'll not only fall behind in future growth, but that New York will eventually start to lose some of the hard-fought gains we've already achieved. And to see exactly what is at risk, one need only look at recent statistics and real life case studies from the industry.

The thoughtful, dual purpose VLT initiative implemented by New York State charged with funding education and supporting a horse racing industry that is a major job-generator across virtually every region of the state - has increased purses and attracted investment into our breeding and agriculture sectors like never before. New farms and training facilities are opening in regions across the state and our high-quality New York Standardbred horses are commanding the highest prices by far at auction. Just consider a few of the following numbers, pre- and post-VLTs:

The number of yearlings nominated to the New York Sire Stakes Program increased 71%
2001: 648 2011: 1,108

The number of standardbred mares bred in NYS has increased 25%
2001: 1,293 2011: 1,613

The average stud free for registered NYS stallions increased by over $1,300
2001: $965 2011: $2,322

Purses paid to breeders increased 137%
2001: $7.6 million 2011: $18.1 million

Breeders Awards went from $0 in 2001 to $1.25 million in 2011

The economic multiplier effects of this purse money on various sectors of the New Yorks economy are really quite amazing. Below is just a small sampling of these very real, very concrete, very significant case studies that demonstrate how VLT-generated purse money is filtering throughout our local economies and is attracting even more investment across New York State:

Blue Chip Farms in Wallkill, NY has made $9 million in capital investments to their property since 2001 and has purchased and franchised stallions worth $11.3 million dollars here in New York since the inception of the VLT program. Each of these investments has generated additional expenditures for New York feed companies, hay growers, veterinarians, trucking companies, plumbers, electricians, tractor mechanics and more.

The Leatherstocking Equine Center in New Berlin, NY did not exist in 2001. They have since built a full-scale large animal clinic in upstate New York, own 400 acres, and now employ 12-15 New Yorkers all as a direct result of VLTs. Furthermore, the Leatherstocking Equine Center functions as an educational center for New York graduate and undergraduate students in vet and reproduction studies.

In 2006, a horse family from New Jersey left that state and moved to New York to build the Mt. Hope Training Center in Orange County. They have invested millions of dollars in this new facility, including building a new mile track and a new 62-stall barn all with New York contractors and workers.

In nearby Middletown, NY, Mark Ford has built a brand new, 85-acre training center that includes a 5/8 mile track and seven barns with 300 stalls. This facility which directly employs 22 full time workers and hosts and additional 30 to 40 grooms employed by the trainers at the farm represents a capital investment of more than $8 million. It is also important to note that of the ten trainers currently stabled at the facility, eight have come to New York from other states...specifically as a result of New York's VLTs.

Soon after NYs VLTs came online, Dan Phillips at Genesee Valley Farm spent $250,000 to replace his old barn with a new, modern 12-stall building and add a vet clinic with a full service treatment center. He also rented 30 acres down the road from his main farm, spent $50,000 on road improvements, and spent another $100,000 on new fencing and run-in sheds.

In Western New York, the Erie County Ag. Society and the Western NY Harness Horsemen have partnered on numerous capital projects that have put money directly back into the local economy, including a new, state of the art paddock facility at Buffalo Raceway (at a cost of $1.5 million) and a track resurfacing and drainage project ($300,000). This is in addition to the Ag. Societys construction of 5 new barns with a total construction impact approaching $3 million.

In 2002, Winbak Farm a highly regarded breeder with operations in 3 states and Canada purchased an aging 125-acre farm in Walden, NY and began investing millions in New Yorks Standardbred industry. They built a new stallion barn, brought in 8-10 quality stallions, began boarding 40-60 mares, and created 6 full-time and 5 part-time jobs for New Yorkers. Winbak now produces 50-70 New York breed yearlings annually and has a significant impact on the local economy.

Silver Maple Farm in Schoharie, New York estimates that it directly invests more than $100,000 per year back into the local community through the purchase of hay, grain, supplies, equipment and repairs alone.

Stirling Brook Farm is a 140 acre, 80+ horse farm that was built in 2008 in Easton, NY and now employs 10 New York residents. The economic impacts of the this farms operations on the local economy are significant, with an annual payroll of more than $300,000; school and property taxes of nearly $15,000; annual hay and straw expenditures of between $30,000 and $36,000 (which directly support area farmers); and major capital expenditures such as the $350,000 recently spent on new fencing.

As a direct response to the establishment of VLTs in 2001, Jordan and Kim Myers purchased 25 acres of land in Saratoga, built a farm (house, barn, run-in sheds, and numerous paddocks), brought in dozens of horses and hired two employees. The couple who had previously split time between NY and Florida, where they raced at Pompano soon sold their home in Florida and have now moved back to Saratoga full-time.

Finally, in yet another truly inspiring story about New York investment, consider that in May of 2007, Agostino Abbatiello purchased an empty, abandoned horse farm in Pine Bush into which he has since invested more than $4 million dollars and which now is home to the Pine Bush Training Facility. What was an abandoned property only five short years ago now hosts eight to ten trainers at a time again, many relocating here from other states and accounts for a total of between 50 and 60 good New York State jobs.

Clearly, this isn't just economic theory, conjecture or even predictions from a decade ago. These are proven, on-the-ground economic gains in communities throughout New York State that are taking place thanks to our harness racing industry.

In light of all of these clear and positive economic gains, it should come as no surprise that horsemen, breeders, farmers and tens of thousands of others who are dependent on racing for their livelihoods are deeply concerned about how the coming expansion of casino gaming in New York State will impact these important economic benefits. As noted earlier, other competing racing states have recognized that racing and breeding should grow right along with casino gaming, so one must ask why horsemen or breeders would invest additional resources or even keep their existing horses already here in New York when they can anticipate additional growth in nearby states? With 33,000 New York State equine jobs at stake, it obviously makes complete sense to have a "hold harmless" provision to ensure that agriculture and breeding dont get hurt by the expansion of full casino gaming. However, what is less clear is the economic or policy rationale for capping racing industry support payments at 2013 levels and not allowing the opportunity for any future growth or investment in a critically important, proven, job-creating New York industry.

Within this clear and compelling economic context, the SOA of New York and harness horsemen from across the state are asking the New York State Legislature to reevaluate and reconsider the specific provision included in the casino enacting legislation that mandates a cap on racing industry support levels at the 2013 level. While eliminating this cap would obviously require the creation of a new formula for determining reasonable and appropriate levels of industry support payments from full casino gaming (including both slots and table games), we are committed to working collaboratively with both legislators and gaming industry stakeholders to develop a workable solution. Our experience with the existing VLT initiative has shown that it is possible to create win-win-win scenarios, and we look forward to working with you and your colleagues to continue to support and grow equine industry jobs in the great state of New York. Thank you.

Joe Faraldo, Standardbred Owners Association of NY 718-544-6800
Joni Yoswein, Yoswein New York (representing the SOA of NY) 212-233-5700

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