Overview
Chapter 194 of the Acts of 2011 expanded gaming in the Commonwealth and established the Race Horse Development Fund (RHDF) to support the Massachusetts thoroughbred and standardbred horse-racing industries. The Massachusetts Gaming Commission (MGC) administers the fund, which consists of money from gaming licensees. Section 60 of the Acts of 2011 states that funds from the RHDF are earmarked for thoroughbred and standardbred associations as approved by MGC, with 80% distributed into accounts that fund purse awards, 16% to support breeding associations, and 4% for health and pension benefits for the members of the New England Horsemen’s Benevolent and Protective Association and the Harness Horsemen’s Association of New England Inc.
Over the past several years, the Commonwealth’s horse racing industry for thoroughbreds has changed. Specifically, in June 2019, the Suffolk Downs race track closed, and since then, all races that involve Massachusetts-bred thoroughbreds have been held out of state. This change in the industry has significantly affected the RHDF. Specifically, the 80% of the RHDF that is earmarked to fund purse awards cannot be distributed because, according to Section 4.02 of Title 205 of the Code of Massachusetts Regulations, it can only be used to fund races held in Massachusetts. Consequently, the Massachusetts Thoroughbred Breeders Association (MTBA) has been using the 16% of RHDF funding that is earmarked to support breeding associations to fund purses in out-of-state races when a Massachusetts-bred thoroughbred wins a purse. This is allowed under Section 2(g) of Chapter 128 of the Massachusetts General Laws.
As a result of the changes to the industry, spending from the RHDF for thoroughbred horse racing purses has declined while revenue deposited in the RHDF has increased. Specifically, according to MGC’s annual reports, spending from the RHDF has decreased from $17 million in fiscal year 2019 to $8.7 million in fiscal year 2020. As of March 31, 2020, the unspent balance of the RHDF was $16,851,650, of which $16,836,045 was allocated for the thoroughbred racing purse award accounts. Consequently, the majority of the RHDF cannot be used as intended—to support the Massachusetts thoroughbred and standardbred horse-racing industries in Massachusetts—or for any other purpose, and its unspent balance will continue to grow unless the Commonwealth takes measures to address the problem.
In recent years, bills have been filed in the Legislature regarding the horse racing industry. Some of them involved changes to the RHDF. For example, during the 2019–2020 legislative session, 10 such bills were filed in the Legislature, including House Bill 13, which was intended to grant MGC greater control and flexibility in determining the use of the RHDF. House Bill 387, filed during the 2020–2021 legislative session, is meant to reallocate $10,000,000 annually from the RHDF to the Community Preservation Trust Fund.[1]
Section 2(g) of Chapter 128 of the General Laws requires MGC, MTBA, and management of the Equine Division of the Massachusetts Department of Agricultural Resources to consult to establish the percentages of purses to be awarded to breeders and owners for running horse races. The Office of the State Auditor believes that to better support the health of the thoroughbred racing industry in Massachusetts, MGC should also discuss the significant issues facing the industry—such as how to deal with the millions of dollars accumulating in the RHDF that cannot be distributed—with these entities, as well as with the Legislature as appropriate.
| Date published: | September 30, 2021 |
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