MFOA Bill: Stop State subsidizing of the Maine harness racing industry

Sponsor Rep. Jim Handy, Lewiston, District 58

“An Act To Change the Allocation Formula for Revenue from Slot Machines” 

 

Following voter approval of a 2003 Citizen Initiative intended to help save the ailing harness racing industry, 39% of slot machine revenue from Maine casinos is annually allocated to the state in a distribution framework sometimes referred to as the “Cascade Fund.” Funds are transferred to a variety of programs including education, agriculture, and healthcare, with the majority going to harness racing in various forms. 

In addition to independently increasing the revenue allotted for harness racing, the legislature failed to implement a requirement for the industry to account for how the money was spent. 

Although those funds were initially invested in the Bangor and Scarborough racetracks, recent use have shown the money is simply going to cover basic operating costs. If not for slot machine revenue, Scarborough Downs would have been $1.3 million in the red in 2013. Annual revenue fell from $4.2 million in 2004 to $2.8 million in 2015. Yet funding continues, despite the sport’s precipitous decline in popularity and revenue. 

After off-track betting failed to generate consistent and supportive revenue, the slot machine allotment was implemented to “rescue” the industry yet again. Since it opened in 2005, Hollywood Slots has distributed over $70 million in slot machine profits to the harness racing industry, directly and indirectly. In 2013, the Cascade Fund gave $10.6 million to the industry. The infusion of revenue has boosted purses and encouraged horse owners to invest in faster horses, but attendance and money wagered on harnessing racing have continued to decline. 

According to a 2017 economic analysis from the University of Southern Maine, harness racing has experienced a revenue drop of more than 50% over the last 15 years. Moreover, there are other forms of entertainment the industry has to contend with to attract and retain younger fans. Today the stadium is empty while a few participate in off-track betting. 

The time is long overdue for legislators to re-examine and re- allocate the slot machine revenue, as well as the wisdom of the state funneling millions of taxpayer dollars - over 120 million as of 2018 - into an industry that has demonstrated a precipitous decline for decades, despite years of substantial financial attempts to revitalize it. With so many other significant state fiscal needs, why do we continue to try to salvage an activity that is outdated, often cruel, and has drastically faded in popularity? 

These monies would certainly be better utilized if they were directed toward economic development, infrastructure, education, healthcare, or other worthy services, many of which have been severely reduced or eliminated in recent budgets. 

In October 2014, Rep. Louis Luchini (D-Ellsworth), Co-chair of the Veterans and Legal Affairs Committee, which oversees gaming, told The Ellsworth American that, “I’m not convinced this is a responsible use of taxpayer dollars, especially amidst cuts to other important programs. In the next session, we should re-examine all casino tax distributions and ensure they’re aligned with Maine’s priorities.” Four years have passed. A careful analysis of how our public dollars could be more prudently spent is long overdue. 

 

 

See FACT SHEET on Maine Harness Racing Industry on ‘Education’ and ‘Farm Animals’ pages

Why do taxpayers continue to subsidize Maine harness racing despite its long and precipitous decline?

 

 

An To Change the Allocation Formula for Revenue from Slot Machines

Committee on Veterans and Legal Affairs 

CONCEPT DRAFT SUMMARY

This bill proposes to change the allocation of the revenue from slot machines operated by casinos, as established in the Maine Revised Statutes, Title 8, section 1036, subsections 2 and 2-A. This bill would not change the percentage of the net slot machine income being distributed, but would:

1. Return to the allocation formula established in the legislation allowing casinos that was approved at referendum, which would require reducing the funding of certain items, such as the fund to supplement harness racing purses and the Sire Stakes Fund, and eliminating the funding of other items, such as the Fund to Encourage Racing at Maine’s Commercial Tracks and the Fund to Stabilize Off-track Betting Facilities. Under this proposal, the 14% of the net slot machine income attributable to the reduction or elimination of those allocations would be distributed elsewhere;

2. Reallocate the net slot machine income among the current receivers of the income, increasing the share of some, such as the Fund for a Healthy Maine, the University of Maine System Scholarship Fund, the Maine Maritime Academy and the Maine Community College System, while decreasing the share of others, such as the fund to supplement harness racing purses, and eliminating the share of others, such as the Fund to Encourage Racing at Maine’s Commercial Tracks, the Sire Stakes Fund and the Fund to Stabilize Off-track Betting Facilities; or

3. Enact a combination of the 2 methods and include different recipients.

 

Re-evaluation of the distribution of State slot machine revenues to reflect economic changes since the legislation was enacted in 2003.  

Allocation of Funds Subchapter 3; 923. Allocations of funds 1. Distribution from commercial track.  Proposed options:  

  1. *Go back to the original allotment (25%) per the 2003 Citizen Initiative and find other recipients for the 14% balance;  
  2. ** Reallocate the amended and current 2004 legislation (LD 1820) - see suggested 2019 redistribution below
  3. Use a hybrid of current recipients (adjusted) and new recipients

                          (current)

Referendum  Amended        Proposed

 *(2003)             (2004)           **(2019)

  1%                      3%                   5%       General Fund for administrative expenses, including gambling addiction counseling services                            

  7%                     10%                  7%        to supplement harness racing purses

  1%                      3%                   0%       to the Sire Stakes Fund to support breeding of Maine Standardbred horses

  3%                      3%                   3%       to the Agricultural Fair Support Fund 

 10%                    10%                 15%     for a the Fund for a Healthy Maine for prescription drug benefits for the elderly

  2%                      2%                   5%       for University of Maine System of scholarships 

  1%                      1%                   3%        for Maine Community College System scholarships 

  0%                     4%                    0%       the Fund to Encourage Racing at Maine’s Commercial tracks 

  0%                     2%                    0%       to the Fund to Stabilize Off-Track Betting Facilities 

  0%                      1%                   1%       to the host municipality 

25%                     39%                 39%      TOTAL (% of slot machine revenue) 

 

 

 

 

 

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