Impact of Breeder Awards Series: Maryland Case Study

Only a decade ago the state lost nearly 80 percent of its stallions, mares and foals to neighboring states that offered greater financial incentives. The decision in 2010 by the Maryland state legislature to invest slot money from casino video lottery terminals into the breeding industry is credited with helping to re-energize and revitalize the breeding industry in the state.

In addition, the program had an enormous economic effect in Maryland valued at $1.6 billion and accounting for over 28,000 jobs. “Slots came to Delaware first, then to West Virginia and then Pennsylvania and all during those years we were advocating to our legislature that we needed to be competitive,” said Cricket Goodall, Executive Director of the Maryland Horse Breeders Association. “Maryland wasn’t able to compete at the racetrack and consequently in the breeding numbers because people were going where they could make more money with their horses.”

The close proximity of neighbouring states meant that it was convenient and more rewarding for breeders to support lucrative programs in the other states. “That’s when times got really rough for the farms,” Goodall continued. “2012 was the lowest production number for Maryland-bred foals. It took awhile for the (state) to pass slots here, then to implement them and to get the money flowing. It was a challenge for the legislature to agree.”

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Mike Pons, who operates Country Life Farm with his brother, Josh, President of the Maryland Thoroughbred Breeders Association, said money from the VLTs provided a financial panacea.

“The secret ingredient has been the cash,” said Pons, whose farm bred the great Cigar. “It solved a lot of ills. Everything was here; it just needed a transfusion of cash. That’s what the slots have done. It’s been interesting to see what’s happened here in just the last four or five years. It’s very exciting.”

Through the Purse Dedication Account supervised under the authority of the State Racing Commission, 1 percent of the VLT revenues fund the Racetrack Facilities Renewal Account while 6 percent (capped at $100 million per year) are allocated to racing, with 80 percent going to the thoroughbreds and 20 percent to the Standardbreds. For the thoroughbred industry that amounted to about $55 million last year, 89 percent of which was directed to the purse account and 11 percent to the breeding fund.

The number of annual race dates has increased since 2015. This year nine additional racing programs were added to increase it to 178 from 169 the year before. Laurel has 159 dates, Pimlico 12 and Maryland State Fair seven. Moreover, the racing schedule has continued uninterrupted this year because the Maryland Jockey Club wanted to take advantage of increased simulcasting opportunities.

Last year, there were 1,649 races – the highest since 2007 – running for a total amount of more than a record $56.3 million. There were a total of 4,029 starters
– the most since 2008 – and a total of 12,932 starts. The average purse per race is $34,168.

The number of Maryland-bred starters last year totaled 1,150 – the most since 2013 – posting 7,087 starts – the most since 2014. The foal crop has gone from 370 in 2012 to 629 as of 2016 (the 2017 figures haven’t been released by the Jockey Club, but Goodall expects a slight increase). It represents almost 3 percent of the entire North American foal crop.

In 2016, the Maryland state legislature put forward a $500,000 bonus to be split evenly between the winning owner and breeder of a Maryland-bred that wins the Preakness, the second leg of the U.S. Triple Crown that takes place at Pimlico. The legislature also committed $500,000 a year to revive the D.C. International Stakes, one of the premier grass races in North America, under the new name of Baltimore Washington International Turf Cup. It may happen by 2019.

Collectively, it’s been a remarkable turnaround. “The market was dead; it’s been a nice, slow revival, simply because you just needed more cash,” Pons said. “We were hurting. We were on IV. It was really bad. I have two farms and employees and everything and I was thinking ‘what are we going to do here.’ We were really in a box.”

Pons said once the subsidies were in place and the percentages defined, the Maryland Racing Commission brought together the racetracks, the breeders and
the horsemen from both the thoroughbred and standardbred and signed a long-term agreement so the individual entities would work as one.

“When the watering hole got really small, a lot of the critters got more aggressive, but once we all got drinks and didn’t stay very long it was a lot easier coming and going,” Pons said. “That’s really what’s happened in Maryland racing.”