Horse Racing Seeks State Subsidy

Some people rode horses in circles really fast here in Aberdeen over the weekend. Apparently the pay for the fastest riders—$1,700–$1,800—is so low that more racers are heading to neighboring states to ride.

According to Fort Pierre racetrack manager Shane Kramme, spring horse races in South Dakota are surviving on charity:

The South Dakota Horsemen’s Association, a group of Thoroughbred and Quarter Horse enthusiasts, put up $15,000 to the Verendrye Benevolent Association, the non-profit that hosts the races, to keep the races alive this year.

…The Ft. Pierre track charges a $1 per person entry fee, to help ensure families can afford to visit and enjoy the sport. Kramme said the community raised about $30,000 to support the races, but “the community can only do so much” [Carrie Stadheim, “Ft. Pierre Horse Races Seeks Funding from Sports Betting,” Tri-State Livestock News, 2018.05.24].

Kramme wants the state to bail out horse racing, first with payback from the State Fair, then long-term with sports-betting revenues:

Kramme has a plan, but it relies on the benevolence of politicians, so it’s not exactly a lock to work.

“I’m talking to my local legislators,” he said. “Back in the (19)90s, maybe ’95, ’96 or ’97, then-governor (Bill) Janklow borrowed over 1 million dollars from the racing fund. I’m going to ask for that money back. We need some interim funding for two to three years, and my ultimate plan is to fund horse racing off sports betting” [Cuyler Meade, “Future of South Dakota Horse Racing in Doubt,” Aberdeen American News, 2018.05.29].

Kramme tells AAN that horse racing is “an agricultural issue… agriculture at its finest,” and that its loss would be a “tragedy” for the entire state. He stretches both big words in that passage (agriculture at its best feeds people, and tragedy… well, on top of everything else, it comes from the Greek for goat song, not horse song). But even if we’re a half-lap back from real tragedy, I am tempted by Kramme’s argument that government subsidy for horse racing would merely repay a loan made from racing to the State Fair. I don’t have handy the 1990s borrow to which Kramme alludes, but in 2002, the Legislature passed and Governor Janklow signed House Bill 1120, which pulled $900,000 from two racing funds and transferred it to the State Fair. 2002 HB 1120 pulled another quarter million from racing and transferred it to the Department of Social Services.

But hold your horses—we don’t tax horse racing to horse racing, any more than we tax alcohol to support beer drinking or tax groceries to promote eating. We tax various activities to obtain revenue for other vital state functions. We can argue about the vitality of the State Fair, but $900,000 in properly collected and appropriated tax dollars isn’t a “loan” that the State Fair has to pay back any more than the $100 million more a year that our 2016 sales tax hike was designed to collect is a “loan” that teachers and commercial property holders have to pay back.

If people stop smoking, the state that taxes tobacco doesn’t have to take money out of the education and law enforcement budgets to subsidize tobacco farmers (even though that’s agriculture) and promote smoking. The state just needs to find a different source of revenue that captures shifting consumer behavior. Horse racing may be a pleasant afternoon diversion for its spectators and riders, but this apparently dwindling industry will have to get in line behind small dairies, organic local-market producers, farmers battling dicamba drift, to claim the state’s compelling interest in funding.