Members of the Pennsylvania Senate have introduced Senate Bill No. 1188, which if enacted, would reform the regulatory oversight of the multi-billion dollar horse racing industry in the state. The new legislation would create a Bureau of Horse Racing tasked with duties ranging from drug testing enforcement to gift exchanges between breeders, owners, and trainers. Moreover, and perhaps of most interest to the many commentators following this story, the new legislation would effectively phase out the Racing Commissions that currently operates under the PA Department of Agriculture and would instead have the new bureau be run by the Gaming Control Board, which would also have the ability to grant online horse-race betting licenses to casinos across the state.

Among the sponsors of this bill is PA Senate Majority Leader Dominic Pileggi (R-9th District). After receiving a Presidential Scholarship to Saint Joseph’s University and graduating with a B.A. in Economics in 1979, Pileggi went on to earn a J.D. from the Villanova School of Law in 1982. He chairs the Rules and Executive Nominations Committee and is a member of the Appropriations Committee, the Judiciary Committee, and the Legislative Reapportionment Commission. Prior to his election to the Senate, Senator Pileggi served as Mayor of the City of Chester.

This bill has a lot of components to it – what are the highlights of which Pennsylvania residents should be aware?

Our goals are to make Pennsylvania a national leader in ensuring the integrity of the horse racing industry, to continue the growth of an industry which provides more than 23,000 jobs in Pennsylvania and contributes significantly to open space preservation, and to better fit the regulation of horse racing within the context of how Pennsylvania regulates other forms of legal gambling, such as slots, table games, small games of chance and the state lottery.

These goals will be accomplished by:

Placing responsibility for oversight of the industry with the Pennsylvania Gaming Control Board and dissolving the two separate commissions which are now responsible for those duties.

Strengthening Pennsylvania’s drug-testing program by authorizing testing at off-site training and boarding facilities, authorizing out-of-competition testing, and authorizing a testing fee which will include the cost of equipment, supplies, and facilities.

Prohibiting track personnel or relatives from receiving gifts from breeders, trainers and other persons.

Moving fines and fees, along with a significant percentage of both thoroughbred and standardbred breakage to the State Racing Fund to ensure the Gaming Control Board has the resources needed to enforce the act. Fees and fine amounts will be increased.

Establishing a surcharge on purses for marketing and promotion of Pennsylvania racing.

Providing a statutory framework for the current practice of Internet wagering on horse racing.

What was the impetus for the drafting of this proposed legislation?

The law governing horse racing in Pennsylvania has not been updated in almost 30 years. Since the General Assembly authorized slot and table gaming in Pennsylvania in 2004, the number of races, the number of horses racing, and the size of purses have all increased dramatically.

On top of that, since additional means of wagering on horse races, including via the Internet, have become available, the state has seen a decline in live betting – the primary revenue source for the State Racing Fund, which is used for regulatory oversight.

In other words, Pennsylvania has experienced a large expansion in the racing market since 2004 while simultaneously experiencing declining revenues to support the necessary regulatory oversight.

What effect can we expect this to have beyond Pennsylvania’s borders?

We want to position Pennsylvania as a national leader. We hope our law can be used as a model for other states who wish to grow the horse racing industry while ensuring its integrity with strong oversight.

For our readers who are not as familiar with the federal government’s role in these matters, what is the effect of existing federal legislation (such as the Unlawful Internet Gambling Enforcement Act) on this proposed state legislation?

UIGEA makes it clear that “unlawful Internet gambling does not include placing, receiving, or otherwise transmitting a bet or wager where … the bet or wager does not violate any provision of … the Interstate Horseracing Act of 1978.”

This legislation was carefully drafted to comply with the Interstate Horseracing Act, UIGEA and other existing federal laws, so we don’t anticipate any effect going forward.

What obstacles do you anticipate from animal rights groups, anti-gambling activists, labor unions, and others, and how would you respond to their concerns?

We’re not aware of any active opposition. In terms of animal rights groups, we believe that strengthening Pennsylvania’s drug-testing program and improving overall oversight of the racing industry are directly related to the welfare and well-being of the horses, and we feel that’s a vital component of the bill. In terms of anti-gambling activists, the bill doesn’t propose to add new types of gambling; rather, it proposes to strengthen regulation of what already exists.

Some commentators have criticized the timing of the bill being brought to the floor, in light of a federal horse racing investigation. To what extent is this bill related to the federal investigation?

We’ve been working on this legislation for most of 2013. Alan Novak, who was appointed to the State Horse Racing Commission last year, began discussing the Commission’s financial issues with members of the General Assembly in March or April of this year. The federal investigation only came to light last week.

What other Pennsylvania legislation is pending that could also impact the horse racing and gaming industries?

There are more than a dozen bills introduced in those general topic areas in the current (2013-14) legislative session. The best way to find them is to use the General Assembly website’s co-sponsorship memo search tool and the legislation search tool.

Given the success of Pennsylvania casinos, have any state legislators and/or lobbyists considered a push for the repeal of PASPA and bringing sports gaming within the oversight of the PA Gaming Control Board?

We’re actively following the ongoing federal litigation involving New Jersey. But at this time we’re not aware of any similar push in Pennsylvania.

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