Lawmakers want to study ending subsidies for greyhound racing

A contract could be awarded this week for a study to determine the fiscal impact of state subsidies for greyhound racing — and the potential costs and benefits of eliminating those subsidies.

State Lottery Director John Musgrave said that while the state Lottery Commission will underwrite the study, it was requested by current Finance Committee chairmen, Sen. Roman Prezioso, D-Marion, and Delegate Brent Boggs, D-Braxton.

“We were asked by the two present Finance chairs, through the Department of Revenue, to do a study to assess dog racing, and make a determination to see if decoupling is viable,” he said.

West Virginia is one of several states that require racetrack casinos to also offer live thoroughbred or greyhound racing. With “decoupling,” the casinos are no longer obligated to offer live racing, or use casino revenues to subsidize racing purses. Some states, including Rhode Island and Iowa, have already decoupled their casinos and live racing.

“It seems like greyhound racing is on a path of destruction,” Prezioso said. “They’re losing money, and we’d like a study to see how much money they’re losing and what they can do about it.”

Prezioso said that in tough budget times, it’s difficult for the state to keep directing millions of dollars a year to what appears to be a failing industry.

“We’re supporting that industry, and it just doesn’t seem right,” he said. “We can’t keep subsidizing an industry that’s failing.”

In March, West Virginia legislators passed a bill cutting state Lottery subsidies for thoroughbred and greyhound racing purse funds by 10 percent, to about $80 million this budget year.

In September, Sam Burdette, president of the West Virginia Greyhound Owners and Breeders Association, told a legislative interim committee that, between the reduced purse fund subsidies and an ongoing decline in wagering on live races, the greyhound industry in the state is struggling to survive.

He said at the time that only about three of the 17 kennels racing at the Mardi Gras Casino and Racetrack in Nitro were making a profit, citing weekly revenue reports from the racetrack.

Prezioso said he’s optimistic the new Republican leadership in the House and Senate will make use of the findings in the greyhound study.

“We want an independent study and we want the facts,” he said.

As requested, the greyhound racing study is to look at:

| The fiscal and budgetary impact of state-subsidized greyhound racing.

| The economic cost-benefit of state subsidies, the value to casinos if subsidies are withdrawn, and the added tax revenue to the state from subsidy termination.

| Whether greyhound racing can operate as a commercial business with a minimum of state financial support.

| The applicability of Iowa’s gradual “soft-landing” model, or Rhode Island’s outright withdrawal of state support for greyhound subsidies. (Under decoupling legislation enacted in Iowa this year, casino operators will be required to put up about $72 million for buyouts for greyhound owners and breeders.)

For years, one of the biggest greyhound breeders in the state was Tomblin Kennel Inc. in Logan County, operated by Gov. Earl Ray Tomblin’s family. The governor’s mother, Freda Tomblin, who operated the business, died earlier this month.

Two firms that do consulting work for the gaming industry submitted bids last week to conduct the study of West Virginia’s greyhound racing industry: Hooke Associates of Chevy Chase, Md., and Spectrum Gaming Group of Linwood, N.J.

Spectrum Gaming has worked with the state Lottery before: In 2007, the firm was hired by the Lottery to supervise implementation of table games at the four racetrack casinos, which previously had offered only video gaming. Between 2007 and 2009, the Lottery Commission paid Spectrum Gaming more than $1 million, according to payment records in the state Auditor’s office.

Burdette said last week that he was unaware of the planned greyhound racing study, but said there has been talk that a decoupling bill will be introduced during the 2015 session.

“We’ve heard there’s going to be a bill introduced in the Legislature,” said Burdette, who said the association will be pushing for a buyout option if the bill goes forward. “We don’t have a formal proposal yet,” he said.

The Lottery’s request for proposals sets a tight Dec. 31 deadline for completing the study.

In its bid, officials with Spectrum Gaming said that in order to meet that deadline, it will need to have all requested data on revenues, wagering and subsidies submitted within three business days once the contract is awarded.

Reach Phil Kabler at philk@wvgazette.com, 304-348-1220, or follow @PhilKabler on Twitter.

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