News Story

Analysis: Horse Racing Subsidies Fail to Win, Place or Show

A Nolan Finley column in today's Detroit News shows remarkable sympathy for government support of Michigan's dwindling horse racing industry. Several points stand out:

Column: "Lansing is allowing an established segment of the entertainment industry - horse racing - to wither, taking with it hundreds of jobs and small businesses."

Response: Who died and made Lansing the savior for any industry? Tastes and preferences in entertainment change, but that reality hardly justifies taxpayer subsidies to a lucky handful, whether they were buggy whip makers turned obsolete by Henry Ford in the past or horserace promoters today.

Column: "When you're in a state that is losing jobs daily, you need to protect the ones you have." - Quote from Patty Dickinson of the Michigan Thoroughbred Breeders and Owners Association.

Response: At whose expense? Government has nothing to give anyone it doesn't first take from someone else. That means Lansing can only "protect" (subsidize) horse racing jobs by causing other jobs to disappear or remain uncreated in the first place. If Michigan's annual horse racing subsidy is $10 million, that's $10 million taken from families and business owners elsewhere who might cause employment to grow in expanding industries, not contracting ones.

Some $6 million from a tax on the industry's simulcast wagering that used to go to horse racing now flows to the state's general fund, where, among other things, ironically it subsidizes other programs in a rapidly multiplying "economic development" empire, such as handouts to film and car battery makers. Ideally, the state should have eliminated the wagering tax when it cut funding to the industry. For the past decade lawmakers have been handing out selective tax breaks and subsidies like Santa Claus on Christmas morning, yet Michigan has lost a staggering 800,000 jobs since 2000. Who can possibly believe that one more subsidy for horse racing could possibly benefit anyone but a handful of special pleaders?

Column: "Much of the loss (horse racing industry jobs) ... has come in the past two years after the state, in a budget cutting move, stopped paying for keeping officials - stewards, vets, timers, etc., at Michigan's five tracks."

Response: In other words, the industry only existed to the degree it did because of state handouts. More than 100,000 Michigan businesses pay the state's Michigan Business Tax, but how many of them get subsidies for their operating expenses?

Column: (Quoting a stable owner who has cut back her herd), "That hurts my grain supplier, it hurts my vet, it hurts the people who sell horse trainers - and it really hurts the track workers ... It goes right down the chain."

Response: OK, but the same can be said about the taxes paid by others to subsidize a few politically favored industries: Those extracted tax dollars go "right down the chain" of their suppliers, employees and customers.

Column: (Quoting the same stable owner), "Benefiting from Michigan's short-sightedness ... are Indiana, West Virginia and Pennsylvania, which have more race days, and allow slot machines at racetracks and offer incentives for horse breeders."

Response:  If the state's political establishment thinks Michigan's adult population should have access to gambling, then it should remove the obstacles to other forms, not use that as an excuse to redistribute taxpayer dollars to a handful of players in a politically favored one.

Column: "But budget cuts that kill jobs and jeopardize tax revenue seem a poor bargain"

Response: In this case the state jeopardizes jobs and tax revenue by subsidizing the very industry the article defends - an industry that has long since fallen out of favor as a form of entertainment.