Public Hearing on Gaming Legislation May 6, 2003 Max Hempt, Hempt Farms Good morning. My name is Max Hempt and I am here today on behalf of the Standardbred Breeders Association of Pennsylvania. Sitting with me is Jim Simpson, the president of Hanover Shoe Farms. Hempt Farms has been our family's business since 1942. As the fourth generation of a standardbred horse breeding farm, the viability, the success and the future of the family farm will someday rest with me. The Standardbred Breeders Association has concerns about the current legislation introduced this session regarding slot machines at racetracks. This legislative effort is not new; in fact, the standardbred breeders have been involved with this discussion since 1997. The horseracing industry in Pennsylvania begins with us. Standardbred horses are a dominant agribusiness in Pennsylvania. There is probably one standardbred breeding farm in nearly every Senatorial district, as there are some 400 plus farms across the Commonwealth. We support the idea of using slots as a partial solution to the budget shortfall. We support the use of taxes from such revenue to offset property taxes, advance education and assure economical resources for the elderly. We also endorse the financial support of Pennsylvania racetracks, horsemen, owners and breeders to receive part of the distribution of these revenues. We believe those revenues are necessary to create an economic environment and to assure a revenue stream resulting from slot machines at live race tracks in the state. The committee will hear testimony as to what those acceptable levels of return on investment might be in each section of the industry. I am here today to address the economic needs of the more than 400 Standardbred breeders in Pennsylvania. Let me begin by saying, we are disappointed by the percentage being provided to the standardbred breeders in the current legislative bills. There must be a greater incentive for us to continue to operate at such a low level of return in this state while breeders in other states flourish. We believe a 4% allocation of the industry revenue is necessary so the standardbred industry can maintain their farms and produce the kind of high quality racehorses to support harness racing. We feel this is a fair and equitable percentage and it is in accordance with the agreement of allocations reached by the industry's 1997 Memorandum of Understanding negotiated and agreed to by all parties under the Pennsylvania Live Horseracing Council. Had these percentages been followed in the DeWeese and Tomlinson bills, we would be here today enthusiastically supporting the vision of these bills. But as we reviewed each bill, we realized that the necessary allocations agreed to, after protracted industry-wide negotiation, are not included in the measures. In the Tomlinson bill, the standardbred breeders are disappointed in the percentage provided for the PA Standardbred Breeder's Development Fund. A level of revenue that will not help the decline of standardbred horse farms in this state. In the DeWeese bill, it provides for the majority of the distribution to the Sire Stakes program and 6/10ths of 1% to the Standardbred Breeders Development Fund. The Sire Stakes revenue will benefit horse owners, who may or may not live in PA or the U.S., while the Standardbred Breeders Development Fund will be allocated to the more than 400 standardbred breeding farms across Pennsylvania. Pennsylvania was once the standardbred capital of the world. And it can be again. We can be the Keystone to live harness horse racing in the entire northeastern United States if our legislature has the foresight to invest in Pennsylvania businesses -- our breeders. Hanover Shoe Farms, just south of here, is the largest winning standardbred breeder farm in the world. The main farm is over 3,000 acres located between Hanover and York, PA. This is prime green space that has been conserved for more than three-quarters of a century because of their love of the land, their employees, their community and the horses they breed. They take considerable care in maintaining hundreds of thousands of acres, tens of thousands of jobs, and hundreds of millions of dollars invested in our state agribusinesses. However, the economic realities make this more difficult each year. You may be aware of our farm, Hempt Farms on Carlisle Pike in Mechanicsburg. Our operation has not been doing as well as we'd like in recent years. Our land is the sirloin of a growing corridor from Harrisburg through Camp Hill and Mechanicsburg to Carlisle. We are surrounded by new car dealerships, Cumberland Valley High School and the Frye publishing plant. This is prime real estate, worth perhaps ten times its current value if developed for housing tracts and strip malls and in addition, is very attractive to manufacturers because of rail access to our property. While surrounding states offer larger purses and greater incentives to standardbred breeders, we are continually pressured year after year with poor returns and no dividends to our shareholders. Hempt Farms is currently expanding its breeding operations out of state. We presently breed approximately 40 percent of our horses at neighboring states because it no longer makes good business sense to expand in Pennsylvania. We are proud people with a long tradition of pride in our horses and our farms. It is embarrassing for horse breeders like me to come before you today and tell you we can no longer make a decent living in our own state. This forces us to consider setting up farms in other states, where legislation has been enacted that favors the breeding of standardbred horses in their state. Even Canada, with its lower exchange rate, offers more incentive for us to breed and race our horses there than in our own state. We are looking to the Legislature to help us revitalize the equine industry and bring the state back to the epicenter it once was. But as the bills are currently written, the emphasis is placed on promoting the advancement of gaming at racetracks, rather than the growth of live standardbred racing and breeding. We fully expected to come before you today in support of the current measures. We believed that the legislature was moving in the right direction with innovative approaches to not only revitalizing our live racing industry, but by responding to other social needs, like education and property taxes as well. However, we would be dishonest to the thousands of people who rely on us for their livelihood if we did so. Our legislative delegation would also like to see that the standardbred breeders' needs are met and they will not support the current bills if the allocations are not fairly distributed. We believe the standardbred breeding farms across Pennsylvania, and the rural way of life they support, are worth saving. We are hoping the legislature will find a way to keep our operations in Pennsylvania, return our eroding farms into thriving enterprises and make Pennsylvania once again the envy of every horse racing state in the northeast. We thank the committee for this opportunity to testify, and we welcome any questions.
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