REVENUE ESTIMATING CONFERENCE TAX: Quarter Horse and Thoroughbred Tax ISSUE: Authorizes a Quarter Horse Permitholder to Substitu

REVENUE ESTIMATING CONFERENCE TAX: Quarter Horse and Thoroughbred Tax ISSUE: Authorizes a quarter horse permitholder to substitute 50% of their races for thoroughbred races BILL NUMBER(S): SB788ENR SPONSOR(S): Senator Jones and Senator King MONTH/YEAR COLLECTION IMPACT BEGINS: Effective upon ratification of compact DATE OF ANALYSIS: May 26, 2009

SECTION 1: NARRATIVE a. Current Law: A full schedule of live races for a quarter horse permitholder is defined as the conduct of at least 40 performances during the preceding year.

A quarter horse permitholder may substitute 50% of their live races during the year with other breeds of horses, with the exception of thoroughbred horses registered with American Paint Horse Association, Appaloosa Horse Club, Arabian Horse Registry of America, Palomino Horse Breeders of America, or United State Trotting Association.

A quarter horse permitholder may substitute 50% of their live races with thoroughbred horses registered with the Jockey Club, if they have written consent from all greyhound, harness, and thoroughbred permitholders located within 50 miles of their facility.

Tax on live handle is based on type of races or games conducted by a permitholder.

Tax rate for a quarter horse race is as follows: • Live 1% of handle • Simulcast 1% of handle • Intertrack 2% of handle • ITWS 2.4% of handle, or • ITWS/ITW .5% of handle, if the guest is located outside the market area of the host and within the market area of a thoroughbred track conducting a live meet.

Tax rate for a thoroughbred race is as follows: • Live .5% of handle • Simulcast .5% of handle • Intertrack 2% of handle • ITWS 2.4 of handle • ITWS/ITW .5% of handle, if the guest is located outside the market area of the host and within the market area of a thoroughbred track conducting a live meet.

b. Proposed Change:

A full schedule of live races for a quarter horse permitholder is defined as follows:

FY 09/10 - 40 live performances, or FY 09/10 – 20 live performances if agreed upon by the permitholder and the horsemen’s association. FY 10/11 – 20 live performances FY 11/12 – 30 live performances FY 12/13 – 30 live performances

Authorize quarter horse permitholder to substitute 50% of their live races during the year with other breeds of horses, which now includes thoroughbred horses registered with American Paint Horse Association, Appaloosa Horse Club, Arabian Horse Registry of America, Palomino Horse Breeders of America, United State Trotting Association, Florida Cracker Horse Association, or Jockey Club without written consent from all greyhound, harness, and thoroughbred permitholders.

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SECTION 2: DESCRIPTION OF DATA AND SOURCES Pari-Mutuel Wagering Annual Report from 1986/1987 Pari-Mutuel Wagering Annual Report from 2007/2008 Section 550, Florida Statute

SECTION 3: METHODOLOGY (INCLUDE ASSUMPTIONS AND ATTACH DETAILS) The last time a quarter horse permitholder conducted races in Florida was FY 86/87. Assuming a correlation between quarter horse handle and thoroughbred handle, quarter horse revenue would show a similar percentage decrease in handle as the thoroughbred handle from FY 86/87 to FY 07/08, which is approximately 90 percent.

• Estimated the total tax revenue per quarter horse performance to be $222.

• Assumed quarter horse daily license fees for live and simulcast per performance to be $1300.

• Estimated the live and intertrack tax revenue per thoroughbred performance to be $5,859.

• Assumed thoroughbred live daily license fees per performance to be $800.

• Assumed 3% decline in tax revenues from facilities within the market area of quarter horse permitholders, pro-rata for the number of facilities estimated as below.

• Assumed that a quarter horse permitholder substitutes the maximum number of allowable races for thoroughbred races, which is ½ of their races. A performance consists of a minimum of 8 races.

o Estimate: 1 facility conducting 20 performances for FY 09-10 and 3 facilities conducting 44 performances for 10-11, 11-12, 12-13. The figures assume one additional facility than the estimates adopted at the previous Revenue Estimating Conference, beginning operations from FY 10-11 onwards.

SECTION 4: PROPOSED FISCAL IMPACT

State Impact: FY 2009-10 FY 2009-10 FY 2010-11 FY 2011-12 FY 2012-13 All Funds Annualized Cash Cash Cash Cash Medium $400,000 $50,000 $400,000 $400,000 $400,000

SECTION 5: CONSENSUS ESTIMATE (ADOPTED 5/28/09) The conference adopted the proposed estimate.

FY 2009-10 FY 2009-10 FY 2010-11 FY 2011-12 FY 2012-13 Annualized Cash Cash Cash Cash General Revenue .4 .1 .4 .4 .4 State Trust 0 0 0 0 0 Total State Impact .4 .1 .4 .4 .4 Total Local Impact 0 0 0 0 0 Total Impact .4 .1 .4 .4 .4

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