Report - 2023 02 16 A30799 D253181 Bill Report 5598 Sbr Bfgt Ta 23

Summary

A Washington State Senate Bill Report on SB 5598, as of February 7, 2023, prepared by staff of the Senate Committee on Business, Financial Services, Gaming & Trade, which heard the bill on 2/07/23. The bill would provide supplementary funding to legalized horse racing and the recreational use of horses in Washington State. The report states that the bill repeals the parimutuel tax, creates the Washington Equine Industry Reinvestment Account, transfers up to $6 million a year from sales and use tax on equines and equine-related items, and appropriates $6 million a year to the Washington Horse Racing Commission Operating Account. It lists the split of remaining funds, including 65 percent to class 1 racing associations, and sets a $200 per day live race day fee. The report summarizes supporting public testimony and lists Senator Mark Mullet as prime sponsor.

Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Full text

                            SENATE BILL REPORT
                                  SB 5598

                                      As of February 7, 2023

Title: An act relating to providing supplementary funding to legalized horse racing and the
     recreational use of horses in Washington State.

Brief Description: Providing supplementary funding to legalized horse racing and the
     recreational use of horses in Washington State.

Sponsors: Senators Mullet, Fortunato, Nguyen, Keiser, Schoesler, Kauffman, Hunt, Padden,
    Wilson, J., Conway, Dozier, Stanford and Van De Wege.

Brief History:
     Committee Activity: Business, Financial Services, Gaming & Trade: 2/07/23.


                                     Brief Summary of Bill
           • Repeals the parimutuel tax.
           • Creates the Washington Equine Industry Reinvestment Account
             (Account) to support the Washington Horse Racing Commission and
             activities related to the equine industry.
           • Requires an annual transfer of $6 million per year to the Account of
             revenue from sales of equines and equine-related items.
           • Requires an annual appropriation of $6 million from the Account to the
             Washington Horse Racing Commission Operating Account.


SENATE COMMITTEE ON BUSINESS, FINANCIAL SERVICES, GAMING & TRADE

     Staff: Kellee Gunn (786-7429)

     Background: Washington Horse Racing Commission. The Washington Horse Racing
     Commission (Commission) is responsible for licensing, regulating, and supervising all




     This analysis was prepared by non-partisan legislative staff for the use of legislative
     members in their deliberations. This analysis is not part of the legislation nor does it
     constitute a statement of legislative intent.

Senate Bill Report                              -1-                                             SB 5598
     horse race meets held in Washington where the parimutuel system of betting is used.
     Parimutuel betting, or pool betting, is when those who bet and finish in the first four places
     share the total amount bet minus a percentage for management.

     Betting or wagering on a horse race is lawful in Washington only if it is by the parimutuel
     method.

     Parimutuel Tax. There is a tax on parimutuel betting in Washington State. The tax rate is
     dependent on the gross receipts of the previous calendar year on in-state parimutuel
     machines. The tax rate that must be withheld and paid to the commission daily is either:
         • 1.3 percent if gross receipts from the previous calendar year are greater than $50
           million; or
         • 1.803 percent if gross receipts from the previous calendar year are less than $50
           million.

     Gross receipts from the parimutuel tax are deposited into a nonappropriated account for the
     Commission’s operating expenses. If sufficient funds are available for operating, then the
     Commission may spend up to $300,000 per fiscal year for the equine industry.

     If a licensee is a nonprofit, and meets less than ten days a year, they are not subject to the
     parimutuel tax.

     Race Fee. Every person wanting to hold a horse race with betting and wagering must apply
     to the Horse Racing Commission for a license. The licensee shall provide certain
     information on the race meet. The number of days the horse race meets as well as the gross
     receipts from parimutuel betting from the previous calendar year shall determine the daily
     fee. Licensees which had gross receipts from parimutuel machines in excess of $50 million
     in the previous year must pay a $500 daily fee, those at or below that must pay a $200 daily
     fee. There must be at least six, but no more than 11, races per day for each licensee subject
     to the daily fee.

     Summary of Bill: Annually, beginning July 1, 2023, up to $6 million shall be transferred
     into the Washington Equine Industry Reinvestment Account (Account) from the state’s
     sales and use tax on the following items:
         • equines;
         • equine feed;
         • prescription drugs, over-the-counter drugs, or dietary supplements to be dispensed to
            equines;
         • equine tack;
         • horse bedding and grooming supplies;
         • sale of horses, including equines claimed at class 1 and class C regulated race meets;
            and
         • other taxable sales directly related to equine ownership, riding, or boarding.



Senate Bill Report                             -2-                                         SB 5598
     The term equine means horse, pony, mule, donkey, or hinny.

     The Account is created in the state treasury to help legalized horse racing and the
     recreational use of horses in Washington State. Beginning in fiscal year 2024, and annually
     thereafter, the money in the account must be appropriated as follows:
         • $6 million to the Washington Horse Racing Commission Operating Account for
           commission activities and operating expenses.

     Remaining Account funds shall be distributed as follows:
        • 65 percent to the class 1 racing associations allocated by grant from the Washington
          Horse Commission; of that allocation 25 percent must be used for assistance in
          shipping and recruitment of horses to Washington from outside the state, with the
          remainder being used for equine health and safety programs, research, racetrack
          improvements, and long-term maintenance of the racing surface;
        • 10 percent to support grants for nonprofit class C race meets;
        • 10 percent to supplement Washington breeders and bred horses awards and owners
          bonuses;
        • 10 percent to be awarded as grants to support certain equine activities such as shows,
          educational activities, and sponsored rides; and
        • 5 percent to the local affiliate and representative of horsemen and horsewomen in
          Washington State, authorized to apply for grants to implement health and welfare
          programs for those working in the stable area at covered tracks.

     The parimutuel tax is repealed, and the statutory provision allowing the Commission to
     spend up to $300,000 for equine-industry related expenses is stricken.

     A $200 per day live race day fee is required of all licensees holding a race meet, irrespective
     of previous years gross receipts.

     Appropriation: The bill contains an appropriation totaling $6 million per year.

     Fiscal Note: Available.

     Creates Committee/Commission/Task Force that includes Legislative members: No.

     Effective Date: The bill contains an emergency clause and takes effect immediately.

     Staff Summary of Public Testimony: PRO: Last year's bill provided funding to the
     purses, and this bill does not do that. This is about encouraging and supporting the horse
     industry.

     The cost of running the commission is about $1 million per year. The parimutuel tax
     collects about $1.1 million per year. The remaining funds, after paying for the commission's
     costs, will go to support things like nonprofit class C meets; race days in Dayton and Walla


Senate Bill Report                              -3-                                         SB 5598
     Walla, whose cities have functional racetracks; Washington horse breeders and back stretch
     employees; class 1 racing, to ensure the racetrack surface meets quality standards; and other
     investments related to horses and horse racing. These investments will more than pay for
     themselves. Once upon a time, Washington was 6th in horse breeding and racing - now the
     state isn't even in the top 20. The revenue from the parimutuel tax isn't enough to do the
     work that the Commission is required to do. The money raised from equine sales should
     support the equine industry.

     The Washington Horsemen's Benevolent and Protective Association offers health and
     welfare benefits for those who work at Emerald Downs. Our Association assists in workers
     compensation claims between Labor and Industries and those who work in horse racing. It
     is a rarity that an association is put in this place. Due to a variety of factors the amount that
     our association has received from the parimutuel tax has dwindled down from $300,000 to
     $20,000. The programs we offer help everyone in the horse racing community. These are
     life changing benefits that this bill can restore. I started as a dishwasher at Emerald Downs
     15 years ago and am now the head chef. My job allows me to support my family. Please
     support this bill and the people who work in this industry.

     Using the tax money from the money spent on horses to support horse racing and activities
     will be wonderful. These events help small towns. When horse events come into a town, it
     supports that town's local economy as well as those involved in those shows. We provide
     equine therapy to children, veterans, and people with disabilities. Without the support of
     people in this industry, we would not exist. Equine therapy works. All Washington residents
     should have the opportunity to participate in horse related activities. From the agency
     standpoint, this money will stabilize the commission's operating account and staff at the
     adequate level needed for consumer protection and protection of those in the industry.
     Supporting Washington bred horses is an important function of the commission, and one
     that will be helped by this bill. If this bill passes, the Commission will be able to do their
     work and support other things such as equine therapy.

     Persons Testifying: PRO: Senator Mark Mullet, Prime Sponsor; Rocio Reyes, Emerald
     Downs; Boone McCanna, Down The Stretch Ranch; Doug Moore, Washington Horse
     Racing Commission; MaryAnn O'Connell, WA Horsemen's Benevolent & Protective Assn;
     Pat LePley, WA Horsemen's Benevolent & Protective Assn; Sara Stewart, Evergreen
     Equestrian Club; Dennis Eagle, WA Federation of State Employees; Bret Christopherson.

     Persons Signed In To Testify But Not Testifying: No one.




Senate Bill Report                              -4-                                           SB 5598


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