The National Thoroughbred Racing Association has been busy problem-solving (or trying to) on Capitol Hill this past year. An update to media and industry stakeholders in Saratoga Springs, N.Y. this week outlined the variety of legislative issues impacting the racing business.
Greg Means, longtime NTRA lobbyist from the Alpine Group, believes the racing and breeding industry will grow as a result of the tax incentives currently available to owners. A recent tax reform bill gives horse owners 100 percent bonus depreciation available for horses and farm equipment from now until 2022. After 2022, the depreciation available will phase down by 20 percent each year.
Section 179 expense deductions made available in that plan also benefit farm owners – expense allowances for horses, farm equipment and other property (including building improvements) will be permanent at $1 million. Means said his group hopes to eventually resurrect a provision of the 2008 Farm Bill which has since expired allowing uniform depreciation on horses at three years. Typically, regulations like this impacting smaller industries are bundled into other bills, and lobbyists from different interest groups work together to get the bundle passed. Based on upcoming political events such as congressional elections and a new Supreme Court appointment on the horizon however, Means is doubtful the right bill will come along this year.
Alex Waldrop, NTRA President and CEO, believes the 100 percent bonus depreciation is already benefitting owners and breeders, possibly enough to impact auction results.
“I think you cannot underscore how important that is,” Waldrop said. “I'm going to hazard to say that may have had something to do with why they had such a gangbuster sale here earlier this week. If you can buy and depreciate a horse the year they purchased it, that's a huge benefit. It's not a permanent benefit, but it's there.”
Elsewhere in the business, Means said the Interstate Wire Act of 1961 is causing some challenges. The Wire Act was originally intended to prevent organized crime from trafficking by prohibiting wagering across state lines. Of course, it is legal to bet on horse racing across state lines, but Means said a few people unfamiliar with racing have stumbled over the law's implications lately. Advance deposit wagering customers recently experienced issues using their bank cards to fund their ADW accounts. There are no new laws or regulations on the books requiring banks to refuse the use of their credit cards for this purpose, and Means suspects the refusals were a reflection on the fraying nerves of general counsel. Means asked Rep. Andy Barr to meet with the CEO of Chase, and the confusion was resolved. There are still a couple of other banks refusing transactions with ADWs however, including Wells Fargo. Means thinks the simplest way to solve this problem is via conversation rather than law.
“It's not something you can legislatively go do but politics is politics, and politics is about squeaky voices, greasing wheels, and the right people talking to the right people,” Means said.
The Wire Act could ultimately impact sports betting too, Means acknowledged. Some sports leagues and social conservatives still oppose sports betting, and Means said he is aware those lobbyists have become aware the law could provide them a template to resist the betting.
Another area of focus for the NTRA has been immigration.
“I've said this for years now. I get to keep saying it: Immigration is a disaster,” said Means. “I know that everyone we talked to in the industry has problems with H2B workers, not enough workers, raids, the whole kit and caboodle.
“Years ago, the Senate passed — by almost 70 votes — a bipartisan comprehensive immigration reform bill. It would have worked, from our perspective. Things have gone the other direction. The House at the time killed it. The extreme conservative wing didn't like it because there was a path to citizenship for workers already in the country. It's a lightning rod, third rail issue.
With the current administration, I wish that I had an optimistic scenario for you, but I don't.”
There is an appropriations bill in the works which would include a provision reinstating a previous exemption for returning H2B workers which would keep their visas from counting against the 66,000-visa cap. Waldrop said in the long term, NTRA hopes to allow racetrack workers to be part of the H2A program, which he says is bulky but at least does not have a cap on the number available.
Finally, the NTRA is keeping an eye on research demonstrating the benefits of equine therapy for veterans. Future legislation could help fund nonmounted therapy programs (and therefore second careers for off-track Thoroughbreds) if a connection is demonstrated.
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