Kentucky: Horse industry about family farms – and $15,000 for seed

Kentucky Commissioner of Agriculture Ryan Quarles stressed that the Kentucky horse industry “is about family farms,” using as an example KEEP board member Fred Sarver’s saddlebred farm in Carlisle.

“It’s no different than on the production-ag side,” Quarles said. “There are 76,000 farms in our state; 95 percent of them are owned by families. We have a very small corporate presence in Kentucky. Our overall agriculture impact is $45 billion. And in the horse industry, it often rivals the total production of production agriculture. There are 35,000 horse farms in Kentucky, almost all owned and operated by people like Fred, family operations that contribute to the local economy.”

Quarles noted that while he grew up on a tobacco and cattle farm, his mother spent summers working at Turfway Park and his grandfather was a horse trainer.

“And every time he sold a load of hay off our farm, that was an economic impact,” he said. “People forget Kentucky is the eighth-largest producer of hay and a $300 million industry for us. It’s important to start connecting the dots. One of the jobs I do is to educate not just the public but the rest of the farm community about the $4 billion impact that the horse industry has. It’s about equipment sales. It’s about health and veterinary supplies, feed, hay, bedding, farm equipment, fuels, truck and trailer rentals.

“One thing we have to do in the horse industry is to remind people and correct misperceptions. Every single week we try to remind people that the horse industry is a reflection of dozens of breeds…. Also remind our policymakers in Frankfort that the horse industry is about family farms. Yes, we do have some beautiful properties out there. But that is atypical. As the General Assembly continues to look at the future of what tax structure Kentucky should have to fund itself, it’s important that we have advocates there who understand the economic impact of the equine industry. And yes, we do advocate for sales-tax exemption and parity for the horse industry not only for farm inputs but also for veterinary supplies.”

Craig Bandoroff, who with wife Holly started and operates Denali Stud in Paris and whose 25-year-old son Conrad is about to join them, is an example of the industry reality that Quarles described.

“Especially in the Thoroughbred industry, when so much of the perception is we all are the Arab sheikhs or some of the other titans of industry who come in here,” Bandoroff said. “But so many of us are family-run operations that provide a huge economic engine to this economy. I looked at my financials last week. We spent $15,000 this year on seed. We have a mowing contract that’s tens of thousands of dollars. Hay, straw, not to mention veterinarians and blacksmiths. That’s the thing to really keep in mind and not lose sight of: The economic engine that this industry, every single farm, provides is very significant.

Sales-tax equity: Who packs a horse in car as a ‘companion’?

The bill passed by the Kentucky legislature and signed by Gov. Matt Bevin last spring classifying equines as livestock stops short of providing horses the same 6-percent state sales-tax exemption on feed, supplies and equipment in place for cattle, pigs, chickens, sheep, alpaca etc. Jay Ingle, an attorney with Jackson Kelly law firm, said in his legislative update said he found 18 different sections in Kentucky’s statutes that were impacted by the change.

Ingle said provisions and clarifications that impact horses include water resources, highways and transportation (including vehicle licensing and exemption for maximum weight) and pesticides, along with easements and economic grants for agri-business through the Kentucky Economic Development Finance Authority.

“Others see it as the possible next step to sales-tax equity,” he said.

Frank Penn, a KEEP board member and owner of Lexington’s Pennbrook Farm, called the legislation “a good first step” toward just that.

“Equine has been known as a companion animal in the state of Kentucky for a long time. I have a yet to meet anybody who took their horse in the back of their car and went by McDonald’s for a burger, let alone took them in the house with them,” Penn said. “We’ve been fighting this for fifteen years. It’s very important what Senators Robin Webb and Damon Thayer did (getting the bill passed) that let’s us classify equine as animal production, as production agriculture. Why should we be called production agriculture? Because we sell forage through our horses, just like cattle and sheep do.

“… Fifteen years ago, if I told (someone who raises horses) that he was a farmer, he’d say, ‘No, I’m a horseman.’ It took the disease that came with caterpillars (Mare Reproductive Loss Syndrome in 2001) to realize that those of us who produce horses are no different. We’re subject to the weather, subject to all the other assets and liabilities of being a farmer. My hope is that when we get the tax-reform issue before the legislature that it levels the playing field for equine. The other thing is that on a national level we’ll be considered agriculture and will be eligible for disaster loans when it comes to weather.”

Penn had a message for his fellow Thoroughbred farmers: “We are part of a group called equines, and it takes the walking-horse people, all the other breeds. We have to go to Frankfort with a unified voice and we have to talk about what’s best for equine. And what’s best for equine is also best for Thoroughbreds.”

Thayer, the Kentucky Senate Majority Floor Leader, told the conference that he expects tax reform to be addressed in the 2018 regular legislative session.

Referring to walking-horse enthusiast Linda Starnes’ plea to keep the Kentucky Breeders’ Incentive Fund in tact because of “how important it is in trickle-down effect” for non-racing breeds, Thayer vowed: “I will lay my body down on the track to make sure that the Breeders’ Incentive Funds do not go back into the General Fund. The good news is that, unlike when I joined the General Assembly 15 years ago, there are a lot of advocates like Chairman Adam Koenig (chair of the House’s powerful Licensing, Occupation and Administrative Regulations Committee and who attended the conference), Speaker Pro Tem David Osborne, Senator John Schickel, Senator Steve West and others I believe will work with me to ensure those dollars continue to be reinvested” in the various breed funds to expand the overall horse industry.

As far as tax equity for equines, Thayer said. “Meetings already are taking place with the administration…. All things are possible; I don’t want to predict what’s probable.”

Penn closed with noting that the inequity between charging sales tax on feed and equipment used for equines and not for other livestock puts feed and equipment companies near Kentucky’s borders at a huge disadvantage with their competitors just across the state line.

“Most tractors nowadays cost between $60,000 and $100,000,” he said. “Would you pay 6 percent on $60,000, $80,000, $100,000 if you can drive your truck and gooseneck across state lines, save that money and bring it back to your farm? Of course you wouldn’t. So that’s lost. The other thing is large consumers of feed that are close to mills, not necessarily in central Kentucky but southcentral and western Kentucky, are being pressured to put horse feed in cattle bags in order to save that 6-percent sales tax. You know what happens if the guy at the mill puts real cattle feed in horse bags (delivered) to a horse farm? You’ll kill the horses. We don’t need to make crooks out of honest people just because of the 6-percent tax incentive to do this. Those are two just pragmatic reasons you want to think about this.”

Historical horse racing: Brand-new revenue stream

Denali Stud owner Craig Bandoroff said about six or seven years ago he contemplated opening a New York satellite breeding operation because Kentucky was suffering from an exodus of broodmares from the state. Today he said his Paris farm is at capacity and can’t take anymore horses unless Denali acquires more land.

“We are in so much better shape today because of historical horse racing and what that’s done for primarily our racing circuit,” Bandoroff said. “Racing is the locomotive that pulls the whole train. If you don’t have a strong racing circuit, you’re going to suffer. And Kentucky suffered very badly. We were really worried about our economic well-being.”

Historical horse racing, a topic of one of the KEEP conference panel discussions, is the innovative technology that provides a different betting experience through game terminals that use the parimutuel system that is the crux of American wagering on racing but with results based on the outcome of previously-run races. Since Kentucky Downs put in the Commonwealth’s first HHR terminals in late 2011, the track’s purses have skyrocketed to the highest in America, with Ellis Park soon afterward getting its own operation, Keeneland and The Red Mile launching a joint Lexington venture two years ago and Churchill Downs building a $60 million facility scheduled to open next year. Turfway Park also is working on plans to install the games.

Bandoroff noted that while the mares bred in North America have dropped significantly, the Kentucky population has increased, from 15,636 in 2011 (39.4 percent of overall population, according to The Jockey Club) to 17,862 (more than 50 percent) last year.

While the Kentucky Breeders’ Incentive Fund is largely funded by the 6-percent sales tax on stud fees, Bandoroff pointed that historical horse racing also contributes and is a reason for an 8-percent increase in the fund. The Kentucky Breeders’ Incentive Fund provides financial incentives to breeders whose horses go on to win the better races in Kentucky and in important stakes throughout the U.S. and world. It also funds the Kentucky Sire Stakes in standardbred racing and the Kentucky Horse Breeders’ Incentive Fund that provides money to non-racing breeds, providing revenue for shows, trails and facilities improvement.

“Our industry is like every business: It’s all about the economic incentives,” Bandoroff said. “If you give people reason to move to New York and breed their horses there, or West Virginia, you name the state, that’s where they’ll go…. This program rewards people for horses that win everywhere, not just this state. We are here as an export product. We want horses to go everywhere around the world and the country and perform. We’re coming off a very strong September (yearling) sale and all North American sales. And participation from Europe was stronger than I had seen in the last 15 years. American horses are going over there and running at the best race meets and are competing and winning.”

An example he provided: the top four finishers in England’s Group 1 Dewhurst for 2-year-olds were bred in Kentucky.

Bandoroff said that historical horse racing has been a game-changer for Kentucky, with Ellis Park exhibit No. 1. With its own HHR operation still evolving, Ellis Park is coming off two transcendental meets thanks to a transfer of $3 million in purses and Kentucky-bred purse supplements from Kentucky Downs, done in collaboration with the Kentucky Horsemen’s Benevolent & Protective Association that represents owners and trainers at the Commonwealth’s five Thoroughbred tracks.

“You had a track that struggled for a long, long time, the fact that that track now has purses that are able to keep horses in the state and provide a year-round circuit is critical,” Bandoroff said. “… The breeding industry has been a huge beneficiary of a stronger Kentucky racing circuit.”

Historical horse racing ‘next big step’

Corey Johnsen, Kentucky Downs president and KEEP chairman, said major advancements in parimutuel wagering generally have a 10- to 15-year span from inception to really taking off. He says that’s where historical horse racing is now.

“Historical horse racing started in 2001 at Oaklawn Park in Arkansas,” Johnsen said. “The first real step forward, in my opinion, was 2011 at Kentucky Downs. So what I see is that historical horse racing over the next 10 to 15 years is going to grow exponentially and is going to be an economic driver like simulcast wagering, like ADW. I think the next big step is going to be historical horse racing.

“Why do I think it’s such a great development? Well, here’s the difference between historical horse racing and casino gambling: The fact is that it’s our product. It’s parimutuel wagering on historical horse races. It’s not something you can take away or offer some other place. You’ve got to offer it at racetracks. So we have greater control over what happens with the revenues, and we can invest those back into the industry, like we do with other parimutuel wagering.

“The other thing is that it’s had minimal or no effect on the regular parimutuel wagering. An example: September at Kentucky Downs, we had five live racing days and during the month of September, our historical horse racing handle was $57.8 million — an all-time record. Also, our (five-day) live meet handled $30 million all-sources, an all-time record. So those two complemented each other. I think you see that more with historical horse racing than a track that might have a casino or slots-machine operation as well as live racing.”

Johnsen cited Jockey Club statistics that Thoroughbred purses in Kentucky totaled $67.79 million in 2009, $65.34 million in 2012, $78.46 million in 2016 and “I think in 2017 it will be greater than $80 million.”

Katherine Paisley, General Counsel and Vice President of Compliance for the historical horse racing games-provider Exacta Systems, agreed that statistics show that historical horse racing is a new revenue source, rather than cannibalizing from the existing revenue streams. Paisley said annual betting on live racing in the United States has held steady at between $10.55 billion and $10.88 billion since 2011, but that historical horse racing handle has gone from $171 million in 2011 to $1.1 billion in 2016. That’s while being meaningfully conducted only in Kentucky, Wyoming and Oregon, with Arkansas now having very few HHR terminals, she said.

“That’s 10 percent of the handle in the country being wagered from three states — and three states that aren’t offering the wager at every facility,” she said of combined wagering on live and historical horse races.

“If more venues offered historical horse racing, we would continue to see a significant increase in the parimutuel handle in the country,” said Paisley, whose company provides the games to Kentucky Downs and Ellis Park in Kentucky. “As Craig (Bandoroff) said, breeding in Kentucky is an export product. The health of our industry grows with the health of the parimutuel handle everywhere…. I think we can expect in 2017 to see a $1 billion in handle on historical horse racing just in Kentucky alone…. It’s interjecting a brand-new revenue stream. We’re not just moving ADW dollars around. It’s brand new money coming into the sport, driving the economy, driving the industry and continuing to keep Kentucky at the front of the field.”

‘If you were a horse, this is the place to be’

With a large assist from historical horse racing, money going into the Kentucky Thoroughbred Development Fund has almost doubled since 2010, from slightly more than $4.5 million to approaching $9 million. KTDF, funded by a percentage of betting, provides purse supplements to the owners of registered Kentuckybreds competing in maiden-special weight and allowance races at the commonwealth’s tracks, which have the option of using that money to also enhance stakes purses, as Kentucky Downs has done to great effect.

Jamie Eads, Executive Deputy Director of the Kentucky Horse Racing Commission, also said in her KEEP conference presentation that nearly $130 million has been distributed since 2006 through the Kentucky Thoroughbred Breeders’ Incentive Fund to the breeders of registered Kentucky-breds that win certain types of races in the state and designated races throughout the country and world. That fund comes from the 6-percent sales tax on stud fees when a mare is bred to a stallion.

Eads said that in a recent Commission Kentucky Thoroughbred Development Fund advisory committee meeting that the state’s racing secretaries are seeing “how much larger the 2-year-old population in the state is this year and how our horse population has stuck and around and stayed through with us.”

Eleven non-racing breeds in Kentucky have received almost $10 million since 2006 through the Horse Breeders’ Incentive Fund. The vast majority of that comes from the HBIF receiving 7 percent of the total assessed from the 6- percent state sales tax on stud fees, almost all of it from breeding mares to Thoroughbred stallions.

“I don’t know if there’s another state that shares the Thoroughbred money with the other breeds, but I think it’s something that makes us a much-stronger industry,” said Corey Johnsen, the Kentucky Downs president and KEEP chairman.

“There are pockets of Quarter-Horse programs in Texas and Paint programs somewhere else,” Eads said. “But we are the only state that recognizes 11 nonracing programs…. The state recognizes the opportunities to have the horses in our state and to breed in Kentucky. If you were to be a horse, this is it. This is the place to be.”

Vision Awards: U of L’s Capps, Central Kentucky Riding for Hope

Conference moderator Alan Balch, who has almost 50 years in the horse business and ranks among the most-respected executives in both racing and the show-horse world, pointed to the 1984 Olympics in Los Angeles as a textbook case of breeds helping each other.

“The all-time biggest year we had at Santa Anita was the year of the Olympics,” said Balch, who was senior vice president at the track as well as the Los Angeles Games’ competition director for the Olympic equestrian sports staged at Santa Anita. “And I have no doubt that it was because of the synergy among all types and pursuits of horses.

“… The horses are innocent of our prejudices, you might say, our likes and dislikes of types of horses. And if we can all together — which is one reason I love this organization — and see racing benefiting the non-racing equestrian sports and see them benefiting racing in return, that’s really what we need to market the sport properly.”

Balch used his impassioned pitch for breeds working together as the prelude to the late Tim Capps being honored with the KEEP Vision Award for outstanding contribution to the overall horse industry. Capps served with distinction as a turf journalist and publisher, breeding and track executive before joining the University of Louisville’s Equine Industry Program in the College of Business, for which he became the director in 2011.

“He had a great many assets,” Balch said of his contemporary. “Not only did he teach at the University of Louisville and was extremely productive, proficient, popular, educational. But teaching was the last stop in his life. Because he had done so many things in racing, as a journalist, association administrator all over the country.”

KEEP and the University of Louisville’s interim program director Terri Burch, announced the launching of the Tim Capps mentoring internship where the winning U of L equine student will have monthly meetings with KEEP board members and hands-on experiences to get insight and connections with all facets of the equine industry.

“Tim was very important for this organization. We have an empty seat for him today,” said KEEP Executive Director Joe Clabes. “We hope to provide a very rich experience for the young folks that Tim was so passionate about helping, providing a start we hope he would be proud of. We look forward to working with the department that Tim so ably led to help serve our next generation of leaders.”

The 36-year-old non-profit Central Kentucky Riding for Hope, located at the Kentucky Horse Park, was honored with the Vision Award for an organization. Executive Director Pat Kline observed that CKRH has been the recipient of KEEP grassroots grants for its array of programs making life better for children and adults with special physical, cognitive, emotional and social needs while using horses as the conduit.

The 36-year-old non-profit Central Kentucky Riding for Hope, located at the Kentucky Horse Park, was honored with the Vision Award for an organization. Executive Director Pat Kline observed that CKRH has been the recipient of KEEP grassroots grants for its array of programs making life better for children and adults with special physical, cognitive, emotional and social needs while using horses as the conduit.

“Our horses in our program are much more than horses to us,” Kline said. “They are team members. We have about 30 horses. They are all breeds, everything from little minis to draft horses, with Thoroughbreds in the mix. Because every kind of breed helps fill a need in the clients we serve. Our mission is to provide equine-assisted activities and therapies to those with disabilities.”

Getting enough (and prepared) workforce

Eric Hamelback, Chief Executive Officer of the National Horsemen’s Benevolent & Protective Association, asked Bryan Brendle, the Washington D.C.-based American Horse Council’s Director of Policy and Legislative Affairs, about getting racetrack stablehands classified as agriculture employees, which would have a significant impact on visas for guest-worker labor. Currently backside employees are in the same category as landscapers, roofers, etc.

Brendle said his understanding is that the Agricultural Guest Workers Act “intends to make the regulatory and statutory definition of agriculture and agricultural operations as expansive as possible. The only certain thing at this point is that definitely covers the breeding farms. But we’ll be glad to repeat our request to staff on the House Judiciary Committee that we’d like that definition to be expanded further.”

Developing a domestic workforce prepared for all capacities of the industry is increasingly important with the uncertainty over federal immigration policy.

“There is a crisis in our industry,” said Remi Bellocq, Executive Director of Equine Programs and the North American Racing Academy (NARA), which is operated through the Bluegrass Community and Technical College. “We need to have a healthy workforce.”

A KEEP conference panel featured four entities working to alleviate the problem: NARA, U of L, the University of Kentucky and Locust Trace, a magnet school in Fayette County that opened in 2011 and offers six agricultural pathways, including equine studies and a veterinarian tech program.

Bellocq said one of the things that NARA enforces with students “who come to us to become a rider or assistant trainer or work their way up in a racing stable or to run a farm is how to learn to drive a tractor. Which a lot of them have no idea how to do. Or to pull a trailer. Locust Trace has the kids do all that, which is fantastic.”

“… It’s kind of like it takes a village, we’re all working together to bring resources to future workforce for the equine industries,” he said. “…. Some of the observations and comments I have are ‘How do we take 139 students and evaluate whether they have what it takes to succeed?’ Whether it’s with a racing stable, breeding farm or any other discipline, we can find those kids, but do they have the work ethic? The desire and passion to work in racing or any of the disciplines where it’s seven days a week, rain or shine, travel a lot. That’s going to be the big challenge for the industry. Because with the loss of guest-worker visas, we have to find a way to make these industries something that the kids at the high-school level really want to do again.”

Bellocq said NARA has evolved from being a rider-oriented program to emphasizing overall horsemanship. He said that when the program places a student into a barn, that leads “90, 95 percent of time into a full-time job. How long that lasts is up to them.”

Bellocq, who like his father Pierre (known as PEB) is a talented cartoonist, drew a caricature of a millennial at the barn holding coffee and his phone, saying, “Yeah, so like I hear you. You need American workers. Whatever. So when do I get my BMW? And I need wifi.”

“This is going to be a problem we have,” Bellocq. “We have a lot of kids coming in here. But they have no idea about the demands of the sport, that you’ve got to wait your turn when you start working for farms, trainers, things like that. So a lot is not just what we teach them about horsemanship. But it’s also about those social skills, about learning and how to work in this environment.”

Mick Peterson Ph.D., the new Director of Equine Programs in the University of Kentucky’s Ag Equine Program, said the industry must “rethink how we manage the horses… Thinking about how we can increase efficiencies to support the equine industry to reduce labor force. Every other agricultural industry has addressed a number of these issues. The equine industry hasn’t. That’s not on the equine industry. That’s on us. Because we have not stepped back and thought, ‘Where can we increase the efficiencies on the farm?’

“You walk into a barn in 1920, you want into a barn right now. I don’t think you notice any difference. We need to think about that. But we need to think about it in the context of what is the demand side. The demand side is equine safety and welfare. Everything we need to do needs to be clearly focused on the safety of the animal and the safety of the rider. We need to step back and think about how this all fits together. Because this is our market, this is our future. And that’s what creates this multi-billion industry in the United States and Kentucky.”

Notable: On tourism and marketing

Kristen Branscum, commissioner of the Kentucky Department of Tourism, challenged the equine industry to come up with new ways to broaden its reach into attracting out-of-staters and foreign visitors to the Commonwealth to grow an overall tourism industry that in 2016 produced $14.5 billion in revenue.

“I am driven to get what I call OPM,” Branscum said. “As a Kentuckian, I want other people’s money outside of this state, and I believe tourism is the way to do it… We want to make the world aware of what Kentucky has to offer, and on the function side, get OPM. If you’re talking about needing budget money, I think that’s how we do it.”

Conference moderator Alan Balch, an executive in both racing and the showhorse world, pushed for renewed commitment to marketing in its various forms.

“I’ve seen a shift come back in racing everywhere, including Kentucky, frankly, to an accounting mentality,” Balch said. “…. Accountants love to count those beans and put them in the bank. We marketers do not look at marketing as an expense but as an investment. But marketing is an investment you cannot depreciate.

“What we need in racing is a very strong renewed commitment to marketing, which takes investment in advertising, sales, promotion, communications, all the tools in the toolkit now for marketers to try to translate this interest in historical horse racing into on-track betting, on-track attendance and greater expansion of the gaming market for racing. We are in a struggle with every other form of gaming… It takes marketing, marketing, marketing and all the tools to get it done. And that’s attitudinal. And I don’t think we have it in racing.”

Proceeds will support the KEEP Foundation which funds industry-related grassroots programs, education resources and other charitable giving

LEXINGTON, Ky. — The Seattle Slew specialty license plate was officially made available to Kentucky drivers today. The new license plate features a photo of the legendary Seattle Slew, and proceeds from the sale of each plate will support the KEEP Foundation’s Grassroots Funding Program and educational activities.

“This license plate, bearing the image of one of the greatest racing champions of all time, means a great deal to us,” said Fred Sarver, Chairman of the KEEP Foundation. “The revenue from the sale of this commemorative plate will allow us to bring greater awareness of the importance of the horse industry in Kentucky. We are truly grateful to Bobby Shiflet and the Tony Leonard Collection for his donation as well as permission from the owners of Seattle Slew, Karen and Mickey Taylor.”

The KEEP Foundation’s Grassroots Funding Program has distributed more than $700,000 to more than 900 non-profit equine organizations throughout the Commonwealth since it began in 2005.

“The additional revenue raised by this specialty plate will allow the Foundation to expand its funding program that benefits 4-H, FFA, trail riding, therapeutic riding programs and breed associations,” said Joe Clabes, Executive Director of the KEEP Foundation.

Seattle Slew, considered by many to be one of Thoroughbred racing’s greatest champions, was undefeated as a 2-year-old and won the iconic Triple Crown in 1977. Following his retirement from racing, Seattle Slew left another legacy as a sire, producing more than 100 stakes winners including Horse of the Year and leading sire A.P. Indy and the dam of Cigar, a two-time Horse of the Year and all-time leading money winner in North America at the time.

ABOUT KEEP FOUNDATION

Founded in 2015, the KEEP Foundation is committed to educating the people of the Commonwealth about the importance of horses to the state, its economy, its heritage and its people. The KEEP Foundation spreads its mission by providing education units, speeches, presentations and by participating in equine events throughout the state. As a part of this outreach the Foundation allocates grant funds to help local horse organizations, equine youth clubs and educational institutions promote the importance of the horse industry in Kentucky. To learn more about the KEEP Foundation and its programs, visit www.thekeepfoundation.org.

ABOUT KEEP

The Kentucky Equine Education Project is a not-for-profit grassroots organization created in 2004 to preserve, promote and protect Kentucky’s signature horse industry. Support for KEEP’s activity comes directly from the horse industry and horse industry supporters. To learn more about how you can become a member or make a contribution, please visit www.horseswork.com.

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SB 139 now goes to the Governor’s desk to be signed into law.

FRANKFORT, Ky. (March 15, 2017) – The Kentucky House of Representatives today unanimously passed Senate Bill 139, which would amend the definition of livestock in Kentucky to include horses and equines. The bill now moves to Governor Matt Bevin for his signature. Securing livestock classification has been among the top policy priorities of the Kentucky Equine Education Project since its 2004 creation.

“SB 139 is an important step forward for the Kentucky horse industry, and legislative success like this is a product of years of commitment and hard work,” said KEEP Chairman Corey Johnsen. “Many KEEP members have been instrumental in getting this legislation to this point, but we owe particular recognition to Frank Penn for being a tireless leader and advocate on this issue from the start.”

“Having horses and equines included as livestock in Kentucky law has been a key policy priority for KEEP since its founding over 12 years ago,” said Penn, KEEP Board member and Chairman of the organization’s Equine Sales Tax Equity Task Force. “I applaud the Kentucky legislature for their unanimous support of SB 139 and recognizing horses’ rightful place along side other agriculture commodities in Kentucky.”

Senator Robin Webb, an accomplished horsewoman from Carter County, sponsored the bill, a measure she’s worked on for several years.

“The continued and consistent designation of equine as livestock is imperative for the ownership and utilization of the animals that we have relied on for centuries,” Webb said. “The equine industry contributes to the quality of life for Kentuckians and the economic bottom line of the Commonwealth.”

SB 139 does not address the state’s 6-percent sales tax on feed, bedding and equipment used for horses. All other livestock are exempt for sales tax on those necessities. However, passage of the bill does strengthen the case for tax equity.

Rep. Susan Westrom, whose district is in Fayette County, said the measure is a major step toward putting horses on equal footing with other livestock.

“I am pleased to know that my colleagues finally understand that the equine industry in their own backyard was never treated ‘business friendly’ by the state,” Westrom said.

Speaker Pro Tem David Osborne of Oldham County said the action “highlights the importance of the horse industry to our overall agricultural economy.”

“Finally, horses in Kentucky have received the proper designation as livestock,” he said. “For years, our statutes have been unclear with the designation of horses, and as a result one of our signature industries has suffered. This designation will clear the way for tax equity and other legal parity within the entire equine industry, which will strengthen the future for years to come.

“Additionally, despite some confusion, this bill in no way opens the door for horse slaughter in Kentucky, or weakens horse protection laws. In fact, on this same day, the Legislature gave final passage to House Bill 200 to make it easier for local officials to intervene and remove horses in abuse and neglect cases. These bills combined will greatly benefit the entire equine industry in Kentucky, and help to solidify our global role as the Horse Capital of the World.”

Osborne, an owner of both Thoroughbreds and Saddlebreds, said the bill affords protections to horse farmers in ways that might surprise people.

“You can’t be included in an agricultural conservation district unless you are a livestock and agricultural enterprise,” he said. “Well, horses were not included in that definition until now. It gives you certain advantages and legal standings as far as zoning, city annexation, things like that…. Right now, it’s a crime to cut somebody’s fences if they have cattle or other livestock. But horses are not defined in that statute.”

Rep. Richard Heath of Mayfield, head of the House Agriculture Committee, said SB 139 makes an overdue correction.

“As Chair of the House Agriculture Committee, I am pleased to lend a hand to the equine industry in Kentucky and vote to classify horses as livestock, which brings long-overdue fairness and equity,” he said. “I am proud to support every type of farm in Kentucky, whether it be a family farm, a dairy farm, a crop farm, or a horse farm. Today we finally righted a wrong: Horses belong in the livestock classification where they are overseen by the Department of Agriculture, and not in the companion animal or pet classification.”

Other members of the House Agriculture Committee voiced equally strong endorsements.

“Horses in Kentucky are a staple, and in Central Kentucky we not only have scores of internationally renowned farms but we have the tourist and competition draw of the Kentucky Horse Park,” said Rep. Phillip Pratt of Georgetown. “After all these years of interested parties attempting to make this change, I’m proud to be a part of the new voice in Kentucky that respects and takes action to protect this multi-billion dollar industry that employs tens of thousands of hard-working Kentuckians. Our action today will ensure the success of the industry for generations to come.”

“As a cattle farmer with my husband, I am keenly aware of the previous livestock classification issues in Kentucky,” said Rep. Kim King of Harrodsburg. “In the past, horses have been left out of this important classification, and it has taken its toll on the industry. However, with this passage, Kentucky now accurately classifies horses as livestock. This move will create the foundation for further progress, including tax implications, and will offer the protections that the equine industry deserves. I commend the leadership shown by all involved to create parity that should have been granted years ago.”

“This legislation is a crucial step forward in recognizing the importance that the equine industry has in our Commonwealth,” said Rep. Dean Schamore of Hardinsburg. “Senate Bill 139 affords protection for the industry not currently included in statute, and I am glad to support this significant measure.”

Rep. Wilson Stone, whose district includes Ellis Park, called it “a good day when we can recognize Kentucky livestock.”

“The stockmen of Kentucky have historically and traditionally considered horses as part of their livestock,” Stone said. “Sometimes they are the livestock in which owners take the most pride. SB 139 simply shows respect to horses and stockmen by placing horses in our statutes where livestock is referenced.”

Said Majority Floor Leader Damon Thayer of Scott County: “I’m pleased that SB 139 has passed the House and is headed to Governor Bevin’s desk.  Redefining horses as livestock is an appropriate step to take in the Horse Capital of the World.”

“The legislature’s understanding of the importance of this issue is demonstrated by its unanimous approval in the Senate and the House,” said Joe Clabes, KEEP executive director. “We’d like to thank and congratulate Sen. Webb for introducing consensus legislation and guiding it through the legislative process. We also appreciate the support we received from (Kentucky Agriculture) Commissioner Ryan Quarles, who attended both Committee hearings to support SB 139. It is gratifying to see such strong bipartisan support for Kentucky’s horse industry.”

ABOUT KEEP

The Kentucky Equine Education Project is a not-for-profit grassroots organization created in 2004 to preserve, promote and protect Kentucky’s signature horse industry. Support for KEEP’s activity comes directly from the horse industry and horse industry supporters. To learn more about how you can become a member or make a contribution, please visit www.horseswork.com.

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SB-139 will next move to consideration by the full Senate.

FRANKFORT, Ky. (February 28, 2017) — The Kentucky Senate Agriculture Committee today unanimously passed a bill that would designate equines as livestock, an action that if approved will provide tremendous benefit the entire horse industry. Securing livestock classification of horses and equine has been among the top policy priorities of the Kentucky Equine Education Project (KEEP), since being founded in 2004.

Sen. Robin Webb of Carter County sponsored Senate Bill 139, which she said she’d been working on for several years.

“Our statutes have been historically inconsistent with the designation of the horse as livestock. We have the support of AAEP, which has taken this position publicly, as well as our major horse-industry groups,” Webb told her fellow committee members before their vote, referencing the American Association of Equine Practitioners, which represents veterinarians of all horse breeds and disciplines. “Seven years ago today, I got my favorite horse. He’s a big part of my life, and I love him. He’s my companion, but he’s not a companion animal. He’s livestock. It’s important to myself as an owner and him as a horse to be so designated, and designated consistently for protections that designation does allow.”

Sen. Damon Thayer, the Republican’s majority floor leader from Georgetown, hopes the bill can go to the Senate floor later this week. “I think it has a great chance to pass the Senate,” added Thayer. ”Then we’ll send it on over to the House and see if we can get agreement from them.”

“SB 139 would be a great step forward for the horse industry as a whole,” stated KEEP executive director Joe Clabes. “Designation as livestock is the most reflective of the realties of breeding, owning and caring for horse and we’re proud to stand in support of this bill with the AAEP and the numerous Kentucky horse organizations from across the state.”

Webb stressed the designation is important to make sure that horses are not classified as companion animals, similar to household pets. She emphasized that her bill did not deal with taxation, with the state’s 6-percent sales tax required when buying feed, bedding and equipment used for equines, with all other livestock exempt.

“We hope to address that at another time, with tax reform or in another measure,” Webb said. “It’s designation of the horse being what it is: And that’s livestock.”

Several of the committee members clearly were sympathetic toward tax equality for the horse industry.

“As chair of the horse farm subcommittee in the Senate, I couldn’t vote any other way on this legislation,” said Sen. Steve West, who lives in Paris and whose district includes some of the most famous Thoroughbred farms in the world. “Basically, it’s equity and fairness for the horse industry.”

“In this state, for years, there seemed to be walls and barriers between one livestock group and another. But this seems to be a way we can bring some of our producers together and put equine on the same page as all the other livestock groups. It’s not a complicated thing. Horses are livestock. Unfortunately this doesn’t apply to taxes, but as we go into tax reform in the fall, maybe we can take a look at that.”

Said Thayer: “I think horses are livestock, and should be treated as such in the tax code. I’m hopeful some day, when we do tax reform, we can get tax parity for the equine industry. I think this bill is a good step in the right direction.”

Agriculture commissioner Ryan Quarles, who represented Scott County as a member of the Kentucky House of Representatives, applauded the action.

“It’s a clarification that has been attempted for several years now,” Quarles said. “As agriculture commissioner, I always remind people of the economic impact that horses have in Kentucky. It’s a signature industry, one that creates literally tens of thousands of jobs, and billions of dollars of investment here in Kentucky. As I continue my term as commissioner, I will be supporting not only our family farms, but our family horse farmers as well.”

Said Sen. Dorsey Ridley of Henderson, whose district includes Ellis Park: “It just puts them all (livestock) in one classification. It’s an effort to make sure that horses are certainly not taken advantage of, but by the same token, it’s to protect our property. I was glad to be a part of it. It is a big thing for the Thoroughbred industry — and for all horses.”

“This legislation is a significant step for the horse industry and our membership,” said Martin Maline, executive director of the Kentucky division of the Horsemen’s Benevolent & Protective Association, which represents about 6,000 owners and trainers involved in horse racing in the commonwealth. “The livestock designation offers other important protections for everyone who owns and works with horses. We applaud members of committee, and hope Senator Webb’s bill sails through the full Senate and state legislature.”

Clabes added, “I’d like to congratulate Senator Webb, Chairman (Paul) Hornback, and Majority Floor Leader Thayer in advancing this long awaited legislation. Success in Frankfort doesn’t happen overnight and they and many of their colleagues in the Senate and the House have put in a lot of work on this issue over the years.”

ABOUT KEEP

The Kentucky Equine Education Project is a not-for-profit grassroots organization created in 2004 to preserve, promote and protect Kentucky’s signature horse industry. Support for KEEP’s activity comes directly from the horse industry and horse industry supporters. To learn more about how you can become a member or make a contribution, please visit www.horseswork.com.

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KEEP members discussed the importance of horses to Kentucky’s economy.

LEXINGTON, Ky. (Friday, Feb. 24, 2017) — Kentucky equine-industry participants and supporters got the chance to emphasize the important impact horses have on the state and local economies during visits with state legislators on Wednesday’s KEEP Day in Frankfort organized by the Kentucky Equine Education Project.

Several dozen stake-holders in Kentucky’s $4 billion horse industry told an array of lawmakers their individual stories and advocated for state sales tax exemption for feed, equipment and supplies, equal to that provided to other livestock.

Edmonton County’s Linda Starnes, a team leader in KEEP’s state-wide grassroots network who owns, trains and shows Tennessee Walking Horses, said the Kentucky Breeders’ Incentive Fund (KBIF) is a tribute to all breeds in the state working together to enhance the overall horse industry. The KBIF, whose creation was spear-headed by KEEP working with legislators, provides funding for non-racing breeds and is largely financed by sales tax on Thoroughbred stud fees. This month, the Kentucky Horse Racing Commission released $940,000 from the KBIF to non-race breeds, bringing the total distributed since the fund’s 2005 inception to $10.8 million.

“If it wasn’t for the horse-racing industry, we wouldn’t have the Breeders’ Incentive Fund program,” Starnes said. “And if we didn’t have the Breeders’ Incentive Fund Program, this kind of horse-showing wouldn’t be happening; it would be gone.”

Agreed Rep. Adam Koenig, whose district includes Turfway Park: “There are so many jobs associated with horses, horse racing. People like green space and open space. It adds to the economy in so many ways through direct and indirect jobs. Obviously it’s our signature industry – in large part our identity.”

Rep. Kelly Flood of Lexington said KEEP has done a good job focusing on the economic benefits of the industry.

“That’s what it’s about, if you don’t have horses in your district,” she said of the legislature. “Not everybody has the bourbon industry in their district. But the bourbon industry is good for the whole commonwealth. You have to do the same thing with all our signature industries.”

Inaugural event featured a wide variety of current topics covered in series expert panel discussions.

LEXINGTON, Ky. — Now that the Kentucky Equine Educational Project’s first KEEP Equine Industry Conference is in the books, plans are in the works to make it an annual event for the commonwealth’s multi-breed horse industry.

At total of 156 people registered for the conference Tuesday at the Embassy Suites hotel. The four panel discussions featured speakers working in an array of breeds and disciplines, reflecting the diverse nature of those in attendance.

“I’m very pleased with how our inaugural event turned out,” said KEEP executive director Joe Clabes. “I think it’s really something we can build on. The conversations really had a life of their own. The panelists and the audience were very engaged.”

Clabes said a major mission of the conference was “to build unity and consensus on some things and promote this idea of a unified front where we can better engage our policy-makers and more effectively advocate on behalf of the horse industry. There are a lot of commonalities that folks might not have assumed existed, at first blush. But they exist.”

A prime example: Everyone who owns, raises or boards horses of any type would benefit if the industry is successful in securing the exception from the 6-percent state sales tax on feed and equipment granted to other livestock. Clabes pointed out that issues such as infectious disease and animal welfare impact all breeds, and that joining together might even work toward a larger insurance pool to coverage on not only jockeys but riders of other performance horses.

Enthusiasts of the Tennessee Walking Horse at the conference cautioned that regulations targeting one breed can impact others. They said a proposed federal regulation aimed at ending the practice of “soring” a horse’s feet and legs to force an exaggerated gait might have good intentions but also unintended and unfortunate consequences, including for other horse pursuits.

“I thought it was great and learned a lot,” Kentucky state representative Susan Westrom (D-Lexington) said of the conference. “I hope to be back next year with a lot more of my (legislative) brethren.”

Historical horse racing helps spur optimism

Clabes said he was not surprised by the upbeat tone of the conference, a contrast to marked declines in some other racing jurisdictions.

“The indicators over the past few years have moved in a positive direction,” he said afterward. “Other states are going backwards in many ways. Legislatures are taking away what their horse industries had earned.”

He said one factor is the emergence of historical horse racing, the innovative technology that provides bettors an electronic experience but is parimutuel in its structure — and therefore the domain of the racetracks. Historical horse racing allowed Kentucky Downs to offer almost $8 million in purses and Kentucky-bred purse supplements for its record-setting five-date meet last month, along with transferring a game-changing $1.35 million into purses at Ellis Park, whose own historical horse racing has been picking up. Keeneland and The Red Mile harness track began partnering last year on historical horse racing in Lexington, with the state approaching $2 billion in betting since Kentucky Downs launched its first terminals in 2011. Turfway is working on a plan to install the machines.

While historical horse racing benefits the thoroughbred and standardbred racing industries, the sales tax on stud fees helps other established breeds in the state through the Breeders’ Incentive Fund.

“In Kentucky, we’re protected in one sense with historical horse racing being implemented through the regulatory process,” Clabes said. “It’s allowed the tide to be turned. Now the Standardbreds are coming back. The mares aren’t leaving the state in droves. They’re starting to come back home. The more the Breeders’ Incentive Fund grows, the more the (Kentucky Thoroughbred Development Fund), the Standard Development Fund grows, that is only going to be positive.”

Turfway plans to run five days a week in December

Ted Nicholson, who a year ago became senior vice president and general manager of Kentucky Downs, was on the equine industry economic reports panel. He said that Kentucky Downs’ average of almost 11 horses per race “is three more horses a race than what most racing secretaries are dying for today” — thanks to historical horse racing that has pushed purses to among the highest in America.

“Kentucky Downs is not a good success story. It’s a great success story,” Nicholson said. “… Any time you see a graph where the bars are going up and up and up is tremendous… Our expectations are for 2017, ’18 and ’19 going in the same direction. .. The beauty of my job, I work for an owner who gets it. He (Johnsen) knows our revenues are derived from historical horse racing, but we never forget why we are there — and that’s live horse racing.”

Conference attendant Chip Bach, general manager at Turfway Park, said track ownership continues to work on plans to install 250 historical horse racing terminals.

Turfway’s ownership is Jack Entertainment, which also owns a casino off downtown Cincinnati. “We don’t have an adversarial relationship with the biggest property in the area, which is a good thing for us,” Bach said. “I believe that river going across the Ohio is like 500 miles wide. People don’t like driving over it, and we have a fairly significant population in Northern Kentucky. I think from a casual basis, Turfway Park is going to be able to attract some people who don’t want to drive to Indiana or drive into downtown Cincinnati.

“We’re starting off a little small, with 250 machines, working on refacing the front of the building and upgrading things that should have been upgraded in maybe 1984. Our owners are going to work very hard not just to throw 250 machines into an existing facility and hope it sticks to the wall. They’re working on developing the entire experience. That’s why it’s not going as fast as some of our horsemen would like it to go to get those purses popped up. But we want it to be sustainable and make the experience a positive one.”

Bach said the Northern Kentucky track continues to seek out the best formula for how many days a week to race. The track faces the most severe competition for the discretionary dollar, from nearby casinos to the Cincinnati Bengals, of Kentucky’s five thoroughbred tracks.

Bach said that Turfway plans to run five days a week in December, Wednesday through Sundays, for the first time in years. Turfway will drop Sundays in January and February and go to three days a week in March, he said.

“The horse demand is important,” he said. “We only make money on the days we race. Every day we don’t race, we lose money. Most of our revenue is generated through simulcast outlets, not the on-track experience, so that’s very low-margin…. We’re continually trying to change the model to see what benefits the best purse situation we could have, the optimum amount of horses and racing as many days as we can.”

Up-close approach key to engaging new fans, lawmakers

Price Bell Jr., a fourth-general horseman from Lexington, was among those stressing the importance of individual contact, whether to create fans or educating legislators on issues impacting the horse business. Bell helped found the Horse Country initiative formed in 2015 by industry stake-holders to give the public an up-close look at Kentucky’s farms and veterinary facilities. Horse Country is patterned after the highly successful Kentucky Bourbon Trail to promote the commonwealth’s other signature industry.

“The consumer demand for taste and preferences has changed dramatically in my lifetime,” Bell said. “I think we took for granted that people would always bet on horses. Now you can bet on anything. The demand for experience has changed. People want to touch a horse. They want to have a horse breathe on them. They want to learn how horses are taken care of.”

He said that includes celebrating and rallying around their care after horses’ competition days have concluded.

“We need to continue to drive more experience-based exposure for the public to the horse,” he said. “I think we take for granted that we have the opportunity to see horses every day, and the majority of America and majority of the world does not.… We forever have not allowed people on the backside. We’ve forever have just exposed the horse on race day for about 30 minutes. They leave the barn that you don’t have access to; they walk in a circle, they go out and run and they go back somewhere. We can do a better job connecting people to the animal.”

An up-close approach also is paramount with elected officials, other speakers said. Ryan Quarles, Kentucky’s Commissioner of Agriculture and a former state legislature, said those in the industry must get to know their legislators.

“Go to the effort to invite them out to your farm or a horse event,” Quarles advised. “Educate them and do this throughout the year. So when a bill or piece of legislation does come up, they know who you are.  They remember who you are. They can put context into what you’re asking about…. Politics is about relationships, being able to pick up the phone, shoot an email and get a response.”

He cited the push for sales-tax equality, saying, “When this is part of a larger, omnibus package about taxes in general in Kentucky, you need to make sure that this a priority that is communicated clearly to your legislature.”

Agreed Fran McCall of the Kentucky Farm Bureau: “You have to come in as a united front, no matter what you want to get done, whether in Frankfort or Washington. If you don’t have a relationship with your elected official, now is the time to do that…. Relationship building is key when it comes to policy development.”

Julie Broadway, the American Horse Council’s president who gave the keynote address, said, “It’s important that new members of Congress and the administration hear from the horse industry… We’ll be doing that in Washington, but it’s important that they hear from their constituency.”

By the numbers: 242,000 horses; 40,665 jobs

Dr. Jill Stowe, associate professor in the University of Kentucky’s Department of Agriculture Economics and director of the UK Ag Equine Programs, provided statistics from the 2012 survey on the state’s horse industry, the first comprehensive study since 1977. The survey determined there were 35,000 equine operations in the state with at least one horse in residence, totaling 242,400 equines (which include mules and donkeys), accounting for 40,665 jobs, 1.1 million acres devoted to equine use and with the value of equines and equine-related assets totaling $23.4 billion. Stowe said UK now plans to conduct such a study every 10 years.

Tom Biederman, of Biederman Real Estate and a noted equine auctioneer, said that the presence of the super wealthy among Kentucky’s horse farms is “a great thing” but that “we need to continue to help the small family farmer.

“Because at the end of the day, they are the ones who built (the industry) up from the beginning,” he said. “They came here and recognized that this land is great and this is where you can find and raise the best horses in the world. If we can all keep that in mind when we’re setting our stud fees… I love it that all these wealthy folks are here. They love our land; they take great care of it. But we have to realize we have to help those family farmers as well.”

Chauncey Morris, Executive Director of the Kentucky Thoroughbred Association and Kentucky Thoroughbred Owners & Breeders, said statistics show that the breeding industry is in recovery mode over the beat-down of the post-2008 market meltdown. He said that more than one-half of all the thoroughbred mares in the America two years ago were bred to one of Kentucky’s 278 thoroughbred stallions, no matter where the resulting foal was born. Morris pointed out that as the American foal crop has dropped significantly, the Kentucky-bred crop has been far more stable to where it now reflects about 36-percent of the foal crop.

“Are we in recovery mode? The statistics say we are,” Morris said.

Kentucky Horse Park to pursue 2022 WEG

New Executive Director Laura Prewitt said the Kentucky Horse Park declined to bid on the 2018 World Equestrian Games because of the timing but hopes to land the 2022 WEG. The Horse Park was host to the 2010 WEG, the first time it was held outside Europe.

Some symposium participants mentioned the competition for shows facing the state-owned Horse Park from North Carolina’s privately-owned Tryon International Equestrian Center.

“We have to continue to promote the Kentucky Horse Park and everything it does for Kentucky, because it does a lot,” Biederman said. “… We need to keep that as a crown jewel of Kentucky.”

Also on the horse-show front, an attendee from Edmonson County volunteered that what she liked about Kentucky Downs “is other breeds feel welcome there, and it’s accessible for everyone,” then asking Kentucky Downs management point blank “what’s the chance of building an indoor arena?”

Apparently very good, with Johnsen saying, “We would like to do an equine event center at Kentucky Downs.”

KHRC’s Guilfoil advocates ‘feet on grounds,’ uniform testing

Kentucky Horse Racing Commission Executive Director Marc Guilfoil, speaking on the legislative and regulatory panel, emphasized the need for “feet on the grounds security” at racetracks and said the technology has gotten cheap enough to install state-of-the-art camera systems on the backside. “Not getting them too much into somebody’s shed row but sort of a broad spectrum and you go from there,” he said.

He called the goal of uniform medication a “great” objective but said that first the laboratories conducting the equine testing must use identical equipment and protocols.

“If a Hershey candy bar isn’t made in Hershey, Pa., but made somewhere else, they use the same machinery, the same recipes, the same thing,” he said. “If we’re going to test for XYZ drug and use serum and plasma, everybody should use the same machine. Whether it be three, four or five uniform labs across the country, I think we just need to go for uniformity with that. And once we get that uniformity, we can get uniform regulations as far as treating things the same across the board.”

Making ‘something happen that is different’

Other panelists and moderators included Dr. Stuart Brown of Hagyard Equine Medical Institute; Norm Luba of the Kentucky Quarter Horse Association; Mistee Wrigley-Miller of Hillcroft Farm, a prominent competitor on the Saddlebred circuit and the sport of combined driving; Topline Communications’ Jen Roytz; Reese Koffler-Stanfield, owner and head trainer of the Maple Crest Farm dressage facility; the Kentucky Horse Council’s Katy Ross, and Rusty Ford from the Office of the State Veterinarian.

Tim Capps, director of the University of Louisville’s Equine Industry Program in the College of Business, moderated the panel on industry economic reports and concluded that the industry has “come a long way and a good way.”

“Where we are today isn’t where we were eight or nine years ago,” said Capps, who has worked in an array of capacities in the sport, including as Maryland Jockey Club executive vice president. “We went through a very difficult time, the most difficult in my lifetime. If you heard the conversion that went on today — from the audience as well as up here — you heard people talk about good things, exciting things new things.

“We did something we had not done before. Instead of as an industry talking about how bad things were, and how unfortunate they were and how sad they were and we needed them to be like they were in the old days, we just forgot about that. We said, ‘We’ve got to make something happen that is different from what we’ve seen before.’ And that’s what’s happened. That’s a reason to be positive.”