- Alexander Thompson
Post and Courier: Backing the right horse: Online racetrack betting bill out of the gate in SC
COLUMBIA — South Carolina horse breeders and trainers say they’re locked in a losing race with other states, putting their business and historic industry in jeopardy.
So now they’re betting that a modern form of gambling could save them.
A bipartisan Statehouse bill dubbed the SC Equine Advancement Act would legalize a limited form of online wagering on horse races.
The new state commission created in the measure would license up to three applications to accept bets in the state, and those licensees would pay 10 percent of their earnings into a fund to support the Palmetto State’s equine industry.
The bill would only allow pari-mutuel betting in which winners split the pool with advanced deposits, meaning bettors would have to load money onto an account before wagering.
If the bill became law — which is a long shot given the state’s traditional opposition to gambling and a governor who is an opponent of betting — it would mark a watershed moment in South Carolina, where the only legal form of gambling is the state lottery and where gambling prohibitions are so tight that friendly games of garage poker are technically illegal.
But the state’s horse breeders and trainers say livelihoods are at stake.
“Unfortunately we’re getting kicked to the curb by other states who have incentives,” Deborah McCutchen, who runs McCutchen Training Center in Kingstree with her husband, told a Senate subcommittee Feb. 7. “It’s killing us.”
Other states, like Virginia and Delaware, pay monetary bonuses to horses that win races if those horses are stabled in their states for at least part of the year.
McCutchen said customers have cited incentives when they take their horses somewhere else. The McCutchens’ training center is currently stabling 45 thoroughbreds though they have space for 80 and they have laid off staff as demand has slackened.
At the same time, businesses that supply the equine industry, like blacksmiths, have fallen on hard times as well, she said.
Between 2001 and 2020 the number of mares bred annually in South Carolina fell from 232 to 26.
Over the same period the amount that S.C.-bred horses won in races dropped from $607,400 to $65,000 a year, according to testimony Tom Aronson, the president of a racing services company, gave to a legislative study committee in early 2022.
Proponents see gambling as the best way to generate money for the industry.
About $130 million a year might be wagered through the programs, according to estimates from the Revenue and Fiscal Affairs Office based on data from other states that have similar programs. Another estimate projected annual wagers at between $40 million and $70 million.
About 80 percent of the wagers would be reserved as payouts for the winners, and race operators usually take a 3 to 7 percent slice of the total in hosting fees, though high-profile races such as the Kentucky Derby take much more, according to Brandon Dermody, a lobbyist for the South Carolina Thoroughbred Breeders and Owners Association.
The remainder goes back to the betting companies which would be required to pay 10 percent of their yearly projected earnings to the commission, generating $1.8 million a year for the fund, the fiscal office estimated.
The fund will likely generate more money than just the 10 percent fee because applicants can offer more to be more competitive, Dermody said.
Under the bill, the commission would dole out the fund in grants to the equine industry. A 2022 study committee report put the implementation of a thoroughbred incentive program as the top priority, but named a variety of other potential recipients including the equine programs at state universities and prisons, the state’s horse trail system and efforts to save the critically endangered Marsh Tacky horse.
The Senate bill, sponsored by Katrina Shealy, R-Lexington, and Tom McElveen, D-Sumter, was passed unanimously out of subcommittee on Feb. 7 and is likely to be voted out of full committee to the floor on Feb. 8. Beyond that, its future is uncertain. Some South Carolina politicians, especially those on the religious right, believe any form of gambling is immoral and preys on the most vulnerable.
Gov. Henry McMaster has repeatedly opposed gambling legalization efforts as contrary to the state’s values.
Rep. Russell Ott, D-St. Matthews, who sponsors the companion legislation in the lower house where it has yet to receive a hearing, acknowledged the fierce opposition gambling legislation could face.
“I completely understand that there could be concerns from some if not many,” he said. “But I don’t know of anyone who is opposed to trying to improve the equine industry.”