At Emerald Downs on Sunday, a red-coated trumpeter signaled the arrival of horses on the track. A large electric scoreboard displayed bet totals and horse odds. Golf carts ferried people from the stadium to the barns, where workers known as grooms live on-site to brush, feed and tend to the horses.
Legislators who steered the funding to the state’s Horse Racing Commission say the Auburn racetrack serves as a key economic driver in the south King County region – and keeping the declining industry alive preserves jobs for the largely working-class, predominantly Hispanic jockeys, trainers and maintenance workers.
But public policy analysts see a handout for a sports venue organized around gambling as a frivolous use of one-time funds intended for essential government services.
“The intent of that law is to help local governments and state governments make their economies more resilient for the next pandemic,” said Greg LeRoy, executive director of Good Jobs First, a progressive think tank based in Washington, D.C. “Horses don’t meet that definition.”
States from North Carolina to Alaska have made headlines by using COVID-19 relief money from the American Rescue Plan to renovate NASCAR stadiums or pay food influencers.
Washington’s budget allocation follows a multi-year push by the racing industry for annual state support. Sen. Mark Mullet, a Democrat from Issaquah currently running for governor, sponsored a bill last session that would have sent $6 million per year to the racing commission, a state regulatory agency historically self-funded through a combination of taxes and fees charged on wagering as well as licensing fees. The bill advanced through one committee but did not come to a vote on the Senate floor.
“I want to see Emerald Downs stay in our region,” Mullet told Crosscut.
Several Eastern and Central Washington race venues have not returned from pandemic closures, leaving Emerald Downs as the only remaining active racetrack in the state. The track ran races without fans in 2020. It reopened the following year, though executives say attendance and revenue have yet to fully recover.
Washington state has funneled hundreds of millions of pandemic relief dollars to small businesses through the Working Washington program, and many cities and counties launched their own business grant programs. Unlike the horse-racing money, those programs largely spread funds to a variety of enterprises through competitive grant programs.
It’s not clear if lawmakers have awarded similar financial relief to other specific entertainment venues in recent years. The federal government previously bailed out live event venues shuttered by pandemic restrictions to the tune of $16 billion.
Emerald Downs also received two Paycheck Protection Program Loans in 2020 worth $3.3 million, both of which were forgiven.
This story is a part of Crosscut’s WA Recovery Watch, an investigative project tracking federal dollars in Washington state.
Phil Ziegler, president of Emerald Downs, said the industry deserves even more support and that $1.1 million wouldn’t have a major impact on the industry’s finances. He said the grant money allowed the track to cover federal safety fees that would otherwise have been charged to jockeys and horse owners.
“If you’re looking for places where federal funds are being misused or not accounted for, this ain’t it,” Ziegler said. “This is a little bit of money that’s going towards lots of folks who are benefitting just a little bit.”
Jorge Rosales, of Enumclaw, Wash., is a horse trainer who works with 36 horses in the stables at Emerald Downs racetrack. Rosales said he grew up around horseracing and started working behind the scenes cleaning stables before working up to being a horse groom and eventually a trainer. The majority of jockeys, trainers and maintenance workers at Emerald Downs are Hispanic. (M. Scott Brauer for Crosscut)
How they spent the money
Lawmakers did not provide specific instructions to the Horse Racing Commission on how to spend the $1.1 million.
State law says the commission can use its money only for operating expenses, with one exception: It can give up to $300,000 per year for the purposes of “developing the equine industry, maintaining and upgrading racing facilities, and assisting equine health research.”
Commissioner Doug Moore told Crosscut he understood lawmakers’ intentions pretty clearly, but the law prevented them from cutting Emerald Downs a check – so the commission decided to channel the state funds back to the industry by temporarily waiving fees charged to Emerald Downs’ profits from online betting.
The online betting fee, known as the “source market fee,” brought in about $480,000 in 2022, according to the agency’s annual report. Moore said he expects the fee break to last at least one year, and will be reassessed going forward based on the agency’s finances.
The commission also approved $270,000 worth of grants to Emerald Downs at a July 28 meeting, shortly after the legislative funds cleared. According to grant applications filed with the commission, the two grants paid for operating a horse drug-testing barn and meeting new federally required safety precautions, a topic of major anxiety for the industry.
Moore said he could not offer a rigorous accounting of how the relief funds were applied because the commission has not tracked the funds separately from other revenue sources once they were deposited in the commission’s operating fund at the beginning of July. The agency is monitoring how much money they are forgoing in fees, he said.
An email exchange between commission staff and state financial consultants stated that about 20% of the funds would be used to “replenish” the commission’s operating account. But Moore said he wasn’t sure whether the commission would use any of the relief funds for its own operating expenses.
“I couldn’t tell you that at this point,” he said. “I think as we give grants and not receive source market fee, we can track it to learn that.”
Questions about ARPA allowability
This is not the first time the legislature has directed public funds to horse racing. In 2021, after COVID-19 kept crowds from attending races, commissioners requested and received a one-time infusion of $340,000 from the state’s general fund.
Washington isn’t the only state to help out horse racing. Arizona officials were dinged last year for using relief funds to boost purses at horse tracks, something Washington legislators say they deliberately avoided.
Find tools and resources in Crosscut’s Follow the Funds guide to track down federal recovery spending in your community.
LeRoy of Good Jobs First questioned whether cutting the racetrack a break on betting fees is an allowable use of ARPA funds. While the law allows many broad uses, it does restrict local governments from using ARPA funds to “directly or indirectly offset a reduction in net tax revenue resulting from a change in law, regulation, or administrative interpretation.”
Mike Faulk, a spokesperson for the Governor’s Office, said the allocation was filed under “revenue replacement,” a catch-all category that allows states to apply ARPA funds toward nearly any government service with minimal oversight.
“As far as we know it is allowable and [we] are continuing that way,” Faulk wrote in an email.
A spokesperson for the State Auditor’s Office declined to weigh in on the eligibility of the horse-racing money because 2023 expenditures have not been audited yet.
At the track on Sunday, smoke lingered in the sky as fans gathered for the “T-Rex World Championship,” in which humans wearing inflatable dinosaur costumes flailed toward the finish line, some tripping along the way. It’s one of several promotions the track hopes will bring fans back. Next week’s offering: wiener dogs.
Correction: A previous version of this story listed an incorrect amount for 2021 funding provided to the commission due to a source error.