By: Jocelyn Arlinghaus, Staff Member
The beginning of 2012 has heralded new developments in the fight to eliminate contagious equine metritis (CEM) in the United States. CEM is a venereal disease common to horses caused by the bacterium Taylorella equigenitalis. It is considered extremely dangerous due to its highly contagious nature. The disease is typically transmitted via sexual intercourse during the mating process, but it may also be transmitted through artificial insemination or contact with hands or instruments that have been contaminated. Common symptoms include vaginal discharge, uterine inflammation, and temporary infertility. Stallions show no physical signs of CEM, which makes detecting and controlling the disease before it spreads extremely difficult. During breeding season, a stallion often infects several mares before the presence of the disease is discovered.
CEM was first diagnosed in England in 1977, but had spread to the United States by 1978 with reports documented in central Kentucky and Missouri. The disease was treated and thought to be eliminated from the United States prior to 2006, when two imported stallions in Wisconsin tested positive for the CEM bacteria. Another outbreak was confirmed in December 2008, when five mares and 23 stallions in eight states tested positive for the CEM bacterium. Although the 28 initially discovered horses were cured of the disease, another 977 horses were exposed to Taylorella equigenitalis in the outbreak, which spanned 48 states. CEM was subsequently discovered in Arabian stallions in May 2010 in California and in July 2011 in Arizona. The USDA’s National Veterinary Service (NVSL) has confirmed that in all cases the infected stallions were contaminated prior to arrival in the United States. Interestingly, the strain of the isolated bacterium in these new cases did not match any strains previously found in the United States, which indicated that the multiple outbreaks were unrelated and therefore developed as a result of separate equine imports from foreign countries. Efforts to eradicate the recent string of outbreaks in the United States continue. Because mares can only be bred during certain times of the year, CEM can substantially impact equine reproductive efficiency. If the disease continues to stabilize in the United States, the equine industry will face great economic losses.
The United States Department of Agriculture Animal and Plant Inspection Service (APHIS) has been taking steps to provide additional safeguards against spreading CEM to horses in United States through importation of infected horses. In 2011, APHIS amended the regulations concerning the importation of horses from countries affected with CEM. The new standards require test mares and imported stallions above a certain age to undergo an additional CEM test to improve the chances of detecting the disease. APHIS has also imposed stricter certification requirements for imported horses 731 days old or less and added new test measures for imported horses more than 731 days old.  Yearlings and weanlings require proof that they have not been bread to other horses through artificial insemination in order to be imported.
On January 10, 2012, APHIS announced that it will post lists of states approved to receive imported horses from high-CEM foreign regions to its website rather than including them in the Code of Federal Regulations. This change will not affect the criteria that APHIS uses to determine whether a foreign region should be added or removed from the list or criteria used to approve states to receive horses imported from high-CEM foreign countries. Because these lists will not continue to appear in the Code of Federal Regulations, updates are no longer required to be legislated.  This new procedure will enable APHIS to more quickly identify changes in the CEM status of foreign regions and approve states to receive horses from foreign regions where CEM is known to exist. Additionally, this will simplify the process of informing the equine community and the public of any concerns of possible CEM exposure to horses in certain areas of the country. APHIS considers this change to be another step toward eliminating the string of CEM outbreaks and improving the welfare of horses and the equine industry.
 Contagious Equine Metritis, United States Department of Agriculture Animal and Plant Health Inspection Service (Mar. 2009), http://www.aphis.usda.gov/publications/animal_health/content/printable_version/fs_CEMrev09.pdf
 United States Department of Agriculture Animal and Plant Health Inspection Service, supra note 1.
 Contagious Equine Metritis Cases, United States Department of Agriculture Animal and Plant Health Inspection Service, http://www.aphis.usda.gov/newsroom/hot_issues/cem/cem_cases.shtml#december (last modified Jan. 26, 2012).
 United States Department of Agriculture Animal and Plant Health Inspection Service, supra note 1.
 USDA Announces Interim Rule Regarding the Importation of Horses from Contagious Equine Metritis - Affected Countries, United States Department of Agriculture Animal and Plant Health Inspection Service (Mar. 25, 2011), http://www.aphis.usda.gov/newsroom/2011/03/importhorse_cemacountr.shtml
 Importation of Horses From Contagious Equine Metritis-Affected Countries, 76 Fed. Reg. 58 (proposed Mar. 25, 2011) (to be codified at 9 C.F.R. pt. 93).
 United States Department of Agriculture Animal and Plant Health Inspection Service, supra note 16.
 Lists of Regions Classified With Respect to Certain Animal Diseases and States Approved To Receive Certain Imported Horses, 77 Fed. Reg. 1388 (proposed Jan. 10, 2012), (to be codified at 9 C.F.R. pts. 92, 93, 94, 96, 98).
Recently, Keeneland Race Track in Lexington, Kentucky announced that submission of jockey medical information is now mandatory at the track prior to entering a race. Id. While numerous tracks make such submissions voluntary, Keeneland is the first track to mandate it. Id. However, since Keeneland's track physician, Barry Schumer, estimates that prior to the mandate approximately 95% of jockeys submitted their medical information voluntarily, it seems that making this a requirement will create no significant problems with compliance. Id.
The most significant concern with such a requirement would likely be privacy issues if some jockeys do not wish to provide certain medical information. Such privacy issues are protected by this system, however. The Jockey Health Information System can only be accessed with an identification code by medical professionals. Id.
With such a high number of injuries being incurred by jockeys on racetracks and significant compliance already, mandating submission of medical information is a move in the right direction regarding jockey safety. With success stories already arising from access to this reporting system, other tracks are likely to follow Keeneland's lead and make submission of jockey medical information a requirement. But jockeys should be aware that this is a new requirement that may be catching on nationwide. They will need to determine whether reporting their medical information is voluntary or mandatory at a particular track prior to racing there and deal with any problems they might have with this beforehand, so as not to be prevented from racing.
Disclaimer: The following post reflects the views of the author and not that necessarily of KJEANRL.
Governor Beshear's slot plan was not received well by the House or Senate. House Speaker Greg Stub filed a competing plan shortly after receiving Beshear's, which would spend the tax revenue from slots on a massive school construction program, instead of helping to erase the shortfall in the next two years budget, as Beshear had proposed. Janet Patton, Beshear Slots Plan Gets Tepid Reception, Lexington- Herald Leader Jan. 21, 2010, available at http://www.kentucky.com/2010/01/21/1104634/beshear-slots-plan-gets-tepid.html (last April 2, 2010). House Democrats have caucused to get support for Beshear's proposal, which would allow racetracks to add electronic slots under existing lottery laws. Id. However, although no official vote was taken, it appears that there was not much sentiment in favor of Beshear's bill, with one Representative calling the plan "delusional". Id.
Stumbo said of his own competing bill "over a billion dollars worth of construction… best thing we could do for the budget is create jobs all over the state". Id. Stumbo said in his bill anticipates that 400-500 million in state tax revenues will be collected from slots over the next two years when all facilities are fully up and running. Id. Beshear said temporary slots could be up and running within six months, and projected 295 million in tax revenues for the first 18 months of slots. Id. Beshear's plan also takes into account the new casino's in Ohio, which is estimated to cut revenues at Turfway Park by 40%. Id.
The horse industry seems to be very supportive of Beshear's and Stumbo's proposals, in a large part because the horse industry is facing significant competitive challenges. Id. However, while seemingly supporting both Beshear and Stumbo's bills, many in the horse industry are willing to talk with others proposing plans in an effort to help the struggling industry, and it seems that slots may be the best way to do this. Id.
The Kentucky legislature is considering several proposals concerning the addition of slots at racetracks. Janet Patton, Beshear Slots Plan Gets Tepid Reception, Lexington Herald-Leader, Jan. 21, 2010, available at http://www.kentucky.com/
1104634.html. Governor Steve Beshear's bill would place electronic slot machines at racetracks in accordance with Kentucky's present lottery statutes. Id. Beshear says his proposal would generate $295 million in tax revenue within its first 18 months. Id. Keeneland spokesman Jay Blanton said of the plan, "We appreciate the governor's strong and continued support for the state's signature industry, which is facing significant competitive challenges." Id. However, a recent House democratic caucus revealed little enthusiasm for the bill; it was described as "delusional" by State Rep. Mary Lou Marzian. Id.
House Speaker Greg Stumbo, who asserted that there is "no sentiment" for Beshear's proposal, is pushing his own competing plan. Id. Stumbo claims that his proposal would generate $400-$500 million in revenue within two years, which would then be spent on a school construction project in an effort to boost Kentucky's budget by creating jobs. Id.
While both bills suppose that gambling can be expanded under current lottery laws, a third plan, approved Jan. 20 by a Senate committee, demands an amendment to Kentucky's constitution to allow gambling to be expanded. Id. As a proponent of this approach, Senate President David Williams is skeptical that bills like Beshear's, operating under present lottery statutes, could pass in either the House or the Senate. Id.
Ultimately, though, Williams' proposal has not quelled the concerns of the horse industry. Id. Blanton remarked, "…our concern about a proposed amendment remains the same: our challenges require immediate relief; any proposed amendment that we've seen thus far would, at least, take years to afford any assistance to the industry. That hasn't changed." Id.
According to a recent article in the Lexington Herald-Leader, some Kentucky citizens have begun to question tax exemptions provided to horse sales and the impact of this exemption on the state's economy. Janet Patton, Horseman say exemption crucial for Ky., Lexington Herald-Leader, Jan. 17, 2010, available at http://www.kentucky.com/horse_racing/story/1099255.html (last visited Jan. 20, 2010). Kentucky Revised Statute § 139.531 provides exemptions for sales tax and use tax for the sale or use of horses made for breeding purposes only as well as for the sale of horses less than two years of age bought by out-of-state residents who take the horses out of Kentucky. Ky. Rev. Stat. Ann. § 139.531(2) (2009).
Based on estimates supplied by the state, this practice has cost the Kentucky almost $220 million in lost revenue from 2004 to 2010. See Patton. For example, Sheikh Mohammed bin Rashid al Maktoum of Dubai, Kentucky's top buyer of thoroughbreds, has purchased more than $60 million in broodmares at Keeneland's fall sales since 2002. Id. Had these purchases been taxed at Kentucky's rate of six percent, they would have generated more than $3.6 million by themselves. Id. During this time of budget short-falls and overall cut-backs in our state, some suggest that it is time to reevaluate Kentucky's tax code.
However, others worry that that taxing more sales would cost Kentucky a competitive edge in the horse industry, which is already hurting. Those in the horse industry are afraid that if Kentucky imposes a sales tax, buyers will simply go to other states that offer exemptions, including Maryland, New York, California, Florida, Pennsylvania and Texas. Id. Additionally, those who support keeping the tax exemptions point out that the horse industry is taxed in ways that other agriculture sectors are not. Jay Blanton, spokesman for Keeneland, explained "that sales of many horses, including those of racehorses, are taxed, and that horse farms pay sales taxes that other agricultural enterprises don't. Feed and hay for cattle, for instance, are exempt while the same products for horses are taxed." Id.
During these continued tough economic times for people in Kentucky and across the country, these issues regarding tax reform are surely to be debated by our legislators in the near future.
Republican Senator Damon Thayer called off a committee vote on his proposed constitutional amendment on January 13. Janet Patton, Senator Calls Off Committee Vote on Gambling Amendment, Lexington Herald-Leaser, Jan. 14, 2010, available at http://www.kentucky.com/news/state/ story/1094981.html (last visited Jan. 17, 2010). His proposed amendment, if passed by the full Senate, would allow video lottery terminals in up to seven counties that have racetracks, but the racetracks would have to compete for this license. Id. This bill was expected to pass the Senate State and Local Government Committee; however, it was unlikely to pass a floor vote by the full Senate. Id. Thayer believed that delaying the bill would give him more time to gain additional support for his bill. Ron Mitchell, Thayer Delays Committee Vote on Gaming Bill, January 14, 2010, available at http://www.bloodhorse.com/horse-racing/articles/54796/thayer-delays-committee-vote-on-gaming-bill (last visited Jan. 17, 2010.) Thayer said that he "wanted to see if there is anyone else that is willing to come to the table." Id.
Many leaders and racetracks of the horse industry have opposed Senate Bill 21 because "it does not guarantee that tracks get expanded gambling." Janet Patton, Senator Calls Off Committee Vote on Gambling Amendment, Lexington Herald-Leaser, Jan. 14, 2010, available at http://www.kentucky.com/news/state/story/1094981.html (last visited Jan. 17, 2010). But, Thayer said he has heard from a few "rank and file" horsemen that are disappointed with the horse industry opposing his bill. Id. Thayer explained that delaying the vote until later this month will hopefully translate into bipartisan support. Id. "Gambling Licenses are something of value to the people of Kentucky. A competitive bidding process is likely to result in higher fees to the state," Thayer explained. Id. Furthermore, he said that increased purses from the slots would bring more racehorses, which would generate revenue for the tracks. Id.
Senator Ed Worley has said no Democrat will vote for Thayer's bill. Id. If Worley's statement is true, Thayer's bill will not pass because a constitutional amendment needs at least 23 votes in the Senate to pass. Id. Only time will tell if Thayer's amendment can gain enough bipartisan support to pass through the Senate.
Kentucky has, in various forms, debated the legalization of gambling, particularly in the form of video slot machines at racetracks, for more than a decade. Beth Musgrave & Janet Patton, Beshear Wants Slots Bill by Winter, Lexington Herald-Leader, Nov. 5, 2009, available at http://www.kentucky.com/181/story/1006050.html?storylink=omni_popular (last visited Nov. 17, 2009). After Ohio residents passed a referendum on November 3, 2009, allowing casino gambling in four major cities, including Cincinnati, the efforts to legalize gambling gained momentum. Id. Governor Beshear issued the following statement after the referendum passed: "Clearly, the time to act on expanded gaming is now.… Ohio citizens are going to reap the benefits of thousands of new jobs and millions of dollars in tax revenue. Ohio's decision reinforces the urgency to pass the video lottery terminal bill I proposed earlier this year." Id.
In addition to questionable popular support, the proponents of legalizing gambling have faced the criticism that the move can only legally be made through amendment of the state constitution, an argument that Governor Beshear labels as a stall tactic that cannot be tolerated as the Kentucky horseracing industry faces tough times. Id. Although last term a bill passed the democrat-controlled House, but did not get out of committee in the Senate, Governor Beshear now predicts that the bill would pass both houses in 2010, after changes in membership. Ryan Alessi, Beshear: Slots Will Pass the Full Senate if Given a Chance, Bluegrass Politics, http:// bluegrasspolitics.bloginky.com/2009/11/17/beshear-slots-will-pass-the-full-senate-if-given-a-chance/ (last visited Nov. 17, 2009). Speaking of the impact on the horse industry, which would receive a cut of profits under the proposed bill, Governor Beshear stated: "In my opinion we must protect this industry. Why? Not because there are two to three rich guys in it. But because there are 100,000 hard working Kentuckians who work in that industry every day." Id. Only time will tell whether the bill will in fact pass the legislature, and if so, only the courts will tell if the bill passes constitutional muster.
The horse industry is a vital part of Kentucky's economy. In fact, the industry is alone responsible for 80,000-100,000 jobs in the state. Kentucky Equine Education Project, Why Kentucky's Horse Industry Needs Support (2007), available at http://www.horseswork.com/pdf/why_to_support.pdf. However, this industry is currently threatened by increased competition from surrounding states that allow alternative gaming revenue. Because revenue from casino style gambling at racetracks boosts purses and breeding incentives, horses traditionally bred and run in Kentucky are now being taken elsewhere because of the opportunity to earn greater amounts of money.
Kentucky currently has five thoroughbred racetracks in the state: Churchill Downs in Louisville, Keeneland in Lexington, Ellis Park in Henderson, Turfway Park in Florence, and Kentucky Downs in Franklin. Gregory A. Hall, Ky. horse tracks request fewer racing dates in 2010, COURIER-JOURNAL, Oct. 26, 2009, available at http://www.courier-journal.com/article/20091026/BUSINESS/910260343/Ky.+horse+tracks+request+fewer+racing+dates+in+2010. Kentucky tracks have already requested fewer racing dates for 2010 due to decreased revenue, and if things continue in the current fashion, it could mean the end of one or several of these historic venues. Id.
Although the racing industry is suffering nationwide, several states have managed to avoid some of the problems that Kentucky is currently experiencing through the introduction of alternative gaming. According to statistics found in the American Gaming Association's 2009 State of the States report, 12 other horse racing states, including Indiana and West Virginia, allow patrons at the track to wager on video gambling machines, slot machines or other casino-style games. American Gaming Association, State of the States 2009: The AGA Survey of Casino Entertainment (2009), http://www.americangaming.org/assets/files/aga-sos2009web.pdf. This type of expanded gaming has allowed those states to increase purse sizes, attracting many of Kentucky's thoroughbreds to race at those locations rather than in Kentucky.
The size of the purse that racetracks can offer directly affects the quality and quantity of horses that run at the track and the bettors and money that come in to the state. Comparing the purses at Kentucky's Turfway Park and Pennsylvania's Presque Isle Downs, it is clear that purses increased dramatically after the introduction of casino betting in Pennsylvania. Kentucky Horsemen's Benevolent and Protective Association, Inc., Understanding Kentucky's Horse Industry (2009), available at http://www.kyhbpa.org/resources/IndustryHandout.pdf. High purses also mean more jobs for residents of the state. Id.
Additionally, many states have greatly increased purses for horses which are born in that state. See supraAmerican Gaming Association. This practice entices horse owners to move their breeding operation to certain states to ensure that their horses are eligible for the state-oriented prizes, thereby affecting Kentucky breeding farms which have experienced reduced stallion and foaling or broodmare income. Id.
This past June during a special legislative session, Kentucky's House of Representatives passed the Video Lottery Bill which would have allowed slot machines at racetracks. John Cheves, Slots bill dies in committee, LEXINGTON HERALD-LEADER, June 23, 2009, available at http://www.kentucky.com/302/story/839602.html. However, the bill soon died in the Senate. Id. According to Senator Tim Shaughnessy, D-Louisville, the issue is not over: "[t]he reality is, history is on our side. This is eventually going to happen, whether it's done by an act of the legislature or put before the voters of Kentucky for a formal vote. It may be stopped today, but the issue isn't if this happens, it's when this happens." Id.
According to Attorney General Jack Conway, however, it doesn't appear necessary to send the decision to Kentucky voters. In an opinion issued by Conway in June responding to a request by State Representative Jody Richards, Conway found that the "General Assembly may authorize the Kentucky Lottery Corporation to establish, license, regulate and tax video lottery terminals at designated horse racing tracks under Ky. Const. § 226(1) without further amendment to the Kentucky Constitution." Video Lottery Terminals at Kentucky's Horse Race Tracks, Op. Att'y Gen. 09-004 (2009), http://www.law.louisville.edu/sites/www.law.louisville.edu/files/OAG09004.pdf. While this opinion is merely advisory and not legally binding, it represents a well-reasoned argument analyzing Kentucky's laws and furthering the idea that the General Assembly is permitted to make the decision on slots without putting it on the ballot, allowing them to more quickly respond to the urgent situation with Kentucky's horse industry.
The bottom line is that horses help create and support jobs in Kentucky, and it is important for our legislators to support the industry that is so vital to our local economy. Ultimately, if Kentucky allows expanded gaming at the state's racetracks, it will increase revenues, thereby increasing purses and breeding benefits, and will help keep horses and jobs in Kentucky.