Double Taxation Threatens to Put Horse Racing Out of Business

Dear Hillary and President Clinton, New York Gov. Mario Cuomo, Secretary of Commerce Ron Brown, and Rush Limbaugh:

Did I forget anyone?

Oh. Dear members of the Senate and the House of Representatives:

These are difficult times in the racing business. Lately, your mail may have brought this to your attention. If it has, you must first realize how unusual it is for people immersed in racing to put pen to paper and write to a politician. For this reason, I am using this forum to give trainer Mike Kelly an assist in his maiden voyage into the political abyss.

Horsemen are not political animals. They are totally involved in their work, seven days a week, for as many hours as it takes to train, race, doctor and pamper the horses in their care. It matters not that most race horses fail to earn their keep. A cheap horse, trainers are fond of saying, eats as much as a champion and is infinitely more difficult to train and manage. Most racing people have neither the time nor inclination to write letters or make appropriately irate phone calls to inappropriately disinterested politicians.

This does not mean there is an absence of fear and loathing on the backstretch or that the people whose livelihoods depend upon the racing business are not concerned. They’ve seen plenty of their contemporaries simply give up the fight in recent years. They’ve seen people who once owned horses abandon the game. They’ve seen racetracks fail. They’re worried, and not without cause.

Even less inclined to put pen to paper is the average horseplayer. This is a person whose enterprise is almost as time consuming as the trainer’s and just as uncertain. Owners and trainers are faced with rising costs and shrinking purses. Horseplayers, some of whom are also owners and trainers, bear the unique burden of double taxation and tax withholding laws that border on piracy.

This appears, at first, to be a relatively small group of people with a narrow impact upon the economy. “Until you sit down and look at it on paper,” Kelly said, “you don’t realize how much is involved and how many people’s jobs and businesses depend upon racing.”

Kelly is a rare exception to the unwritten rule that says horsemen must suffer quietly at the hands of governments. Born to a large and well-known racing family 35 years ago, he faces a business climate much more complicated and perilous than did his father, E.I. Kelly, at a comparable age. Both E.I. Kelly and his brother, Tommy Kelly, are likely to be in the Hall of Fame one day. But Mike Kelly, his brother and several cousins--all trainers--share a grave and well-founded concern that the sport may crumble beneath them unless sanity is restored to the tax laws related to ownership of race horses.

The last generation of trainers enjoyed the luxury of being able to concentrate on keeping the animals sound and the owners happy. The operative word here is owners.

Mike Kelly and his contemporaries are concerned that soon there will be too few people to support the industry. The number of horse owners has dwindled steadily since the 1986 tax laws removed virtually every incentive to speculate in what is a risky and expensive enterprise. Fewer horses are being bred in the United States.

“Racing was a money-generating machine (for governments) for years and it can continue to be,” Kelly said. “But our legislators have to encourage thoroughbred ownership with tax incentives. Without owners, racing is doomed. These people are an endangered species.”

Kelly is the volunteer leader of a letter-writing campaign aimed at the people with the power to do something about the sport’s economy--an unprecedented political-action movement. “If the people involved in the sport don’t try to help themselves, no one else is going to,” he said.

Kelly compiled a huge tree graph to illustrate the hundreds of jobs connected directly to the racing business, merely the first wave of a wide economic ripple that surrounds every racetrack in the nation. “Everyone from people who write about racing for newspapers and magazines to hot walkers, van drivers, black-smiths, breeders, suppliers,” Kelly said. “There are over 100 individual jobs.”

He enclosed copies of the graph with letters addressed to Clinton, Cuomo, Brown, several Long Island legislators and Richard Rollap, president of the American Horse Council. Only Rollap has bothered to respond, but his efforts have inspired others from Belmont Park and Aqueduct to Virginia. “I’m trying to get people involved. (Writing letters) isn’t something that’s hard to do,” Kelly said. “If these people get enough mail, they’ll begin seeing votes. It has to have an impact.

“For racing to survive, the owner must have a chance to make a profit. Otherwise, the people working in the racing industry and paying taxes will eventually be out of work, not paying taxes and looking to the government for some sort of relief to survive--welfare, food stamps.”

Think about that: Food stamps--future currency of the Sport of Kings.