Would A Program Consolidating Western State Breeding Programs Work?

[Wandering Eyes]

At 78 years of age, Dana Halvorson is looking to move out of Washington State and live permanently at his farm in Ocala, Florida. He leaves behind a decades-long, storied career in the bloodstock world in Washington.

He also leaves behind a state breeding industry in free-fall.

Between 2005 and 2025, the number of mares bred dropped 94%, from 1214 to 70. Only two major farms remain in the whole state.

“The West Coast has just taken a beating,” said Halvorson, president of the Washington Thoroughbred Breeders & Owners Association (WTBOA). “It's our last chance-how do you get the breeding industry back?”

One idea Halvorsen has raised in recent years is the prospect of combining, in some fashion, the breeding industries in California, Arizona, Washington and Oregon to create a kind of reciprocal Western breeding scheme. In other words, a program expanding the individual definitions of a state-bred along Western states.

Halvorsen describes the talks he's had around the idea–both with his cohorts in Washington and other states–as preliminary but ongoing. But he's far from the only one having the conversation.

“Other states that have done this, it's helped them,” said Mike Machowsky, Fasig-Tipton's California representative who floated the idea in the pages of the TDN last June, saying a unique situation needs “unique ideas.”

At December's Global Symposium on Racing in Arizona, former California Thoroughbred Breeders' Association (CTBA) vice chair Harris Auerbach made similar noises–as he did in the TDN last year.

“I believe it's possible. It's needed,” said Oscar Gonzales, vice chair of the California Horse Racing Board (CHRB). “It's been quite some time in the state capitol to make policy adjustments to help breeders, though it's been really encouraging to see what the CTBA has been doing of late.”

Harris Auerbach and Chief Stipe Burge | Fasig-Tipton

The impulse is understandable: strength in numbers to stem the bleeding, while at the same time, help protect the last remaining racetracks still operating this side of the Rockies to give all horses at all levels a chance to compete. It wouldn't be without challenges.

Money is the obvious one. Each state has their own pots of breeders' award money with their own individual purse strings limiting it. In most cases, legislative changes would be needed to free it up.

Then there's the task of getting a disparate set of individuals from different states with a splintered set of wants to sit down and agree upon a plan. And what would a plan look like that would benefit all states, both large and small?

While California's breeding industry has also seen large declines, it still far outnumbers the industries in states like Washington and Arizona. In the latter, the number of mares bred fell 85% between 2005 and 2025, from 565 to 84. The disparities in purse structure are the same.

“In some of the regions back east, when you have comparable racing and funding, it's easier to put together. Obviously, it's totally different out here,” said CTBA president Chief Stipe Burge, who raised questions about whether it behooves California financially to open its Cal-bred program to horses bred in other states.

Rather, the immediate focus in the Golden state should be on luring back ex-California runners competing elsewhere, including the roughly 350 currently based at Turf Paradise, many of them Cal-breds, Burge said.

“The breeder awards that they're forfeiting is another major incentive to come back,” he added. “If the races exist, the opportunity's there for them.”

 

Other States, Other Programs

Last year, the Florida Thoroughbred Breeders' and Owners' Association (FTBOA) announced it was putting $1 million towards a new program that rewards registered Florida-breds who win out of state in selected conditions.

The New Mexico Horse Breeders Association instituted a new program allowing certain Arizona-breds (including those by Arizona-based sires) to participate in state restricted races in New Mexico.

Among the program's conditions, connections are required to stump up $1,000 annually to participate.

The breeding industries in Maryland and Virginia have their own reciprocal program, allowing both Maryland-bred or -sired and Virginia-bred or -sired horses to compete in a series of stake races at Laurel Park and Colonial Downs.

Back in 2012, lawmakers tweaked language in state statute opening the door to an out-of-state breeder incentive program that never came to fruition. Nevertheless, the recent program that did come together still required some deft financial reconfiguring to fund it.

Video lottery terminal monies are a huge revenue for the state racing industry, but they can only be used in the state of Maryland. So, stakeholders came together to re-work how some of these funds are allocated, with breeders essentially covering the program's out-of-state costs, and the trainers covering in-state costs.

Chris Merz | Maryland Department of Labor

“They were able to do some flip-flopping using the finds that they already had,” said Chris Merz, executive director of the Maryland Racing Commission.

The idea had its detractors.

“People I think were a bit worried about letting Virginia-breds into the Maryland stakes program, which is understandable,” he said. “But we're at the time and place in horse racing where if we don't work together, everything's going to go down.”

Arguably the biggest obstacle to getting this program launched, said Merz, was finally landing upon a specific program that everyone could get on board with. That, and getting all the right people together in the first place.

“The way it came about, the stakeholders in Maryland and Virginia finally got in the same room and started hashing some stuff out,” said Merz. “It's one of those things, you start from ridiculous and work backwards. But obviously, good on them [for getting it done].”

It's too early to tell if the program has helped boost the breeding industries in both states. But if they were to begin the process again, is there something that would change?

“Perhaps communications could have been better between the stakeholders and their organizations within the state,” Merz admitted. “I think a lot of the frustration that came out of it, some of the trainers and the breeders didn't know much about the program to begin with.”

 

Economic Factors

Jenny Webber is the assistant farm manager at California's Rancho San Miguel. She thinks a reciprocal breeding program among the Western states is the “only feasible things that's going to save breeding at least on the West Coast.”

Webber has a few ideas about what that could look like. One is that horses competing in the state they're bred in would see higher returns.

“You get a higher percentage of the money if you're a Washington-bred competing in Washington, or a Cal-bred competing in California,” said Webber.

More broadly, she'd like to see horses with fewer options right now have their horizons expanded-a program, for example, to give more opportunities to connections of a Washington-bred, who currently have a short 51-day meet at Emerald Downs to make good on their outlay.

“What we're seeing at the sales in California right now, if you don't have a horse that's going to be a Del Mar or Santa Anita horse, people don't want to buy it. There are no outside options to run aside from Los Alamitos [with tight restrictions on Thoroughbred races],” she said.

If stakeholders are serious about instituting any such kind of reciprocal program in the West, there are some basic principles at play, explained Jill Stowe, a professor in agricultural economics at the University of Kentucky.

Dr. Jill Stowe | UKY WEB

“It's a cost-benefit question,” said Stowe. “It has to make financial sense for all these states to participate.”

Would the program be worth it in relation to travel and training costs, for example? How would the program be structured? Would it be built around open or restricted races? And exactly how do you relax the rules around what constitutes a state-bred?

While ultimately the devil's in the details, the sorts of incentives programs that work as intended (i.e., they give the breeding industry a boost), are those primarily focused on quality, said Stowe. “If the quality is rewarded, then the quantity follows,” she said.

Then there's the issue of how to build a reciprocal program when there's one giant dominating the market.

“In microeconomic theory, we do address the topic of oligopoly markets, which is when there are just a few firms in the market. One could characterize a multistate regional breeding conference with this type of market structure. In this situation, and the relative strength of each firm has to be considered when designing agreements,” said Stowe.

“If California is seen as the leader of this program,” Stowe added, “then the agreement must consider appropriate incentives for the other states to participate.”

When it comes to the program between Maryland and Virginia, it's proven most beneficial to stakeholders in the former.

According to Merz, a total of 101 horses ran in these stake races between June and December, with 85 of them Maryland bred or sired horses, and 16 from Virginia.

Maryland won 10 of the races with Virginia winning the other two. Altogether, 84% of the money paid out in these stakes went to Maryland horses, with the rest going to Virginia.

Lopsided? Perhaps. But when you consider how Virginia bred just 10% of the mares Maryland did last year, the picture looks numerically consistent.

 

Legislative Change

California already has a program where horses bred to a California sire but foaled elsewhere are eligible to race in Cal-bred or sired races in the state (but aren't eligible for breeders or owners' awards).

“In the beginning, it was [successful]. People were taking advantage of it. But now, as the mare population has declined in neighbouring states, you don't see as many,” said Burge.

One important aspect of that program? It didn't require a legislative change to facilitate the program.

“We're not looking at making any legislative changes,” said Burge, about one of the key reasons he's reluctant to expand the Cal-bred program to horses bred in other Western states. “There's always a risk when you run legislation. We just don't believe it's necessary.”

Machowsky said he understands Burge's concerns about the financial disparity between California and the other states. But he still thinks it's worth exploring ideas to develop programs that help breeders in all states out West-like a Western state stakes program, the purses built upon a “futurity” style funding scheme.

“Every idea needs to be talked about, whether it's a good idea or a bad idea,” said Machowsky. “We need to create something unique and different and try to give some of these people something to look forward to.”

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