State Incentives 2025 - The different state incentives for owners and breeders across North America

Words - Ken Snyder

There’s an old saying, “the more things change, the more they are the same.”  “Same,” in the case of Thoroughbred breeding, might actually be desirable, as in a leveling off of declining foal crops and short fields not getting any shorter. 

“Change” is borderline cataclysmic. To wit, the possibility of decoupling racing at Gulfstream Park from the casino poses an existential threat to the racetrack, and dark clouds are beginning to loom over Santa Anita that’s not coming from the recent fires.

Still, the industry soldiers on. 

It’s ironic that Kentucky, the hub of the Thoroughbred industry in North America, prospers with record-high purses and full to overflowing fields. 

On the positive side for breeders and the industry as a whole, sale prices increased over 2023 in the weanling, yearling and broodmare divisions. 

Keeneland’s September Yearling Sale, one major barometer of industry health, broke a cumulative sales record on the 10-day mark with sales topping $405 million, beating the prior record set in 2022. 

Total yearling sales receipts across North America increased by just over 4% year on year with an average price also increasing just over 6% above ’23 averages. With an inflation rate of 2.89% at time of writing (down from the astronomical 9.06% in 2022) breeders could actually spend some of their sales revenues.

Naysayers, however, might snidely ask horse purchasers, “Where ya’ gonna’ race ‘em?”

The answer is states where racing venues operate with breeding incentives, thank you very much. For that matter, one of the states —New York– will boost state-bred incentives by 15% in 2027 in time for renovated Belmont Park. That would be 15% of $42.8 million (the total for 2024 New York-bred races) or a cool $6.4 million in 2027. 

It seems, by the way, New York breeders are ahead of NYRA. The state actually experienced a foal crop increase from 1,446 to 1,524 at time of writing with full results not yet in… one of the few states with a plus number last year.

Also in the plus column is Pennsylvania. Foals numbers are projected to remain the same through 2023 to 2024. But with ten new stallions to hit the breeding sheds this year, including 2022 Kentucky Derby-winner Rich Strike, that number will likely increase in years to come. Rich Strike is one of approximately 45 stallions standing in Pennsylvania, according to Brian Sanfrantello, executive secretary of the Pennsylvania Horse Breeders Association.

The Keystone State might be the best place for breeding awards east of Kentucky. Last year, Warriors Reward topped stallion standings with $199,664. Add breeder totals to that and you have $927,518. 

Speaking of Kentucky, there was $58.1 million last year in Owners’ Awards, but no stallion owners’ awards. But Kentucky has the Kentucky Thoroughbred Breeders’ Incentive Fund (KBIF). Awards since the fund’s inception in 2005 total over $200 million for winning eligible races. 

The KBIF also solves a mystery for most racegoers in the Commonwealth in racing programs. It is common to see purse money added to by the “Kentucky Thoroughbred Development Fund.” That money comes from a 6% sales tax on breeding to a Kentucky stallion.

Peripheral but important to many small breeders in Kentucky for the coming season has been both Spendthrift Farm and Taylor Made Stallions cutting fees for six stallions and seven stallions respectively. 

In total, fee reductions for thirteen damn good stallions went from a total of $205,000 last year to $124,750 in 2025. The cuts enable a wider market of breeders to pass through Spendthrift’s gates and might generate new blood in the sport.

In Florida the absence of a state income tax carries over to horse breeding. Unlike Kentucky, there is no tax on stallion seasons spending; horses purchased from an original breeder are sales-tax exempt; there is no personal state income or individual capital gains tax; and feed/animal health items are tax exempt. 

The incentives require a journey into the proverbial weeds with different awards for Gulfstream and Tampa Bay Downs--some bonuses for a maiden special weight and allowance races but not handicap races; a percentage of a gross purse for winning a Black-Type stakes race; and bonuses on open overnight races. 

The incentives vary between Gulfstream and Tampa. Suffice to say, according to the FTOBA’s website, Florida breeds - "Registered Florida Stallions”-- are eligible for “purse and race incentives plus the $1.2 million 2-year-old stakes series at Gulfstream Park.”

My guess is the trainer, jockey, and maybe even some owners just wait till they get their check from a track’s payroll clerk to know what they won.

Louisiana is much simpler. A horse sired by a Louisiana stallion and foaled in the state who finishes first, second or third at a Louisiana track earns a 25% award. (Purses with this award structure are capped at $200,000.) A horse sired out of state but foaled in Louisiana earns 20% for first, second, and third if the race is within the state. A “non-resident” filly or mare, can earn an award of 10% if sired by a Louisiana stallion and racing in the state. It’s win, place, and show for these horses, too. The smallest award is 9% to resident and non-resident mares sired by out-of-state stallions. This includes mares bred back to an out-of-state stallion.

Arkansas might be the easiest incentive program to understand. Stallion awards are to an owner of an Arkansas-bred stallion for first through fourth place for any race in North America. Awards are “calculated on the earnings of 1st through 4th place finishes.” 

California’s breeding awards are not complicated but vary by race condition and purse size. It’s pretty straightforward (unlike the Kentucky Thoroughbred Breeders’ Incentive Fund) and is available in the state-by-state breakdown of incentives.

State Breeding Incentives for 2024 - on a state by state basis

Article by Ken Snyder

Nineteenth century British Prime Minister Benjamin Disraeli gets credit for coining the phrase “there are lies, damned lies, and statistics.”

Jockey club statistics showing the 2022 foal crop to be 18,200 in the U.S.—down from 19,200 in 2021--might come under the heading of “damned lie.” (Numbers for 2023 aren’t in yet.) 

The phrase is a caveat or admonition to not jump to conclusions with questionable deductions and pronouncements to what, in truth, are damned lies. First, the industry isn’t going over a cliff with foal counts. It operates in a free-market economy. There are gains and losses, “bubbles” when artificially high prices exceed real value, and “corrections” when prices drop to what they should be. 

With foal count, horse population, and racing in general, there are positive, remarkable achievements. In Pennsylvania, the state has experienced increases in foal count and anticipates more. Okay, it’s one state, but it belies that belief that the sky is falling.

Here are the numbers for PA in registered foals: 2017-549; 2018-606; 2019-623; 691 in 2020. Yes, there was a dip in numbers when a former governor attempted to raid the Racehorse Development Trust Fund (2021-593; 413-2022). But, said Brian Sanfrantello, executive secretary of the PA Horse Breeding Association, the foal count has bottomed out and the breeding industry should return to increasing foal numbers with a new governor. Further, five new stallions have come to the state for breeding in 2024.

A Stallion Series is a crown jewel of a breeding program that makes Pennsylvania breeding and racing literally worthwhile. Launched in 2022 it offered $600,000 in purses for stakes races for PA-bred two-year-old colts and fillies over two days of racing. On the first race day, colts and fillies raced for $100,000-dollar purses each. On the second day, they ran for $200,000. The Series attacked one problem for PA breeders and appealed to those out of state. 

“It’s costing forty thousand to fifty thousand dollars from the time you breed the mare to the time the horse races,” said Sanfrantello. “We’re trying to get the money back to the breeder as fast as possible.” 

The means this year, in addition to this Series, are eight two-year-old stakes races, four of which are for PA breds. For non-Series and other races, breeder awards are 40% for PA-sired horses (compared to 20% for non-PA-breds). “If it’s a fifty-thousand-dollar race, the winner would get sixty percent of the purse or thirty-thousand dollars. Plus, if it’s an open race not restricted, there is a forty percent owner bonus added to the purse or twelve-thousand dollars for total earnings of forty-two-thousand dollars for owners. A breeder-owner would get an additional sixteen-thousand eight-hundred dollars. The total? Fifty-eight thousand, eight hundred dollars.

The stunner is what breeder awards have totaled. The most striking example? Uptowncharlybrown won two of thirteen starts  and $125,000 in his career but he has earned in breeder and stallion awards $869,080.

Virginia, with twenty-seven race dates in 2023 at the Commonwealth’s lone racetrack, Colonial Downs, is obviously at the other end of the spectrum from year-round racing in Pennsylvania and other states. However, the Virginia Thoroughbred Association, of which Debbie Easter is executive director, is outdistancing any other state in how fast they are growing their racing industry.

We said, ‘What the heck, we may not be the biggest breeding state any longer, but what we can do and what we do have are farms and the training centers to raise horses.”

Starting basically from scratch when Colonial Downs re-opened in 2019 after closing in 2013, the foal crops had gotten down to a rock bottom, one hundred. This year Easter projects the crop will be 160, a 60% increase. Small potatoes in the general scheme of things but not the only means of building racing. 

“Starting this year, we’re paying for first, second and third anywhere in North America if you’re a breeder and bred a horse in Virginia,” said Easter. “By us paying win, place and show in North America all year long, that makes our program year-round. That’s a big advantage, we think, over other breeding programs. You don’t have to race in our state to get our money.” The award is 34% of the earnings added to the purse. Historical Horse Racing (HHR) generates the award money, which has increased the breeding fund from $500,000 to $2 million dollars in five years. 

Virginia has also initiated a “Certified Program” which covers a horse registered by The Jockey Club and conceived and foaled outside of Virginia, but residing in the state for at least a six-month consecutive period prior to December 31st of its two-year-old year.

“Our Certified guys are averaging about eight months or so a year here. We’re bringing in almost nine hundred horses in a year. We’ve grown the population of Thoroughbred horses in the last five years faster than we could ever have done it breeding horses. It absolutely saved our farms and training centers and the infrastructure that supports those farms.,” said Easter.

The big development with New York is state-bred, 2024 foals will run for the same purse amounts as open-company races. This year at Saratoga, maiden races restricted to two-year-old New York breds ran for $88,000 compared to $105,000 for two-year-olds in open company maiden races. ”It’s something that breeders in NY and horsemen who compete with NY breds have been advocating for a long time,” said Najja Thompson, executive director of the New York Thoroughbred Breeders.

Thompson added that this year there are also increases for New York breds whether sired by state sires or sired outside the state. For 2024, breeder awards are 40% for first place, 20% for second place, and 10% for third place, with a $40,000 cap award. Last year’s awards were 30% for first place and 15% for place and show finishes. A cap per award remains at $40,000.

Maryland’s biggest innovation this year is a two-tiered system, one tier for Maryland-sired and Maryland bred horses, and a second tier for Maryland-breds only. The system will begin with 2025 foals. “We are going to have a two-tiered system to try and reward MD sires as they do in Pennsylvania and other states,” said Cricket Goodall, executive director of the Maryland Horse Breeders Association.

Maryland’s best days will be when the $385 million Pimlico project is completed to rebuild the track from the ground up and also add a training center, according to Goodall.

“I think that you have to have a look to the future to be competitive,” said Goodall. She compares the project, which is projected for completion In what Goodall projects as “four to five years” to New York’s investment in Belmont Park. “Maryland is looking to be one of the states that is investing in racing and breeding.

Meanwhile, Goodall said Maryland is one of the states where stallion books have gone up this year.

Kentucky, of course, is the kingpin of American Thoroughbred breeding. While foal crops nationally have declined, Kentucky, from 2012 to 2021 increased in registered foals by just under 10%. Of the five top states for registered foals—Kentucky, Florida, California, New York, and Louisiana—Kentucky was the only one without a decrease in those years.

Strangely, the number of yearlings sold in North America in 2023—8,303, increased from 8,061 in 2013. That doesn’t correspond to decreasing foal crops. 

The principal reason for the overall decline in foals is increasing expenses, according to Duncan Taylor, senior Thoroughbred consultant and co-owner with three brothers of Taylor Made Farm just outside Lexington, Kentucky. “Costs just keep increasing, and they increase for all horses the same. I’m talking about daily board rate in Kentucky. The last eight years, probably, it has gone from thirty-five thousand to forty-five thousand dollars.” 

Vet care has gone up as well. “I had a mare that had to have a C-section. My bill was twenty-two thousand dollars,” he added.

“People can’t stomach these expenses on a less expensive horse. You got a million-dollar horse, you think ‘I’ve got a shot at getting it back because I could sell a five-hundred thousand, six-hundred-thousand-dollar yearling out of that horse.’”

The upshot is competition for the better horses offered in sales--what Taylor calls “more supply of a higher quality.” But what that also means, he said, is “It pushes the people in the lower part of the market out.” Hence, fewer breeders and foals.

Kentucky is awash in cash, which Taylor believes could stem the trend toward continuing foal crop decreases nationally. “All the purse money that is available to race for now, if it stays as good as it is, I don’t think we’ll continue to decline.”

Societal and cultural issues—challenges beyond, perhaps, the reach of horse racing as a sport and industry—are also factors in foal crops. Times have changed.

“At one time in this country, most of the large racing stables were owned by the kings of industry, with the horses coming from their own farms,” said Kent Barnes, former stallion manager at Shadwell’s Nashwan Farm in Lexington who currently directs the stallion division of Spy Coast Farm also in Lexington. “Unfortunately, in many cases, successive generations have either not shared in the passion, or had the wealth to carry on with these large operations, and most of these stables have been either dismantled or severely diminished.“

Duncan Taylor echoes Barnes’ observation. “The underlying condition is not enough people are in love that much with horses to where they want to have a big farm and raise them and then sell them. The condition is less breeders and that goes along with the declining foal crop.”

Ideas abound, some feasible, some not, some fantasy for getting foal crops back up. 

Evan Ferraro, director of marketing for Fasig Tipton, sees a breeding counterpart to racing syndicates as a potential answer. Racing syndicates both large entities and small, are popular. If there’s a way to encourage breeding syndicates that spread risk, they could be appealing.

Breeding to sell rather than race could be incentivized, according to Barnes. “I believe financial obligations are the primary barrier preventing more breeders from racing their own product.  A few years ago, several stallion owners came up with novel approaches to help the breeder decrease their risk going into the sales. Perhaps this same approach could be extended to allow breeders who choose not to sell to mitigate some of their risk going into racing. Stud fees could be deducted from race earnings. To make it more attractive to the stallion owners, there could be a sliding scale where they earn a higher percentage based on the horse’s performance.”

No matter the challenges, there are obviously bright, experienced, and energetic people at the controls of parts of the racing industry—people like Evan Ferraro, Debbie Easter, Brian Sanfrantello, Kent Barnes, Duncan Taylor and many more.

There is another phrase that may have application from someone who quoted Disraeli‘s phrase about statistics: Mark Twain. He said famously, “Reports of my death are greatly exaggerated.”

Racing is not dying. It is changing. And in everything, change is inevitable.

Where do we go from here?

The strange, but positive thing encountered in examining the declining foal crop and reasons for it, is that everyone interviewed had a different response to this question: What is the first thing you would do if put in charge of the industry? There were no limits put on the responses; the answers ranged from the completely improbable to things right under the industry’s nose. Even better, they span most aspects of racing from fan development to breeding.

First things first: fans. Empty grandstands on race days are par for the course and maddeningly accepted. To drive on-track attendance, Evan Ferraro, offered a simple, but great idea for weekends. “Open up the infields. Let people come in there. Let them bring their own stuff.” Add musical entertainment and things like face-painting for children or pony rides, and …voila, a family event for Saturday and Sunday afternoons. Stack that up against a $15 beer, $10-dollar hot dog, and $10 parking for a major league baseball game. Throw in a premium—cap, cups, etc.--and a free afternoon picnicking at the racetrack looks like a great day out. For racetrack management resting on laurels and reluctant to loosen purse strings fattened by off-track wagering and purses funded from casinos or Historical Horse Racing (HHR) machines, they could find a sponsor to add their logo to the racetrack’s giveaways. 

Ferraro added a familiar lament to his idea: “I don’t think we market our sport well anymore.

“I don’t think you can promote ‘our safety numbers are better.’ You gotta sell the races. That’s what has to drive everything to me. Create some familiarity and give customers a good experience.”

Add to all these things a focus on the “stars.” As recently as the 1970s and 1980s National Basketball Association playoff games were tape delayed. The sport, quite simply, was “meh”… until Larry Bird and Magic Johnson came along. This past year Cody’s Wish provided the public a truly moving story both on the track and more important, off the track in the horse’s relationship with the late Cody Dorman. “There was never a story by the major networks about Cody’s Wish,” said Ferraro. Thoroughbred racing has been silent since “Go Baby Go” was seen and heard on televisions more than twenty years ago. “Public relations,” anyone? 

Kent Barnes, sees a connection between attracting fans and foal crops: “The only way we could ever consider increasing our foal crop is if we can somehow get more end-users involved in the racing game. There is more and more competition out there every year for the public’s entertainment dollar and somehow, we have to attract back the fans, which increases the handle, thereby increasing purses and attracting owners.”

On another subject, the failure of a 140-mare cap for stallions in the U.S. frustrated Barnes, a respected and published researcher on the demise of sire lines and resultant inbreeding. He said, “I was disappointed in their reversal of the cap decision because I feel that if we limit the number of mares bred to each stallion, this ensures that the top stallions are getting the very best mares and also allows second-tier stallions to prove themselves by getting an increased number of mares.  

“There is no doubt stallions that failed to make their mark could have done so with enough mares of quality to prove themselves.”

Bloodstock agent Clark Shepherd pointed out the obvious without a 140-cap limit: “We’re limiting the gene pool. I get handed these mares that are fantastic on the racetrack, and they [clients] want me to do a mating for them. But when I sit down and do a mating, the mare’s bred like a stallion. So now what? It limits my choices.”

Here’s where foal crop numbers really might be, as British Prime Minister Disraeli said about numbers and statistics, “damned lies,” at least according to Shepherd. “I don’t know that a declining foal supply is a bad thing just because of supply and demand,” he said. “For the last three years, I’ve been waiting on the shoe to drop, and we keep going on this upward trend. 

“To me, it’s supply and demand.”

One factor in decline in foal numbers is, Shepherd said, “mom-and-pop” breeders leaving the business unable to afford stud fees for what he called “ultra-stallions.” “They don’t have the mares good enough to get into first-year stallions.”

Whether good or bad, Shepherd points to what he believes is an issue and factor in foal declines. “There’s a lot of mares, even stallions, that don’t need to be in production. If it’s a resulting decline in foal crop because of that realization, I’m okay with it. We’re striving to breed better horses and there’s less of them, and that creates more demand. It could be a good thing.”

On the issue of racehorse ownership Debbie Easter identified what she said is both the problem and a solution: “The problem is the owners don’t own the racetracks. Owners own the talent, but we don’t own the most important part of it:  the HHR or the things that fuel the whole game.”

The solution, in her opinion, is the Japanese model: “Owners are able to pay for their daily expenses with bigger purses earned over there.

“You have the cost of the horse and then there’s the daily cost of racing. I’ve always said, I think the guys would forgive the cost of the horse if they could just pay the daily cost…if they didn’t have to take it out of their pocket. I think we could grow ownership.” 

She wonders if there is too much racing. Contraction of the racing industry could possibly be the ultimate answer.

“Everywhere where racing is successful in this country—Saratoga, Del Mar, Keeneland—what do they all have in common? They don’t run year-round. And they’re in destinations where people want to come.” They also have capacity crowds.

Duncan Taylor, added a novel and, in truth, a not-to-be idea for horse owners. If he were commissioner and it was feasible “I would start purely an owners’ organization and it would be only owners with racehorses while they were running.

“I think they have the most to lose and the most to gain in an entrepreneurial way for improving the sport and not the mediocre management of the racetracks. I would try to get that group of people [owners] to actually buy the tracks.”

Answers? Solutions? Some are immediately viable from this story. Some are unlikely. And some are in a “perfect world” that won’t exist. 

There is, however, one thing on which everyone can agree: racing needs ideas.