SHB 1703
In CommitteeHouse
Equine industry
Establishing an equine industry tax credit, allowing the horse racing commission to impose a fee, and using equine industry sales tax revenues for federal regulatory compliance.
This status may be delayed. See Action History below for the latest updates.
How does a bill become law?
- Introduced: The bill is filed and assigned a number.
- Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
- Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
- Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
- Governor: The Governor reviews the bill and decides whether to sign or veto it.
- Signed: The bill has been signed into law.
AI Analysis
This bill establishes a tax credit for horse racing licensees to offset fees paid for federal horseracing compliance, allows the Horse Racing Commission to charge fees for that purpose, and directs up to $1.5 million per year from equine-related sales taxes into a dedicated account to pay federal regulatory fees. It also creates a new state account to manage those funds.
- The Washington Horse Racing Commission may impose reasonable fees to comply with the federal Horseracing Integrity and Safety Act of 2020, with fee revenue going into a new dedicated state account.
- A new tax credit is created for racetrack licensees equal to amounts they paid in the prior year to the federal Horseracing Integrity and Safety Authority or the state commission; credits can offset state business taxes but cannot be refunded.
- Up to $1.5 million per fiscal year from equine-related sales and use taxes (e.g., on horses, feed, tack, boarding, grooming supplies) will be transferred from the general fund to a new state account for federal compliance fees.
- A new Washington Equine Industry Federal Regulatory Account is created in the state treasury; money in it can only be spent (after appropriation) to pay federal horseracing compliance fees.
- The Department of Revenue must provide sales tax data to the State Treasury to calculate annual transfers, and the Commission must provide payment records to verify tax credit claims.
Who is affected
- Horse racing licensees (e.g., racetrack operators) — Racetrack operators and other licensees who host horse races must pay federal or state fees and can claim a tax credit against their state business taxes for those payments.
- Equine industry businesses — Equine businesses (e.g., feed suppliers, tack shops, boarding facilities, veterinarians) that sell taxable goods or services to horse owners may see increased sales tax revenue flowing into a dedicated state account.
- Horse owners and trainers — Horse owners and trainers may be indirectly affected if racetracks pass on increased compliance costs or adjust fees, and may benefit from improved federal regulatory compliance and safety standards.
- State agencies (Department of Revenue, Washington Horse Racing Commission, State Treasury) — The state government manages new accounts and reporting requirements, and uses sales tax revenue to help cover federal horseracing compliance fees.
Pro/Con Analysis
Potential Benefits (4)
By ensuring dedicated funding for federal horseracing compliance fees, the bill supports implementation of the Horseracing Integrity and Safety Act of 2020, which aims to reduce catastrophic injuries and fatalities among racehorses—potentially improving animal welfare and public confidence in the sport’s integrity.
Public SafetyPeopleRef: Sec. 4The tax credit helps offset compliance costs for racetrack operators, potentially stabilizing operations at Washington’s few remaining tracks (e.g., Emerald Downs), preserving jobs in a niche but culturally significant sector and preventing further contraction of the state’s horse racing industry.
Business & EmploymentPeopleRef: Sec. 2The inflation adjustment mechanism and biennial review may allow the dedicated account to scale with rising federal fees, improving long-term predictability for the industry and reducing the risk of sudden fee hikes that could force racetracks to close.
Business & EmploymentLean peopleRef: Sec. 3(2)The bill enhances interagency coordination by requiring the Horse Racing Commission to provide payment records to the Department of Revenue for credit verification, improving administrative transparency and reducing potential fraud or misuse of the credit.
Local GovernmentLean peopleRef: Sec. 2(5)
Potential Concerns (4)
The bill redirects up to $1.5 million annually from general equine-related sales tax revenues—collected broadly from Washington consumers and businesses—to a dedicated account for federal horseracing compliance, reducing general fund flexibility for other local government priorities like infrastructure, public health, or emergency services.
Local GovernmentRef: Sec. 3(1)The tax credit is only available to racetrack licensees (a narrow subset of businesses), not to the broader equine industry (e.g., feed suppliers, veterinarians, small boarding operations), limiting its economic ripple effect and potentially distorting market competition by subsidizing only one type of equine business.
Business & EmploymentRef: Sec. 2(1)(a)The credit is non-refundable and cannot exceed the taxpayer’s liability in a given period, meaning small or loss-making racetracks may be unable to fully utilize the credit—effectively excluding the most financially vulnerable operators from the benefit.
FinancialRef: Sec. 2(2)The bill includes sales of horses claimed at regulated race meets in the equine tax base, which may inadvertently increase the tax burden on horse owners and trainers—many of whom are small-scale participants—without directly benefiting them, while reinforcing a regulatory framework that primarily serves large racetrack operators.
Business & EmploymentRef: Sec. 3(1)(g)
Who Is Most Affected
Racetrack operators (e.g., Emerald Downs) are the primary beneficiaries: they receive a direct tax credit for federal compliance fees, reducing their net operating costs and helping sustain operations. However, the benefit is limited to licensed racetrack operators—not smaller stakeholders—and may not prevent long-term industry decline if federal fees rise faster than the $1.5M cap.
Equine-related businesses (feed, tack, boarding) may see modest benefits from increased sales if racing activity stabilizes or grows, but they also bear the cost of higher sales tax compliance and contribute to the dedicated fund without direct reimbursement—making their net impact mixed at best.
Horse owners and trainers—especially small-scale, non-professional participants—may face higher indirect costs if racetracks pass on compliance fees or raise entry fees, but could benefit marginally from improved safety standards and regulatory consistency under the federal act.
State agencies gain administrative clarity but face new reporting and verification responsibilities. The Department of Revenue must track and transfer sales tax data; the Horse Racing Commission must verify credit claims—adding workload without new funding, though the state avoids having to appropriate general fund dollars for federal compliance.
General taxpayers and consumers who pay equine-related sales taxes contribute to the dedicated fund but receive no direct benefit—effectively subsidizing a niche industry. This reduces general fund flexibility, potentially affecting services like public health or infrastructure in rural counties where racing is concentrated.