Horses drive $3 billion in annual economic impact in Kentucky and create almost 41,000 jobs, according to the first in-depth study in decades of one of the state's signature industries.
The University of Kentucky economic analysis, based on statewide surveys of horses and of the people who enjoy them, shows that the equine industry creates about $1.4 billion in new income paid to workers, profits to businesses and dividends to shareholders and generates about $134 million in tax revenue for the state.
The $600,000 study, released Friday, was commissioned by the Kentucky Horse Council and paid for by a grant from the Governor's Office of Agricultural Policy and the Agricultural Development Board, along with matching funds from the horse industry.
Agriculture and equine groups sought the study to quantify what the horse industry brings to the state and highlight opportunities for future investment.
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Jill Stowe, director of UK's ag equine programs and lead economist on the study, said that it should be a benchmark for policy makers, community planners and veterinarians because of its scope.
"I think this data will be useful for business owners and entrepreneurs, who might say we didn't realize there were so many horses in this area," Stowe said. "For instance, we have a lot more trail riders in this area, and we don't really have any trails. So maybe we can get some local support for trails."
The Kentucky Horse Council already has used the numbers to hold regional horsemen's meetings in Elizabethtown and Danville and plans at least three more, said Anna Zinkhon, Horse Council board president.
"With knowledge of how many horses are actually in each of 120 counties, the Kentucky Horse Council can plan targeted activities that more closely track real horse populations by breed and use," she said.
Patrick Neely, spokesman for the Kentucky Equine Education Project, or KEEP, said the study shows the importance of the horse industry to the state's overall economy.
"Unfortunately, it also demonstrates that we have lost a large number of industry-related jobs in the past eight years, as our surrounding states have continued to use their competitive advantage to lure horses and industry jobs to their states," Neely said. "Until we put our purses and breeders incentives on a level competitive playing field with our competitor states, we will most likely continue to lose jobs."
KEEP has lobbied Frankfort for expanded gambling at racetracks and has said that without casinos thousands of equine jobs are at risk.
KEEP used to use a figure of 100,000 jobs, based on an American Horse Council study that found 51,000 horse industry jobs in Kentucky.
But the UK study found far fewer jobs linked to the industry, which lost many jobs since the 2008 recession, with only about 32,000 directly employed in the equine operations and businesses.
"The survey methodologies were different," Stowe said. "Certainly there has been some contraction, and we would expect to lose some jobs both directly and indirectly. But if you look at the numbers KEEP has reported, and the American Horse Council study from 2005, the numbers are quite different and a large part of that is because they did the study differently. I feel quite confident in our study because of the way we did it."
"There has been a contraction, based on the economy and the competition from other states," said Sen. Damon Thayer, R-Georgetown. He said that the study might not change many minds on expanded gambling, but it might make a case for eliminating sales tax on horse farm items, feed and hay, which are exempt for other kinds of agriculture.
The $3 billion in economic impact — which represents gross revenue generated by the industry — includes $1.8 billion in direct effect plus $1.2 billion in indirect and induced effects. The net impact of this is about $1.4 billion, after costs are factored in.
This number does not include parimutuel wagering, which also generates millions of dollars every year, or banking, legal or accounting services.
Stowe said that all eight racetracks were asked to participate but only one responded with data.
Top impacts: racing, breeding
Thoroughbred horses are the most numerous breed in Kentucky, and the biggest economic impact comes from the racing section, at $1.28 billion, with an additional $710 million from the breeding sector.
Behind that, the biggest economic impact comes from something Kentucky has worked hard to develop as a niche market: horse competitions.
The researchers surveyed thousands of visitors — people from out of state or out of the country — at equine events to gauge economic impact.
According to the study, small horse events with about 200 attendees generate $21,400; large ones with 2,000 attendees might generate 10 times that amount.
The economic impact of the 2013 Rolex Kentucky Three-Day Event at the Kentucky Horse Park in Lexington, which drew more than 50,000 spectators, was $14.2 million, the authors found.
That is comparable to a spring and fall meet of Keeneland racing, which had an estimated $15 million in economic impact for its 2012 meets combined.
What would Kentuckians pay?
Another factor the UK researchers measured: How much is the rural landscape that comes along with lots of horses worth to Kentuckians?
Earlier this year, they mailed surveys to 8,000 people across the state to ask that question.
A large majority said they would support a hypothetical free program to protect farmland. Of those who were supportive, 80 percent were willing to pay "some amount of increased taxes" to preserve the horse industry, and 60 percent said they would pay $50 or more a year.
Where the horses are
Earlier this year, UK reported results from its initial survey of the horse population by breed and use.
The most common use of Kentucky horses was for trail riding or pleasure riding, with 79,500 horses compared to 38,000 broodmares.
The data released Friday dug deeper into the numbers, breaking the horse population down by county.
Although Central Kentucky, home to top Thoroughbred breeding operations, has the most horses, 39,000, or 16 percent of the state's equine population, there are some surprising clusters elsewhere:
■ Shelby County has more than 6,200 horses, with 1,500 American Saddlebreds.
■ Warren and Oldham counties both have more than 4,000 horses each.
■ The area just west of Louisville has a combined 11,000 horses.
■ Seven counties just south of the Bluegrass have more than 12,000 horses.
■ Seven counties along the central Tennessee state line area have more than 12,000 horses.
■ Northern Kentucky has more than 10,000 horses.