Over the last 15 to 20 years or so horse racing has seen declines in wagering and fan attendance throughout the US. Because of this, the number of races, horses per race, the number of thoroughbred farms, and new thoroughbreds bred and born each year for about the last 10 to 12 years have also declined. The decline in wagering has occurred despite simulcasting of races, online betting, and gambling machines which employ films of past races (historical horse racing machines). Those racetracks doing well are usually part of larger casino and entertainment complexes (racinos). Kentucky, which has one of the greatest number of horses and horse farms per capita in the United States, and which is also home to one of the world’s premier racetracks and horse races, Churchill Downs and the Kentucky Derby, has seen declining inflation adjusted horse industry tax revenues since the 1990s. These losses, although a small share of the state’s overall tax revenues, somewhat exacerbate a budget which has already seen substantial declines in or an almost complete loss of tax revenues from two other major industries of the state, coal and tobacco. This research note explores why the Thoroughbred industries are declining and how this is impacting some Kentucky state tax revenues, especially revenues which support equine industries. Policy decisions will have to be made regarding future state support.