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I / / / LEGISLATIVE RESEARCH COMMISSION HORSE RACING IN NORTH CAROLINA STUDY COMMITTEE I I . REPORT TO THE 1993 GENERAL ASSEMBLY OF NORTH CAROLINA A LIMITED NUMBER OF COPIES OF THIS REPORT IS AVAILABLE FOR DISTRIBUTION THROUGH THE LEGISLATIVE LIBRARY. ROOMS 2126, 2226 STATE LEGISLATIVE BUILDING RALEIGH, NORTH CAROLINA 27611 TELEPHONE: (919) 733-7778 OR ROOM 500 · LEGISLATIVE OFFICE BUILDING RALEIGH, NORTH CAROLINA 27603-5925 TELEPHONE: (919) 733-9390 TABLE OF CONTENTS Letter of Transmittal. i Legislative Research Commission Membership ........................................ .ii PREFACE ...................................................................................... 1 COMMITTEE PROCEEDINGS ........................................................... 3 FINDINGS AND RECOMMENDATIONS ............................................. 18 BACKGROUND MATERIAL .............................................................. 24 INTRODUCTION ............................................................................ 24 BREEDS AND REGIONS .................................................................. 26 EQUINE INDUSTRY REVIEW ........................................................... 38 STRUCTURE ................................................................................. 38 REGULATION ................................................................................ 46 PERFORMANCE ACTIVITIES .......................................................... .49 EMPLOYMENT .............................................................................. 60 THREE STATES EXPERIENCE WITH PARI-MUTUEL WAGERING ON HORSE RACING ...................................................................... 65 ·PARI-MUTUEL WAGERING ............................................................. 79 LAW ENFORCEMENT ..................................................................... 80 OFF-SlTE WAGERING ..................................................................... 83 FREQUENTLY ASKED QUESTIONS ABOUT RACING ................... : ....... 89 GLOSSARY OF HORSE RACING TERMS ............................................ 93 APPENDICES Appendix A Relevant portions of Chapter 754 of the 1991 Session Laws authorizing the study and Senate Bill 917 of the 1991 Session .................................................................................... A-1 Appendix B Membership of the LRC Committee on Horse Racing in North Carolina ..................................................... B-1 Appendix C Legislative Proposal -- A BILL TO BE ENTITLED AN ACT TO ESTABLISH THE NORTH CAROLINA RACING COMMISSION, AFTER A BINDING REFERENDUM TO DEVELOP A PROGRAM OF HORSE RACING FOR NORTH CAROLINA AND TO PROVIDE FUNDS FOR DEVELOPMENT OF THE EQUINE INDUSTRY IN NORTH CAROLINA .................................................................. C-1 Analysis of Legislative Proposal ........................................................... C-44 Appendix D Letters and materials from Charles Dunn, Director of the State Bureau of Investigation suggesting legislative action .......................................................... D-1 STATE OF NORTH CAROLINA LEGISLATIVE RESEARCH COMMISSION STATE LEGISLATIVE BUILDING RALEIGH 2761 1 January 15, 1993 TO THE MEMBERS OF THE 1993 GENERAL ASSEMBLY: The Legislative Research Commission herewith submits to you for your consideration its fmal report on Horse Racing in North Carolina. The report was prepared by the Legislative Research Commission's Committee on Horse Racing in North Carolina pursuant to Section 2.1(10) of Chapter 754 of the 1991 Session Laws. r\ .. Respectfully submitted, / \ j .) / ) 'l ~-//~~/ ~ L~~ I 70~9/&?~?t~: Daniel T. Blue, Ji' :-----' (_) ---· Henson P. Barnes Speaker of the House President Pro Tempore Cochairmen Legislative Research Commission 1 1991-1992 LEGISLATIVE RESEARCH COMMISSION MEMBERSHIP President Pro Tempore of Speaker of the House of the Senate Representatives Henson P. Barnes, Cochair Daniel T. Blue, Jr., Cochair Senator Frank W. Ballance, Jr. Rep. Marie W. Colton Senator Howard F. Bryan Rep. W. Pete Cunningham Senator J. K. Sherron, Jr. Rep. E. David Redwine Senator Lura Tally Rep. Frank E. Rhodes Senator Rlisseu-G. Walker Rep. Peggy M. Stamey 11 PREFACE The Legislative Research Commission, established by Article 6B of Chapter 120 of the General Statutes, is a general purpose study group. The Commission is cochaired by the Speaker of the House and the President Pro Tempore of the Senate and has five additional members appointed from each house of the General Assembly. Among the Commission's duties is that of making or causing to be made, upon the direction of the General Assembly, "such studies of and investigations into governmental agencies and institutions and matters of public policy as will aid the General Assembly in performing its duties in the most efficient and effective manner" (G.S. 120-30.17(1)). At the direction of the 1991 General Assembly and the cochairs of the Legislative Research Commission, the Commission has undertaken studies of numerous subjects. These studies were grouped into broad categories and each member of the Commission was given responsibility for one category of study. The Cochairs of the Legislative Research Commission, under the authority of G.S. 120-30.10(b) and (c), appointed committees consisting of members of the General Assembly and the public to conduct the studies. Cochairs, one-from each house of the General Assembly, were designated for each committee. The study of Horse Racing in North Carolina was authorized by Section 2.1(10) of Chapter 754 of the 1991 Session Laws. That act states that the Commission may consider House Bill 341 and Senate Bill 917 in determining the nature, scope and aspects of the study. Section 2.1 ( 10) of Chapter 7 54 of the 1991 Session Laws which provides that the Legislative Research Commission may study horse racing in North Carolina reads in part: " .. .including its economic and societal impacts, the benefits to the agribusiness industry in the State, potential taxes and fees that could be collected, methods of regulation, and other related issues... Copies of relevant portions of -1- Chapter 754 and the full text of Senate Bill 917 are included in Appendix A. The Legislative Research Commission grouped this study in its State Regulation area under the direction of Senator Frank W. Ballance, Jr. The Committee was chaired by Senator William N. Martin and Representative Vernon G. James. The full membership of the Committee is listed in Appendix B of this report. A committee notebook containing the committee minutes and all information presented to the committee is ftled in the Legislative Library. -2- COMMITTEE PROCEEDINGS The Legislative Research Commission's Committee on Horse Racing in North Carolina met 11 times. Committee meetings, subcommittee meetings, and a public hearing were held in Raleigh and the Committee held a two-day business meeting in Lexington, Kentucky, with presentations from various experts on horse racing. The deliberations spanned more than a year, with a wide variety of issues and subjects, from relatively simple ones like the different breeds of horses to quite esoteric ones like the effect of commingling of pari-mutuel wagering pools at off-site licensed facilities with those at the race tracks, being studied and considered by the Committee. The following are summaries of the highlights of the various meetings. For detailed reports on the presentations at these meetings, please consult the approved minutes on file in the Legislative Library. The following summaries contain terms that are unique to the equine and racing industries; these terms are defined in the -Glossary contained in this report. December 10, 1991. The Committee met for the first time on December 10, 1991 in the Legislative Building. The meeting was called to order by Senator Frank Ballance, the LRC member, and all members of the Committee were introduced. At the outset of the first meeting both Senator William Martin and Representative Vernon James, the co­ chairmen of the study committee, and the sponsors of the legislation leading to the study, indicated that the focus of the study was prepare a bill to allow the citizens of the state to vote on whether or not to bring horse racing to North Carolina to enhance the agricultural interests of the state and horse breeding industry in North Carolina. Both acknowledged that there were negatives involved with pari-mutuel wagering, but -3- that it was the wagering that would ultimately provide the funds for the enhancement of the agribusiness industry in this state. The Committee Counsel provided background material to the Committee. Most of the substantive material provided to the Committee at this and all following meetings is contained in this report, which is intended by the Committee to serve as a reference source during the debate on the legislation recommended by the Committee. The Committee considered the various breeds of horses, the nature of racing facilities at which horse racing is conducted, the equine industry in the United States, and the nature of pari-mutuel wagering. The Committee considered preliminary reports of the potential economic impact that horse racing could have on North Carolina, determining that the impact of an operational program could be as much as $250,000,000 per year providing up to 5, 000 new jobs related to horses and horse racing. The Committee also considered the problems that horse racing in North Carolina could potentially cause including organized crime
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