Other States' Horse Racing Tracks
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79132 Prepared by the North Dakota Legislative Council staff for the Legislative Audit and Fiscal Review Committee January 2006 OTHER STATES' HORSE RACING TRACKS - NORTH DAKOTA RACING COMMISSION REVENUE HISTORY This memorandum provides information on the in Minnesota led to declines in attendance and betting parimutuel horse racing industry, horse racing tracks and after the 1992 racing season Canterbury Downs in other states, and the history of Racing Commission closed. In 1994 several Minnesota horsemen formed revenues from parimutuel wagering in North Dakota. the Canterbury Park Holding Corporation and purchased Canterbury Downs. The track was PARIMUTUEL HORSE RACING renamed Canterbury Park and opened for simulcast INDUSTRY betting in 1994 and reopened for live racing in 1995. Canterbury Park is a publicly traded company According to the American Gaming Association, (Amex: ECP) with over 2,500 shareholders, the an organization based in Washington, D.C., repre- majority of whom are Minnesotans. Since 1995 the senting the commercial casino entertainment industry, track has had slow but reasonably steady growth in and a United States General Accounting Office report, attendance and betting. Americans gamble an estimated $600 billion a year Canterbury Park revenues have been enhanced on everything from blackjack to bingo to poker to by the opening of the Canterbury card club in 2000. office pools. Approximately $60 billion of that total The card club is open 24 hours a day 7 days a week ends up with the gambling industry as gross revenue and receives collection revenue from 31 poker tables or the take before taxes and wages are paid. The and 19 tables offering a variety of "unbanked" card rest is either passed directly from gambler to gambler games. Unbanked card games are games where the or paid out as winnings at racetracks and casinos. players play only against each other instead of Approximately 7 percent, or $4.2 billion, of total against the house. The racetrack's revenue from the gambling revenues is from parimutuel wagering. card club is derived from seat charges and a "rake" Parimutuel wagering is a system in which players bet on wagers, 10 percent of the first $6 million and against each other as opposed to the "house" or the 14 percent on the amounts above $6 million are set management. The winners divide the total amount of aside for purses for live races at the track. Ten the money wagered, minus the percentage that goes percent of this card club set-aside goes to the Minne- to the house, otherwise known as the "rake," to pay sota Breeders' Fund--a fund established by law to for its expenses. Horse racing, with more than promote the horse industry in Minnesota. In 2001 the $3 billion a year in revenue, is the largest piece of the card club raised $1.8 million for Canterbury purses parimutuel industry. Some form of parimutuel and $200,000 for the breeders' fund. wagering is legal in 43 states. According to the Canterbury Park web site, The North American Pari-mutuel Regulators Asso- approximately 300,000 people annually attend live ciation (NAPRA) is a tax-exempt organization incorpo- racing at Canterbury Park. One percent of the total rated in Kansas in 1997 to provide a cost-effective handle on live racing and 5.5 percent of the total focal point for communications and dispersing infor- handle on full-cast simulcast racing is set aside for the mation relating to the parimutuel industry. According Minnesota Breeders' Fund. In 2001 the total breed- to NAPRA, virtually every horse racetrack in the ers' fund revenues, including card club contributions, United States is subsidized by simulcast racing and were just over $1 million. without revenues from simulcast wagering nearly Canterbury Park is home to special events year every horse track facility would lose money. In round, ranging from snowmobile racing to craft 1990 approximately 85 percent of the money wagered shows. Over 100,000 people visit Canterbury Park on horse racing was at the track for live events. In each year for special events alone. 2000 approximately 85 percent of the money wagered In 2005 a proposal was introduced, but not on horse racing was through a simulcast facility and approved by the Minnesota Legislative Assembly, to transferred across state lines. open a racino (combination racetrack and casino) at Canterbury Park. The racino would have added slot OTHER STATES' gaming and banked blackjack at Canterbury Park. HORSE RACING TRACKS Minnesota - Canterbury Downs Iowa - Prairie Meadows Racetrack According to a report published by the Research Prairie Meadows Racetrack in Altoona, Iowa, was Department of the Minnesota House of Representa- bankrupt and its doors closed prior to approval of slot tives, Canterbury Downs--Minnesota's only parimutuel machines in 1994. From 1995 to 1997 Iowa became horse racetrack--was opened in 1985 at a cost of the nation's fastest-growing thoroughbred breeding approximately $80 million. The track was an early state, jumping from 28th to 12th nationally in total success but subsequent expansion of legal gambling 79132 2 January 2006 foals bred. In 2002 Polk County residents voted to The casino at Prairie Meadows is open year approve the racino for another eight years. round and includes slot machines and a card room and the track also offers simulcast racing. Prairie Meadows is subsidized from the casino OTHER STATES' RACINOS and simulcast racing. Other states that have authorized racinos include: y Delaware. No state funds are provided to Prairie Meadows. y Louisiana. Nebraska Nebraska has six horse tracks that operate y Maine. from 1 to 38 days per year, with a total of y New Mexico. 107 days of live racing. y New York. Simulcast racing is also conducted at the horse y Oklahoma. tracks. y Pennsylvania. The horse tracks are subsidized by simulcast y Rhode Island. racing. y West Virginia. No state funds are provided to the horse tracks. HORSE TRACKS IN REGIONAL REVENUES FROM PARIMUTUEL SUMMARY STATES WAGERING IN NORTH DAKOTA According to information provided by the racing Racing Commission Funds commissioners from the six regional states, all horse The North Dakota Racing Commission maintains tracks are subsidized by simulcast racing. In addition, three funds: the horse track in Minnesota is subsidized by a card y Breeders' fund - Established to financially room and the horse track in Iowa is subsidized by a reward breeders or owners of North Dakota- racino and card room. The results of the survey are bred horses to be paid in accordance with as follows: rules as approved by the Racing Commission Minnesota Minnesota has one horse track (Canterbury (North Dakota Century Code (NDCC) Section Park) which has approximately 32 days per 53-06.2-01(1)). year of live racing. y Purse fund - Established to supplement and A card club is operated at Canterbury Park. improve purses offered at racetracks within the Canterbury Park is subsidized by the card room state (NDCC Section 53-06.2-02(10)). and simulcast racing. y Promotion fund - Established to assist in No state funds are provided to Canterbury improving and upgrading racetracks in North Park. Dakota, for promotion of horse racing within Montana Montana had five horse tracks that operated in North Dakota, and in developing new race- 2005, each ranging from 3 to 12 days of races tracks in the state as necessary and approved (primarily in conjunction with state and county fairs). by the Racing Commission. The Racing Commission may receive up to 25 percent of There are no other types of gambling entertain- ment offered at these horse tracks. this fund for the purpose of payment of oper- ating expenses of the commission (NDCC The horse tracks are subsidized from offtrack Section 53-06.2-11(3)). simulcast wagering. No state funds are provided to the horse tracks. South Dakota South Dakota has two horse tracks that each SUMMARY OF LEGISLATIVE CHANGES operate for seven weekends a year (Brown The breeders', purse, and promotion funds and the County Fair and Fort Pierre). general fund each receive a percentage of the total There are no other types of gambling entertain- amount wagered through parimutuel horse racing in ment offered at these horse tracks. North Dakota. The following is a history of the legisla- The horse tracks are subsidized from offtrack tive changes in the allocation of revenues from simulcast wagering. parimutuel horse racing to the North Dakota Racing No state funds are provided to the horse tracks. Commission funds and the general fund and other Wyoming Wyoming has one horse track (Wyoming related statutory changes. Downs) that operates 18 days per year. There are no other types of gambling entertain- 1987 Senate Bill No. 2319 ment offered at Wyoming Downs. y Established the North Dakota Racing Commission Wyoming Downs is subsidized from offtrack in the Secretary of State's office and authorized simulcast wagering. parimutuel horse racing. No state funds are provided to Wyoming y Authorized the commission to issue licenses to Downs. conduct horse races. Every license must specify Iowa Iowa has one horse track (Prairie Meadows the number of days the licensed races may Racetrack and Casino) that operates approxi- continue, the hours during which racing may be mately 48 days per year. conducted, and the number of races that may be 79132 3 January 2006 held each day. The license fee charged by the y Provided that the percentage deposited in the commission is to be commensurate with the size general fund is 2 percent on a live or simulcast and attendance of the race meet. The revenues race wager placed in North Dakota of the first from the license fees were to be placed in the $35.5 million in wagers per year and .5 percent operating fund of the Tourism Division of the after that.