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When the dust settles, racinos will be the best choice for Minnesota

For the first time in recent history, the Minnesota Legislature is poised to have a real debate about casino gaming in Minnesota. For the past 20 years, Minnesota has not had a plan for gambling.

For the first time in recent history, the Minnesota Legislature is poised to have a real debate about casino gaming in Minnesota. For the past 20 years, Minnesota has not had a plan for gambling. Once the tribal-state compacts were signed in 1989, casinos expanded as fast as tribal governments desired, and state residents have had no voice in how, where and when those casinos would be built or expanded.

With the introduction of bills for racinos and slots in bars, Minnesotans are clearly expecting a smart and strategic debate about the future of casino gaming and the use of its revenues. The state will undoubtedly move cautiously, and Gov. Mark Dayton has set some wise parameters for the discussion. By the end of session, the state is expected to move forward to with some plan to authorize state-regulated slot machines.

Let me provide a couple of facts to provide full disclosure. First, I am a strong supporter of Gov. Dayton. Second, I am a shareholder of Canterbury Park, a publicly traded company.

Dayton has stated that he is willing to support new gaming options in Minnesota, and he has been honest with his preferences for a gaming bill. He wants to ensure that private owners do not make excessive profits. He wants new gambling to serve a public purpose. And he prefers a state-owned operation.

All three are worthy requirements for a bill. Of all of the gambling options suggested this year, racinos are offering the best way to meet those requirements:

1. Ensure that private owners do not make excessive profits. Slot and video lottery machines offer the largest return on investment of any games offered at casinos. The potential for high profits — perhaps even excessive profits — is real, and residents should require disclosure and oversight of these profits.

With a racino, Minnesotans receive the information and oversight they deserve from state-regulated gaming. Canterbury Park is a publicly traded company that provides quarterly public reports of its expenditures, revenues and profits. Unlike current casino gaming, Canterbury Park will be held closely accountable through the State Lottery, the Minnesota Racing Commission, the Department of Public Safety and the Minnesota Legislature.

For the public, this is the most transparent solution. They can (and should) demand close oversight by the Legislature and state agencies. On the other hand, everyone has the opportunity to buy Canterbury stock. That’s right — as a private citizen, I determined that Canterbury Park stock had value, so I bought some. So can anyone else who believes that this publicly held company offers a good investment.

One of the most troubling elements of Minnesota’s current system of casinos is that the current owners are under no similar requirement to report income or profits, even though the state has protected their quasi-monopoly for more than two decades. Nor can average citizens buy stock in the groups that own current casinos. People are already getting rich from gambling in Minnesota — we just don’t know very much about who they are and how rich they are getting.

If racinos are approved, stockholders should certainly expect to benefit. But those benefits will be regulated by both the state and the marketplace.

On the other hand, if the racino bill is rejected, there will still be private interests getting rich from casinos. But those monopoly profits will continue to be hidden behind the curtain of the current tribal-state compacts. Some of those profits will continue to be used to finance tribal-owned casinos in other states, taking investments out of Minnesota.

2. New gambling should serve a public purpose. The racino bill, as introduced, meets this test in several ways. Less than a decade ago, Minnesota’s horse industry was estimated to create a billion dollars of economic activity. In recent years, the horse racing industry — breeding, training, feeding, shipping, fence-building and a hundred other activities — has begun to shift from non-racino states to the 12 racino states.

Why? It is all about the purses. Racinos help supplement racing purses, and owners, trainers and jockeys head to the states that have larger purses. In states like Minnesota, they leave behind the shopkeepers, veterinarians and other workers who used to serve the horse industry. Authorizing racinos will stop the exodus, and encourage reinvestments and growth in the equine industry. That translates to real jobs throughout the state.

The racino bill offers a second public purpose — creating a permanent source of funding for public-private economic development partnerships. Sens. David Senjem and Dan Sparks and Reps. Bob Gunther have created an innovative way for Minnesota to duplicate Iowa’s success in using racino revenue to spur new economic development.

Obviously, other legislators and the governor have their own ideas for how racino revenues are used. Education is clearly one option, and I actually support early childhood investments as the best use of state dollars from gaming. Others suggest we permanently solve our ongoing stadium infrastructure problems with a global solution using racino revenues. Any of these opportunities can serve a public purpose.

Current casino owners have used some of their profits to improve their communities, and we should thank them for their continued investments for Minnesota. Eighteen private casinos that generate private investments for community development, complemented by two racinos that serve greater public purposes, seems like a great partnership for Minnesota’s future.

3. Create a state-owned casino. The racino bill announced this week takes a unique approach to state ownership — a true public/private partnership. The Minnesota State Lottery will own the machines and continue to enforce Minnesota’s gaming laws. Horse tracks such as Canterbury Park will host the gaming, and provide the facility, employees, marketing and other aspects of the business operation. As noted above, Canterbury Park will receive income for hosting the video lottery machines, just as they receive income from horse racing, and that income will be closely regulated by the state.

This arrangement is remarkably advantageous. The state doesn’t need to duplicate the expertise that companies such as Canterbury Park already have in managing gaming facilities. But, the state ultimately controls the license, the machines and the regulatory authority. Because the video lottery machines are added to existing gaming sites, there is no explosion of Minnesota casinos beyond the 20 facilities that already offer slot machines, card clubs or both.

Gov. Dayton has suggested that a state-owned casino at the Mall of America or another popular destination is a preferred approach. But that would take years to develop and require local communities to agree to host casino gaming, and many communities simply prefer not to be home to a casino. Other communities, such as Shakopee, have developed effective partnerships with horse tracks already, and are prepared to host racinos. Communities with existing tracks would be better choices.

Whatever your opinion happens to be, this debate needs to happen. For too long, Minnesota has taken a laissez-faire approach to casino games. People can debate the pros and the cons of the current tribal-state compacts, but the one thing that no one can say is that the state actually has a strategy. Dayton has such a strategy, and I believe that by the end of the legislative session our political leaders will conclude that racinos are the best option for Minnesota.

John Morgan is a shareholder of Canterbury Park and an advocate for early childhood education.