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Will Canterbury — and racinos — be in the winners’ circle after the gubernatorial horse race?

The issue of allowing racinos to provide new revenue for the state is sure to be a Capitol controversy next legislative session. Supporters are ramping up efforts, and it’s already being aired in the governor’s race.

With the close of racing season, Canterbury Park  racetrack celebrates its 25th year on Sunday.
MinnPost photo by Jay Weiner
With the close of racing season, Canterbury Park racetrack celebrates its 25th year on Sunday.

When the horses stretch across the finish line of the 11th and final race of the season Sunday in Shakopee, it will mark the end of 25 unsettled years at Canterbury Park, a quarter-century that started with much promise and hype, wrapped in the glamour and glitz of the mid-1980s, scented with the allure of state-supported gambling.

But lofty projections quickly turned to rough riding with the arrival of Indian-run casinos — including the largest one four miles away on Scott County Road 83. Then came the rise of the Internet and online betting. By 2000, horse racing in Minnesota was limping along, needing legislative approval for an adjacent card club at Canterbury.

Now, with another season ending and Canterbury Park Holding Corp. posting losses of more than $1 million for the first six months of the year, the fate of the 385-acre complex is steeped in financial uncertainty. But it is buoyed by the prospect of heightened political activity.

The possibility of a “racino” there — a state-backed casino at the track — is beginning to become a part of the gubernatorial horse race.

“We have ratcheted up our efforts,” Canterbury Park President and CEO Randall Sampson said of lobbying and grass-roots organizing for a racino. “We anticipate having a very active presence [at the Capitol in 2011]. … We think the climate has changed.”

Candidate positions
Tom Horner already is backing it, and racino’s political champion, former Sen. Dick Day of Owatonna, is saying nice things about the Independence Party candidate. The indefatigable Day, who heads a group called Racino Now, has been promoting slots at Canterbury since 1997, and he’s smelling victory at the Capitol in 2011.

DFLer Mark Dayton has called for a state-run casino — not for a racino, yet — but gambling revenues are part of his budget-balancing plan.

Republican Tom Emmer has seesawed on the issue; he once tried to ban gambling in the state but last legislative session signed on as an author of a slot machine bill.

History and losing bets
Canterbury was born into a healthy moment in American horse racing and Minnesota sports history. The industry needed new tracks in the mid-1980s. Canterbury was a jewel. Twins baseball was indoors. Horses ran in the sunlight. The NBA wasn’t in town. The sports market wasn’t as cluttered. The sprawling Mystic Lake Casino a short ride away, owned by the now wealthy and powerful Shakopee Mdewakanton Sioux Community, didn’t exist.

Canterbury CEO Randall Sampson
Canterbury CEO Randall Sampson

But initial investors stumbled, the state signed compacts with Indian tribes to allow casinos, and, by 1990, the British gaming firm Ladbroke took over, and squeezed horse owners and trainers.

By 1992, with Mystic Lake opened, the track closed, even as the Legislature approved off-track betting, a law that was soon struck down by the state Supreme Court.

In 1994, Hector, Minn., telecommunications executive Curtis Sampson and his son Randy, entered the picture with other investors. With Curt Sampson investing $3 million and guaranteeing debt, the new partnership — publicly traded on NASDAQ — paid $8 million and made a bet: Off-track betting could be revived in the state, and horse racing would support itself.

“When we embarked on this thing in 1994, ’95, people were saying this was probably not going to work,” said Randy Sampson. “But we felt like we wanted to give horse racing one more shot.”

Soon, Republican Sen. Dick Day began talking up the introduction of slot machines at Canterbury to raise money for a Twins ballpark and compete with tribal casinos. That was 1997. The track has survived and, in many years, done well. This season, Canterbury, with its live racing, card room and simulcast betting on out-of-town racing, has averaged about 5,800 customers, who have bet more than $300,000 per day.

But to celebrate the 25th anniversary, admission to the track has been free. Its betting handle — the total amount of dollars wagered at the track — has dipped more than 11 percent over last year. The costs of maintaining and running horses are up. The economy is down. A second struggling track, Running Aces, has opened in the northern suburbs with its own card club. The Twins are outdoors.

In 1986, Canterbury raced for 137 days. This season, it’s been 62 days. Next year, Sampson said, racing days will be reduced further, making the track less attractive to the peripatetic trainers who move from track to track in search of better pay days.

Racino and racing
One day last week, at about 9 in the morning, a hundred or so players, all men, were at the blackjack tables, and a few other poker tables were busy at the Canterbury card club. This little bit of Vegas was supposed to prop up the racetrack after it was introduced in 2000. It has helped, with revenues from the cards helping to support the purses for horsemen.

But in Iowa and Oklahoma, where full-fledged casinos have been built at tracks — known as racinos — the horsemen are doing better, and the betting handles are up. Everyone at Canterbury points there and to slot machines as their hope, their only hope.

This leads to a fundamental question to be answered by Canterbury and racino backers: Why preserve horse racing as an industry if it can’t support itself? They shoot horses, don’t they?

“That’s a good question,” said Sampson. “I still think horse racing is a great form of entertainment and provides benefits to the state … But there is a policy question: Do the benefits of the jobs and the economic activity created by horse racing justify the subsidy? I believe it does. But the clear bottom line is: It does require a subsidy. Just on the handle alone, racetracks are not really able to be competitive when you look at track after track. The ones that are successful have other forms of revenue to support it.”

Nationally, horse racing is facing all sorts of economic pressures because of the expense of maintaining the animals, the competition from other gaming, the difficulty of bettors winning at picking horses and the downturn of the economy.

“What we’re seeing in horse racing nationally is a disaster,” said Sampson.

That makes Stanley R. Crooks, chairman of the Shakopee Mdewakanton Sioux, wonder. In a recent guest editorial in the Shakopee Valley News, Crooks wrote: “Instead of allowing market forces to take their course, the cry is to bail out horse racing with slot machines. Is it really that difficult to see that the proposal is not about horse racing? Clearly, it is about slot machine revenue.”

But horse racing supporters point to the importance of a Minnesota-based horse industry — with one study showing hundreds of millions of dollars in economic activity — and related farm jobs that are supported by racing.

Indian gaming supporters say that, much like a publicly subsidized stadium helps boost the riches of team owners, a racino at Canterbury could nicely profit the Sampsons.

Wrote Crooks: “People should remember that although Canterbury Park is publicly traded, it is controlled by seven top shareholders. If it succeeds in getting approval to operate a slot house, the stock value will soar and the seven top shareholders will be enriched beyond anyone’s imagination.”

The most recent proxy statement of Canterbury Holding Corp. shows that Randy Sampson (6.7 percent), his father, Curtis (22.1) and longtime partner Dale Schenian (12.2) control 41 percent of Canterbury stock. Gabelli Asset Management, a mutual fund company, owns nearly 13 percent of the stock.

In some states where a racino was instituted, the existing owners cashed in. In others, upfront licensing fees sapped the benefits to owners.

Last year, in an attempt to get a racino passed, Canterbury offered to pay a $100 million up-front rights fee to host the casino. Any state deal will undoubtedly require that the Sampsons and their partners come up with a fee that is at least $100 million.

“We hope there’s a business deal that will be profitable for the Canterbury Park shareholders,” Sampson said, while insisting that other investors, and not just Canterbury insiders, would benefit, too. “There would be a risk, there would be an investment that would have to be made.”

The conversations about the sport’s economics and the cultural and sentimental link to Minnesota’s agricultural past will undoubtedly be part of the debate that’s sure to explode at the Capitol in 2011. So, too, will the other fundamental conversation: Should the state get in the business of competing with Indian tribes, whose best economic development tool has been casinos?

Crooks argues there is “a balance” of gaming in the state now, with Indian casinos, charitable gambling and the racetracks.

He wrote: “Once the slot machine floodgates are opened, the pro-gambling legislators cannot say no to every failing business or every struggling bar located in every neighborhood throughout Minnesota.”

But the “expansion of gambling” argument may be losing steam, as people can place bets on their laptops from their homes and as a liberal candidate — the DFL’s candidate at that — talks about a casino at the Mall of America.

The campaign(s)
Mark Dayton has backed the notion of a state-owned and -operated casino, but not a racino, perhaps at the megamall or Minneapolis-St. Paul International Airport. Using Minnesota Department of Revenue data, Dayton, in his budget proposal on his website, projects slot revenues to the state of at least $250 million per biennium. He has said Mystic Lake should face competition the same way his family’s department stores did.

Emmer signed on as an author last session to a bill sponsored by Rep Mark Buesgens, R-Jordan, to add slot machines statewide. Buesgens is Emmer’s former campaign manager.

But Emmer’s running mate, Annette Meeks, has been on the board of Citizens Against Gambling Expansion; as recently as last February, Meeks wrote an opinion piece for opposing racinos.

Emmer told the Associated Press’s Brian Bakst in June that he didn’t support racino revenues as a way to help balance the state budget. But, Sampson said, Emmer has told him that he would sign a racino bill if it got through the Legislature.

It is Horner who has made racinos a key plank in his budget solution. Citing Minnesota Lottery data, he also projects about $250 million to state coffers from racinos.

That $250 million figure that both Dayton and Horner are using will come under scrutiny from opponents when it gets to the Legislature. Last session, Patrick McCormack, the director of House Research, analyzed the possible state-captured revenues for both slots in bars and restaurants and, separately, slots at racinos. For racinos, he estimated that state coffers could expect between $88 million and $196 million every two years, far less than projections used by the gubernatorial candidates.

Last Friday, Horner’s relationship to the racino effort kicked up when he made an appearance at Canterbury that was, according to his press secretary Matt Lewis, somewhat of a two-fer. After conversations with Day, Horner went to Canterbury; it also happened that a University of Minnesota alumni group was on hand that Horner wanted to target.

Day, lobbyist that he is, introduced Horner to some donors and later, via track microphone, to the entire crowd. No, it wasn’t an endorsement, Day told MinnPost, although those in attendance inferred that it was close to one.

“Racino Now and Dick Day, we have not endorsed anybody yet, but we really appreciate Horner leading the charge,” Day said.

Dick Day
Dick Day

By the way, Day said that Dayton is expected to visit Canterbury this Sunday.

Political storm
Whether gambling opponents or foes of publicly subsidized stadiums like it or not, there is a storm a-brewing. Perfect or imperfect, the storm involves some subtleties and some hammers.

The success and general satisfaction with the new Twins ballpark has softened some attitudes towards sports facilities. The expiration of the Vikings lease after the 2011 season is becoming more of a palpable reality to politicians.

At a recent Metropolitan Sports Facilities Commission meeting, commission member Paul Thatcher told his colleagues he was feeling a “sea change” in attitudes towards getting a Vikings’ stadium deal done; all three gubernatorial candidates have expressed some level of openness to a Vikings stadium proposal next year. Horner said he would use racino revenues to help fund a Vikings stadium.

And then there’s the state budget crisis, and the counter-intuitive nature of its relationship to stadiums and horse racing and gambling.

On the one hand, the $6 billion hole will highlight the social needs of the state, and the cuts that the most vulnerable will likely suffer under any new governor. Priorities will be extremely important in any new budget.

On the other hand, the $6 billion hole is in search of revenue to plug it; gambling revenues — socially responsible or not — are easy pickin’s.

Day and Racino Now backers are working hard at modeling what the Twins did in their lobbying years; developing a grass-roots effort to forge a victory at the Legislature.

Before the August DFL Primary, Racino Now blasted an email supporting Dayton to 18,000 supporters; the goal was to block the candidacy of DFL-endorsed Margaret Anderson Kelliher, who doesn’t support gambling expansion and has been the recipient of American Indian tribal political contributions.

Meanwhile, Day said that Racino Now is in discussions with, a grass-roots group seeking a new pro football stadium. The two might team up to work together in advance of November’s election to garner support for their potentially related causes and supportive candidates in legislative races, too. There’s a feeling that it would be difficult for Indian gaming backers to fight the Vikings. And control of the Legislature is in play, too. Speaker Kelliher for sure is gone.

It’s no coincidence that one of the lobbyists for Canterbury and Racino Now is the respected Ross Kramer, who patiently finessed a Twins stadium bill through the Legislature over the course of a decade.

Major Canterbury shareholders have funded the Minnesotans for Racino PAC, with Curt Sampson kicking in $15,000 of the PAC’s $23,000 in contributions this year.

Of course, that pales in comparison to the $261,250 the Milles Lacs Band of Ojibwe, which owns and operates the Grand Casinos, contributed to DFL units in 2010 — or the $250,000 the Shakopee Mdawakantan Sioux gave to the DFL caucuses and state party.

The Minnesota Indian Gaming Association has nine registered lobbyists, and Canterbury has 10. But first place goes to the Vikings, who have 13 listed.

As the sun sets Sunday on the 2010 Canterbury season, amid the bugle calls to the starting line, there will be the sounds of a building political drumbeat. Racino backers will celebrate horse racing’s 25th anniversary in Minnesota.

Then they’ll get down to the real horse race at hand.