Racino plan sputters as gambling issues pile up

There are many horses on Minnesota’s hyperactive gambling merry-go-round: racinos, video bingo and pull tabs in bars, a casino in downtown Minneapolis.

So, it was standing-room-only Thursday in Room 200 of the State Office Building at the first hearing in either legislative chamber this session on another attempt to add slot machines at the state’s two horse racing tracks, Canterbury Park and Running Aces.

The event was in such demand that, in a rare occurrence, Capitol pages handed out first-come, first-served tickets to supporters and opponents. Each group sat on opposite sides of the large hearing room, sort of like the bride’s family here and the groom’s family there. Except, this hearing before the House Committee on Jobs and Economic Development Finance was no royal wedding.

Multiple battles
This was another battle over whether horse owners and breeders and the companies that own the tracks could add an attractive component to their businesses to, in their view, continue to survive and to revive a dying equine industry in the state. Slots at tracks would increase racing purses, boost horse owners’ revenues and bring more and better racing to Minnesota, racino advocates argue. Other states have done it.

This, too, was another stand by Minnesota’s American Indian tribes to protect their biggest economic development tool: 18 casinos of various sizes, with only one — Mystic Lake in Shakopee owned by the Mdewakanton Sioux — within the metro area.

Indeed, gambling revenues are the tribes’ tax base for their own sovereign budgets, and their casinos are restricted to the land they own, land — often the worst of the state’s land — ceded to them by greedy white guys years ago.

Marge Anderson, chief executive of Mille Lacs Band of Ojibwe, left, and Angela Heikes, the band's corporate vice president of gaming, planning and analysis.
MinnPost photo by Jay Weiner
Marge Anderson, chief executive of Mille Lacs Band of Ojibwe, left, and Angela Heikes, the band’s corporate vice president of gaming, planning and analysis.

Even before the nearly two hours of testimony and questions-and-answers began, Rep. Bob Gunther, R-Fairmont, offered a spoiler alert. This, he said, was to be an “informational hearing” only. There would be no vote. His ostensible reason: He wanted to give both sides a full chance to offer their points of view.

But in Capitol-ese, “informational hearing” can be code for “Sorry folks, I don’t have the votes, but I might in a week or so.”

With only Republicans signed on as sponsors to his bill, and with Republican Party Chairman Tony Sutton weighing in again against gambling, this was going to be a tough race for Gunther to win.

Positions clear
The arguments for both sides have been longstanding, but the state’s budget crisis has given a boost to all gambling efforts, of which racino is but one. Indeed, a charitable gaming bill that would allow electronic pull tabs and bingo wagering games in the state’s bars and restaurants continued to progress in House and Senate committees this week.

Meanwhile, somewhere on the Capitol campus, lobbyists and lawyers for developer Bob Lux were putting together a bill to allow a big, honking downtown Minneapolis casino. That bill and hearings are expected any day now.

In this $5 billion deficit environment, no one wants to leave money on the table — pardoning the expression — and gaming expansion controlled by the state and not the tribes could, possibly, produce some cash for all sorts of statewide projects.

In the matter of House File 1480, the catcher of potential racino revenue would be an economic development program called “Minnesota Future.” As much as $125 million annually would go to programs to grow jobs around the state, create technology businesses and offer various small-business grants, proponents say.

It’s an attractive notion: link gambling proceeds to job creation.

Racino proponents say that subsidizing the horse industry with slots at Canterbury and Running Aces will, indeed, create more horse industry jobs and preserve the fun of horse racing.

It will also create competition for the Indian casinos. Racino advocates — such as Rep. Mark Buesgens, R-Jordan, and former Republican Sen. Dick Day, now the chief lobbyist for RacinoNow — say it’s time for the state to approve rival gambling sites.

Dick Day, chief lobbyist for RacinoNow, testifying on Thursday.
MinnPost/Jay Weiner
Dick Day, chief lobbyist for RacinoNow, testifying on Thursday.

Buesgens called slots at Canterbury “one more option,” told of his mother’s affection for gambling and wondered: “I don’t know why you’d be against fun?” He warned the lawmakers not to be scared off by “boogeymen,” presumably the fears raised by tribes that this market is already cluttered with gambling options.

Passionate Dick Day, who left the Senate to lobby for this cause, said adding slots at the tracks was a matter of “fairness,” and he warned the committee members, “Don’t be held up by 43 lobbyists,” the number he says are attached to tribal interests.

(By the way, the hearing room looked as if it was a brunch meeting of the Minnesota Lobbyists Club. One non-attached lobbyist scanned the room and counted 20 lobbyists working on the issue for various interests.)

But, during testimony, some committee members wondered why the state should prop up an ailing business. Later, tribal backers pointed out how slots at the tracks would eat into their casinos revenues.

Angela Heikes, corporate vice president of gaming for the Mdewakanton Sioux, was the most eloquent in stating how many rural jobs Indian casinos have created, and mostly for non-tribal members.

Calling the gambling market “mature,” she warned that any new state-backed casinos would “shift gamers, rather than attract new gamers.”

Meanwhile, Stephen Hallan, a Pine County commissioner supporting the Mille Lacs Band of Ojibwe’s two Grand Casinos, said the tribe pays about 10 percent of all of his county’s property taxes and employs more than 1,100 of the county’s 29,000 residents.

Thus, the irony, opponents say: This is a bill intended to use gambling money to create jobs, but it’s a bill that could reduce jobs in some cases, or merely replace jobs in most cases.

GOP not on board
Gunther had some other worries. He was in a hospital last week with pneumonia and an infected kidney. Then earlier this week, he bit on a cough drop and broke some of his front teeth. In a post-hearing interview, the friendly House member bore a striking resemblance to a retired minor- league hockey player.

Getting votes was as difficult as munching on a sandwich for him these days.

Karen Diver, chair of Fond du Lac Band of Lake Superior Chippewa, testifying against the racino.
MinnPost/Jay Weiner
Karen Diver, chair of Fond du Lac Band of Lake Superior Chippewa, testifying against the racino.

“We have many Republicans that are anti-gambling and many Republicans against the bill,” he said of the majority party in both chambers. “But we have many Democrats who are for the bill,” he said.

Gunther and racino backers had one other problem. If the DFLers were still mostly going to side with the tribes — which have traditionally contributed campaign funds aplenty to the DFL — Minnesota Republican Party Chairman Tony Sutton was going to take a whack at Gov. Mark Dayton for saying gambling proceeds, if any, should go to job growth and education funding, including early childhood education.

Sutton issued a statement Thursday afternoon, calling Gov. Dayton, “Don Dayton,” as in Don Corleone in “The Godfather.” Sutton’s press release was headlined: “Gov. Mark Dayton Plays Don Corleone and Muscles in on a Piece of the Gambling Action.”

“These gambling proposals are simply another proxy for garnering more state revenue to avoid spending reductions and structural reforms necessary for an honestly sustainable budget going forward,” Sutton said. “There is nothing ‘free market’ about expanding gambling as a scheme to garner more revenue for the state — especially when Gov. Dayton marks gambling revenue for ‘economic development,’ which means government picking more winners and losers in the market place based on politics and not productivity … Funding education is a constitutional obligation of state government. As such, education funding should be built into the existing tax structure, not dependent on whether or not ‘baby needs a new pair of shoes.’ “

Still, Gunther said GOP legislative leaders want the bill to get to the floor, but Speaker Kurt Zellers and Senate Majority Leader Amy Koch haven’t given it full-throated public support.

As for hallway scuttlebutt that racino backers have been talking up a major coordination of all the gambling bills, Gunther shot that down. “I don’t think so,” he said of some sort of global gambling solution.

But then he raised a few notions that could give the racino bill legs.

One: the Vikings stadium. A marriage long predicted by Capitol watchers in the know.

“Where do you find money enough to build a Vikings stadium, and is a Vikings stadium economic development? ” he asked. “If the members passed an amendment to appropriate money to a Viking stadium, I’m not God, I can’t say no.”

The other issue not now in Gunther’s bill but one he mentioned: charging a licensing fee to the tracks. Last year, Canterbury’s owners offered $100 million upfront to gain a racino license in Shakopee.

But Rep. Gunther had to move on. It was past noon and, believe it or not, the National Day of Prayer event was scheduled for the front lawn of the Capitol within minutes.

And, yes, Gunther opined, his racino bill still had a prayer.

“I have it on fairly good authority, that even if the bill fails here, it isn’t done yet,” Gunther said of his committee. “Nothing dies in St. Paul.”

Not until the merry-go-round stops on or about May 23.

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Comments (8)

  1. Submitted by Neal Rovick on 05/06/2011 - 11:35 am.

    I’m still unclear as to the tie between slot machines and horse-racing.

    Are slot machine revenues to be used for increasing prize amounts on horse races? Or are slot machine revenues going to horse farms? Or is it the fact that people who want to pull the slot lever will stop a couple times in their visit to wager on races, thereby increasing horse racing revenue?

    It all seems rather tenuous in it’s linkage.

    Like the Vikings stadium, there is one absolutely clear winner in a racino agreement–the racino owner.

    Why do Republicans like to pick the winners in a capitalistic system? It just seems wrong…

  2. Submitted by Bill Toppson on 05/06/2011 - 01:03 pm.

    I agree with Neal. If an individual is given the right to the profits from the Racino or the downtown site then, as a citizen, I want a chance to bid for ownership!
    It is hard to fathom that the State would give the owner 75%, or even 50% of the profits as Gov. proposed. I would oversee gaming operations for a pawltry $500,000 a year.
    Why not set up a non profit quasi State corporation to run the gaming with the profits going to the State? Why would the politians pick a single winner?
    Well perhaps the politicians know that gaming is a cash business and perhaps some of that cash would flow back to the politicians who supported the bill? Gambling is a dirty business.

  3. Submitted by jody rooney on 05/06/2011 - 01:16 pm.

    I would like to clarify a bit one of the articles miss conceptions. The horse industry isn’t dying in Minnesota just the racing industry. A DNR Minnesota Tourism report shows that trail riders that live in the metro area spend more on capital goods than all other trail users combined.

    Mr. Rovick is correct why subsidize one industry over another. There have been three subsidies to the racing industry already. The original construction of Canterbury, allowing simulcast and the card room. Enough is enough.

    If you want to subsidize an industry subsidize health care where we know the jobs pay well and there is a demand.

  4. Submitted by Jim Roth on 05/06/2011 - 07:38 pm.

    I guess it’s literally true that the Shakopee Mdewankanton Grand Casinos are the only Indian-owned casinos in the metropolitan area, but the Prairie Island casino (between Red Wing and Hastings) is in easy driving distance as are the two casinos owned by the Mille Lacs Band (in Hinckley and by Lake Mille Lacs). It seems inconceivable to me that a casino in downtown Minneapolis would not be detracting from these existing casinos.

    And despite the sorry state of Block E, I doubt a casino in that location would be a positive development except perhaps for the owners and operators.

  5. Submitted by r batnes on 05/06/2011 - 11:12 pm.

    Ya gotta love the quote from Dick Day….”don’t be held up by 43 lobbyists,”…as he was lobbying for slots.

  6. Submitted by Claire Lundgren on 05/06/2011 - 11:19 pm.

    Doesn’t anyone care that a $1 billion a year industry in Minnesota is getting cut off at the knees? The Racino supporters are in this fight to save the industry. Without this bill being passed look for the entire industry to head south and Canterbury and Running Aces to close their doors. Why are our legislators turning their backs on thousands of jobs related to the equine industry and millions in tax revenue? Why aren’t they listening to the wishes of the vast majority of the voters? We horsemen NEED this bill to finally give us a level playing ground. WHat about us? We aren’t asking for money or tax incentives or special treatment. We want the ability to make a living in our state and not be passed over once again in favor of a Sovereign Nation’s whining that they might have to face a little fair competition.

  7. Submitted by Claire Lundgren on 05/06/2011 - 11:45 pm.

    In response to Jody Rooney, The Racing Industry has received no subsidies ever. Canterbury was not built with tax money but by Brooks Fields and his private interests. It is now a publicly held corporation so there are no private interests involved any longer unless you describe the shareholders as private rather than public. Allowing simulcasts is one of the largest shares of parimutuel wagering – one of the normal practices of racetracks whereby we can share income with other tracks. The income is split amongst the Track – also normal practice to cover overhead and infrastructure with some return to the investors – The State gets its cut – and the horsemen get a cut to fund purses and the breeders fund. The breeders fund is set up to reward owners in Minnesota for breeding and raising horses in the state. The purses and the breeding product are the only incentive for owning horses in the state. Without competitive breeders funds and racing purses, there is no reason to try to do business in this state. This bill is not asking for a handout from the state! Its outcome would be to add jobs in the entertainment, construction, and equine industry. It would add tax revenue all over the state (which will dry up if the industry leaves) The results of the bills defeat will be the loss of livelihood for all of the secondary business dependent on horses – trailer dealers, hay and grain farmers, equine vets, tack producers, manure concessionares, etc. Most of those businesses are outstate. They pay taxes- something we don’t see from the reservations’ casinos. And you never will! Not passing this bill is an extreme version of reverse racism!

  8. Submitted by jody rooney on 05/08/2011 - 02:06 pm.

    In response to Claire Lundgren your response shows not only a lack of understanding of both the horse industry but also tribes.

    The racing industry is not the largest share of the horse industry in Minnesota and it’s closing could have very little impact on the suppliers. I believe you are mistaken about the construction of Canterbury I believe that there were some tax breaks and infrastructure improvements made at public expense. In fact I think the first Corporation defaulted when the tax subsidies ran out. Permission to simulcast and permission to have the card room (which I noticed you didn’t mention) were approved by the legislature a benefit given to no one else in the state. And still they need more to keep it vibrant. Three strikes and you are out.

    There are Indian casinos because there are Indian Governments not because there are Indians. If you are not a Federally Recognized Tribal Government with land held in trust by the federal government for the benefit of the tribe you don’t get to have a casino. It has nothing to do with race.

    Governments don’t tax other governments. The state lottery proceeds are not taxed by the federal government. The federal government doesn’t pay state taxes on purchases. It again has nothing to do with race.

    Several of the Bands do pay property taxes on the property they own that is not on trust land. The Mille Lacs Band is not only the highest employer in Mille Lacs and Pine County it is also the largest property tax payer. The jobs they provide are year around with higher wages than track employees and with health insurance and retirement. They provide a stable base in areas of the state that have historically had high unemployment.

    One other comment tribal members don’t consider themselves a race. They consider themselves Ojibwe, Lakota, Medwalkaton, Potowanomi, Ho Chunk, etc. And we should too.

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