Sports betting bill would subsidize for-profit horse racing companies • Minnesota Reformer

Horse racing – and gambling on the outcome – is in the midst of a long, steady decline in the United States.

Data from The Jockey Club, a thoroughbred racing organization, shows that in inflation-adjusted terms the total amount bet on U.S. races has declined by about 50% since the 1990s.

Canterbury Park, one of Minnesota’s two racetracks, saw its average daily wagers fall by 42% in 2023. “Declining interest in horse racing has had a negative impact on revenues and profitability in our racing business,” the company said in its most recent SEC filing.

Minnesota’s tracks are now facing what they see as an existential threat from the potential legalization of sports betting, and lawmakers have come up with a novel solution to help keep the horses running: subsidize the tracks with tax revenue from the sports bettors.

HF2000, the House version of the bill, would offer Minnesota’s two for-profit horse racing operations an annual subsidy of $625,000. The Senate version (SF1949) would give the tracks $3 million a year.

It’s an unusual solution that few seem to be happy with. “The giveaways to the tracks are a state subsidy of gambling enterprises,” said Jason Adkins of the Minnesota Catholic Conference, which opposes sports betting on moral grounds. “It’s a misuse of taxpayer dollars.”

“It’s an affront to our free-market system,” said Patrick Battuello of the group Horseracing Wrongs, which opposes horse racing on animal welfare grounds.

“We’re not asking for a handout,” said Justin Revak of the Minnesota Horsemen’s Benevolent & Protective Association, which supports horse racing but opposes sports betting that excludes race tracks. He characterized the subsidy amounts under discussion at the Legislature as “insignificant.”

One group that doesn’t seem to mind the subsidies: the state’s 11 Native tribes, who would be the exclusive holders of sports betting licenses under current iterations of the bills in the House and Senate. “Tribes are best positioned to provide this new offering to the state’s consumers,” said Andy Platto of the Minnesota Indian Gaming Association in a February statement.

Back in 2018, before legislation granting the Tribes exclusive license rights was proposed, the organization said that it “has long opposed the expansion of gambling.”

Governments typically subsidize activities that lawmakers believe will contribute to the public good. Minnesota, for instance, gives billions of taxpayer dollars to nonprofits that fund research, economic development, arts, food aid and countless other endeavors. 

It’s less common to direct public funds toward activities widely regarded as harmful, like horse race gambling. In addition to standard concerns about addiction and problem gambling, horse tracks have been implicated in countless cases of animal cruelty and doping allegations. 

Battuello’s group has tracked 112 horse deaths in Minnesota since 2015, all but three at Canterbury Park. Subsidizing tracks through sports betting would “allow for the continued abuse and killing of beautiful, intelligent, sensitive creatures,” Battuello said.

Both of Minnesota’s horse tracks are private, for-profit enterprises. They pay taxes like any other business, but unlike the state lottery or charitable pull tab operations their primary purpose isn’t to fund education, social services, or community organizations. 

Canterbury Park’s parent company, Canterbury Park Holding Corporation, is a publicly traded company listed on NASDAQ. The company’s board of directors works to represent its “shareholders’ interest in perpetuating a successful business, including optimizing long-term financial returns,” according to a 2022 document outlining the company’s governance guidelines.

Canterbury Park CEO Randy Sampson told a House committee this week that the revenue-sharing agreement included in the House bill will not be enough to offset his company’s losses. The legislation “provides only a $625,000 stipend to the horse industry to offset the millions of dollars of lost revenue and purses,” he said. 

Despite the headwinds facing the industry, Canterbury Park Holding Corporation reported profits in excess of $10 million in 2023.