Harness and Thoroughbred Dispute Heats Up Minnesota Winter

Buried under our traditional Minnesota winter blanket of snow and cold, a heated battle is taking place between the state’s two racetracks. At stake may be the very survival of Running Aces Harness Park.  As I live Tweeted during the Minnesota Racing Commission meeting last Thursday, several folks asked to be updated a little deeper as to what the fuss was all about.  This is my shot at that. I’ve tried to be thorough and brief at the same time – which isn’t easy to do.  I’m sure I missed some things but I hope you get the general idea of what the fuss is all about during Minnesota racing’s “hot stove” season.

 

The North Metro Harness Initiative’s initial bid to open Running Aces was rebuffed 5-3 by the Minnesota Racing Commission in October of 2004 (order issued in November) citing “inadequate road access and transportation, inadequate horse stalls and human accommodations, resident opposition and the creation of competition adversely affecting Canterbury Park.” (http://caselaw.findlaw.com/mn-court-of-appeals/1396020.html - italics added)

After voting to reconsider the denial, the Commission met in January of 2005 and,

“The commission discussed four areas of concern:  (1) housing and stabling;  (2) transportation;  (3) competition;  and (4) community opposition.   The commission determined that a newly proposed stabling plan was adequate.   Further, new information provided by the Metropolitan Council and Anoka County officials indicated that the transportation system was adequate and that the facility would not burden the current traffic situation.   Regarding competition, new information from North Metro and the HBPA indicated that an agreement by which North Metro would provide revenue from the new racetrack to supplement purse awards at Canterbury Park was imminent. Finally, testimony and written submissions indicated that opposition was from a small but vocal minority and that there was broad community support for the facility. By a vote of five to three, the commission granted the application.”

(again - http://caselaw.findlaw.com/mn-court-of-appeals/1396020.html - and italics added)

In a nutshell, that agreement was that the card club at Running Aces would provide 3% of card club revenue to the HBPA to supplement purses at Canterbury Park due to the anticipated decline in card club revenues at Canterbury due to the opening of another club in the Metro.  As part of that agreement, payments were to end when racino legislation was enacted in Minnesota.

Fast forward to 2012.  Canterbury Park, after an over decade long struggle to pass racino legislation gives up the fight.  In an economic and political environment as favorable to racino as there has ever been, and with a governor who had said that he would sign a bill if the legislature would pass it, the votes still were not there.  An accord was reached after historic private talks between the SMSC and Canterbury resulted in purse increases and purse security for the next 10-years.  Part of the give and take on both sides was that the track was to give up its quixotic quest for racino and join the SMSC in opposing expanded gaming.

It has to be noted that ALL of the purse enhancement dollars in the agreement go to purses at the track – not to the track itself.  There are other Native American Bands in the state that could have possibly wanted to pursue a similar deal with Running Aces but a deal that would NOT provide money for the out of state track ownership as well as horsemen would not be acceptable to the track.

Late last year, NMHI took to the courts to sue both the Minnesota HBPA as well as Canterbury Park.  In their opinion, the HBPA broke their agreement with the harness track by discontinuing the fight for the racino – the argument being that if the agreement could end when racino is granted but the HBPA isn’t fighting for a racino, then the HBPA is not acting in good faith (that racino will never happen in MN is something that they refuse to accept, though I have yet to see any compelling evidence that would lead me to believe otherwise).  Canterbury was named because they allegedly interfered with the contract between the HBPA and NMHI by entering into the agreement with the SMSC.  Tortious interference, I believe, is the legal term, that NMHI is using.

Canterbury and the HBPA have gone to court to have the case thrown out.  A ruling on that motion is pending, but not expected shortly.

In the interim the HBPA is playing a little hardball of their own.  As part of their push to end their contractual obligation to the HBPA, the NMHI have stopped making their 3% payments.  Because of this breach, Cort Holten, lawyer for the HBPA, appeared before the Minnesota Racing Commission on Thursday, February 7 to present his case to have the operating license of the NMHI to be revoked.

Boiling all the talk down, Holten’s argument as to why the Commission has the authority to revoke the NHMI license in what appears to be a contractual breech between two private parties (NMHI argument) was that this agreement was a ‘material representation’ made by the NMHI which changed the course of the voting for approval of the license.  In fact, he argued, this agreement was more than that, it was determinative in whether or not the license was granted and if the NMHI breaches the agreement, then they have breached the terms of their licensure.

After a lot of discussions and questioning (detailed in my Twitter feed so I won’t get into that here), the MRC requested that officials from the NMHI come back in 30-days with a written response to the allegations set forth by Holten and the HBPA.

That is where we stand – and I didn’t even touch upon Running Aces not renewing the simulcast agreement (if you’re a thoroughbred player in the north metro, you’ve only got about 10-days left to bet them at RA) between the two tracks – on this battle.  There are still several rounds to come.  Thankfully we’re less than 100 days until live racing, which is way more fun to talk about.