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Home My WebLink About12. Racino Information � ., �' � �� $�� Equine Development Coalition � � ,.� ��' � � " aj';V4irinesnlu �`��.. �� - ra ^�'� � . "� y�. � W � r .. y �� ,., ', . "� �€.�� i � �� r F � ..». _ . . —e i r' • ` � � �� _ ��i�� ,... , �. ; __ ... ,_. ° ! � � 1 1 1 . 1 1 About the Equine Development Coalition of Minnesota The Equine Development Coalition of Minnesota is a group of dedicated equine industry members who want to improve economic development throughout Minnesota by strengthening the state's entire horse industry - both racing and non-racing disciplines. As a means to accomplish this goal, EDCOM su�ports the passage of Racino leqislation. To learn more about The Equine Development Coalition of Minnesota, contact Executive Director Rosemary Higgins at (612) 940-4324 or visit EDCOM online at www.equinemn.com. The Wide Reach of Minnesota's Horses Minnesota's equine industry is supported by the great work of many independent organizations. The Minnesota Horse Council, Minnesota Trail Riders Association, Western Saddle Club Association, Minnesota Horse Expo, as well as many other organizations and events, do a great job of bringing Minnesota equine lovers together around central interests. Additionally, therapeutic riding centers, Minnesota 4H Clubs and the Future Farmers of America all significantly impact Minnesota's quality of life and its economy. Furthermore, Minnesota is the proud home to both the University of Minnesota Equine Center and the Minnesota School of Horseshoeing, With more than 155,000 horses present in the state of Minnesota, strategic investment in the state's equine industry will help increase the value of the industry and create jobs through sustainable economic development, Investment in Minnesota equines will have a significant ripple effect as farmers, fence-builders, veterinarians, horseshoers, tack shops, feed dealers and many more occupations experience an increase in demand for their services. Developing Minnesota's Equine & Racing Industries An analysis released in 2004 by Dr. Brian Buhr of the University of Minnesota found ,- --_____ ___a____ that the Minnesota equine industry has a significant economic impact on the state's � � ��; �� agricultural economy. Minnesota's horse industry generates nearly $1 billion in `�,��s '� `"` '� '� �';� �� economic activity every year. Although Minnesota ranked near the top of the nation ••'•.'` , � k in equine population, the state ranks 45th in the country in economic impact per �� horse. Therefore, there is plenty of room for economic growth throughout the equine %��' :. ,_ �, - industry in the state of Minnesota. " ` ' ' �- ��-. 4�.� ; - �tt � � Fourteen other states, most notably Pennsylvania and Indiana, have implemented Racinos and noticed substantial increases in industry employment and economic �`� �"� � �� _ _ _. activity. In Pennsylvania, seven years after the implementation of Racinos, the industry ��` generates $4.6 billion in economic impact and more than 64,000 jobs. Similarly, in �� . . '�'� Indiana where two Racinos were authorized a mere three years ago, the industry now _ �- enerates $2.6 billion in economic im act and is res onsible for em lo in nearl �� ° 9 P P PY9 Y �_ � 20,000 individuals. These statistics indicate a 200% - 300% increase in equine ; �. ' industry employment and economic impact in the aforementioned Racino states, -- - ---=—� Minnesota is home to three racing breeds: thoroughbreds, standardbreds and quarter __ �. horses. Thoroughbreds and quarter horses both race at Canterbury Park while �„� r ��,�,.� �`(.. standardbreds race at Running Aces Harness Park. Each breed plays an important �T��, ,� ,�, `„� role in the state's equine industry as the economic health of a racing industry is ��, � ,r;, directly correlated to the strength of the overall equine industry. As Dr. Tracy Turner, , � .. ., �1 President of the Minnesota Horse Council, noted in a committee hearing before the Senate Committee on Agriculture & Rural Economics in February 2011, "However the -" -�` �� .�+� � � _ _. � �.. �� . : � � _: .� _, >.-�� racing industry goes, so goes the rest of the equine industry." w�:::,;�rN�,seS,��eaCCaReer�J, a,M,�;�mMay-�abo,oay ; . _ �; � t � �°°�° �� .� � . �qaine Development Coalition � �� ' � _ ,.. `�''� �., „ ' ��'.-� v _ � � . af'�1�lirmc�ot�. .c,�y,�� ;"� a,� �� . �� - _ . �B �...��• •�a~ �.,,. � . ; � — � .: . � . . r%,�� ._� '._ i�.�,: ,� o , rrx�x.. .:-. / � � • � � � � � � Construction, Hospitality & Agriculture Industries Benefit from Racinos Racino legislation is unique because it creates jobs throughout three distinctive industries. Construction, hos�itality and aqriculture industries all gain new jobs as a result of Racino legislation. Construction and hospitality jobs are fairly predictable because these jobs are generated through the need to create and staff an enhanced gaming floor and other casino amenities. However, the agriculture jobs and economic activity that come from Racinos have been a pleasant surprise to the 14 states that have enacted Racino legislation. Enhanced purses are reinvested in farms, facilities and breeding - in other words, small businesses. The result is a substantial improvement in the rural economy and a wealth of new jobs. Purdue Study Finds Substantial Growth in Indiana Equine Industry as Result of Racinos The State of Indiana, which enacted Racino legislation in 2008, released a study conducted by Purdue University in 2011 showing the significant impact this legislation has had on both economic activity and employment within the industry. The 2011 study found that the state's equine industry created an economic impact of $2.6 Billion, an increase of 103%o as a result of Racino legislation. Additionally, this study found that the equine industry in Indiana is now responsible for nearly 20,000 (FTE) jobs within the state. Indiana Racino Quick Facts Indiana Racinos Indiana's Breeding Industry Indiana Racino Demographics and Eco_nomic Statistics Current Number of Operating Racinas: 2 Hoosier Park 2,000 Estimated Agriculture lobs Resulting from Racinos: 19,450 (FTE) Indiana Downs 2,000 „ Estimated Racino Facility Employees: 1,790 (FTE) Indiena Racino Revenue Information " Total Number of Video Gaming Machines: 4,000 Slot Machines '.,, ,. � �, • _ , ,., Fiscal Year 2011 State Tax Revenue: $130 Million Graph depids Indiana's Breeding Industry from: 2003 (4 Years before Racinos) - Present Pennsylvania Racinos Generate 318% Increase in Equine Industry Impact The State of Pennsylvania, which enacted Racino legislation in 2006, released a study completed by Tripp Umbach Research and Strategy in 2009 that showed the significant positive impact Racinos have made on employment and economic activity within the state's equine industry. The 2009 Pennsylvania study found that the state's equine industry created an economic impact of $4.6 Billion. This impact marks an increase of $3.5 Billion when measured against 2001 data, or 318% more economic impact as a result of Racino legislation. Additionally, in 2009 Tripp Umbach reported that the Pennsylvania equine industry was responsible for more than 64,000 (FTE) jobs within the state. Pennsylvania Racino Quick Facts Pennsylvania Racinos Pennsylvania's Breeding Industry Pennsylvania Racino Demographics and Economic Statistics �ti�lfii��tt� ' Current Number of Operating Racinos: 6 Chester powns 2,959 Estimated Agriculture lobs Resulting from Racinos: 64,100 (FTE) The Meadows 3,308 ' Estimated Racino Facility Employees: 7,707 (FTE) Penn National Z,463 � Parx Racing 3,407 � Pennsylvania Rac_i_no Revenue Information ; Pocono Downs 2,332 � Total Number of Videa Gaming Machines: 16,535 Slot Machines =, :.�. �- .�<.. :� w. :�. ..,. ,� ,_. :_:., Presque Isle 2,066 Fiscal Year 2011 State Tax Revenue:: $528 Million Graph depicts Pennsylvania's Breeding Industry from: 2000 (4 Years before Racinos) - Present _ :.> �.,� .,.. . , , , _. � -., �� t � Equine Development Coalition � .. ,� _,,.. '�' �. � � � n/'Mi�inccot<< "� ; , k °` `�` � �. �� ull""', r � � ' d � .+ � .�.,�°'. , . . � � �� `� \ � � � �iAllu��'� _ ..., ... . —. " �i� - � r ',,�' 1• 1 � 1 / � 1 1 National Racing Landscape Moving Toward Racino Model When Minnesota's pari-mutuel amendment was originally approved in 1982, charitable gaming was the only other legal gaming option in the state. Now, Minnesota has a State Lottery and more than 22,000 slot machines at 18 casinos throughout the state. At the same time, Minnesota is losing the battle to attract breeders and investments in equine development. In 1997, the first year Racino legislation was discussed in the state of Minnesota, only four states (seven horse tracks) had Racinos. Since then, ten additional states have passed legislation authorizing Racinos. The wide purse disparities between racing facilities with Racinos and those without this gaming model has made it increasingly difficult for racetracks without video lottery terminals or slot machines to survive, Racino legislation is no longer a luxury for Minnesota's racetracks; iYs a necessity if we want to create jobs in Minnesota's equine industry. Below is a look at how all three racing breeds compare to other regional racetracks, nearly all of which operate Racinos. t� � � Track Purse Per Race Track Purse Per Race Track Purse Per Race Hoosier Park* $25,959 Indiana Downs* $17,064 Remington Park* $23,631 Prairie Meadows* $25,282 Hoosier Park* $12,250 Hoosier Park* $23,345 Arlington Park $24,925 National Average $9,022 Indiana Downs* $22,232 Remington Park* $22,588 Balmoral $6,076 Will Rogers Downs* $15,348 National Average $22,554 Prairie Meadows* $14,956 Maywood $3,678 National Average $14,458 Lincoln Fairgrounds $6,421 : + The tracks listed above comprise Minnesota racing's regional competition. (* Denotes a racetrack that operates as a Racino.) The Direct Correlation Between Race Purses and Breeding in Minnesota Investments in horse breeding follow purse levels. Horse owners are small business people, they will continue to move and breed in states that offer higher purses. Below is a graph of Minnesota's breeding industry on the right. On the left, you'll see a chart of Minnesota's available purse money (adjusted for inflation). Both graphs cover the duration of Minnesota racing (1985 - Present). The correlation between available purse money and total horse breeding is striking. � � ■ Thoroughbred Foals ■ Quarter Horse Foals ■ Standardbred Foals $20MM � ,000 $15MM 750 $1oMM 500 $5MM 25o I I''' � � � \�� 1 ��\�� \�� 1 �� 1 1 \� \� 1 �� 1 �� 1�p'�\�p'�'L�'L" ti d' ti ti o°�' v o° a ti o°�' ti o�� ° ti o�� ti o°� ti o°'' ti o` o .��,��' ,��,��°,�� ,�a� �a°' �a°' �a°' �a°'�' �a°' �a°'� �a°'� �a°'�',��,° ti o� ti v d''' ti o° a ti o°`' v o°` ° ti o�� tioo�.yd'atio�o ��' � �° � �� nt alition `� , , �, � � A s Equme Derelopme Co ,�� ' _ M _ , ' 6 � _ o(Mbutesutu ,> � �� '�iI�V�„r � -- � . � ��- � .�r : r , r .� , __ � ,• � - , �- � �.�.� ;�� , '� �?^� , - �.: �, .. N _. ,;,.� � ��- _ � i . 1 1 1 1 1 The Minnesota Equine Industry Improvement Fund - Growing Minnesota's Equine Industry Under proposed Racino legislation, approximately 7% of gross gaming revenue from Video Lottery Terminals at Canterbury Park and Running Aces will be put toward the Minnesota Equine Industry Improvement Fund. This fund will be administered bythe Minnesota Racing Commission and will be split into three distinct categories, all designed to significantly increase the economic impact of Minnesota's equine industry. Non-Racing Equine \ Investment Fund 5% Purse Enhancements 7 5% Breeders' Fund � � 20% � �, � �� '� � i��'r,�'� � t ' � I'I I'� , 75% - Purse Enhancement The Purse Enhancement portion of the Minnesota Equine Industry Improvement Fund will be used to increase purses for live races conducted at Class A licensed facilities (Canterbury Park and Running Aces) for thoroughbreds, quarter horses and standardbreds. The percentage of the purse fund designated toward each breed racing at a Class A facility will be established by law. The Equine Development Coalition of Minnesota supports statutory purse distribution that will bring standardbred and quarter horse racing purses into the top 10 nationally and thoroughbred racing purses into the top 15, known as the 10-10-15 Plan. 20%a � Breeder�' �und The Breeders' Fund portion of the Minnesota Equine Industry Improvement Fund will be used to supplement the current Breeders' Fund that exists for all breeds racing at a Class A facility under §240.18 and is maintained by the Minnesota Racing Commission. Money will be transferred into the Breeders' Fund in order to maximize economic development by creating incentives for people to race and breed horses in the state of Minnesota through purse supplements and breeders' awards. 5% - Non-Racing Equine Industry Enhancement Fund The Minnesota Racing Commission will be directed to issue grants from this fund which will maximize the economic impact of Minnesota's non-racing equine industry, All of Minnesota's non-racing equine groups will be encouraged to apply for grants from this fund. Grants will be available for projects such as, but not limited to, futurity prizes, the construction of facilities, renovation of trails, production of equine shows and equine educational initiatives. .. � h � mm�wn�x+wr^��::, _ _. � � �^'�.— . . -, �.� Equine De�elopment Coahtion � � _ .,�,,._ `�� " w � � � ° � nj Minncsnra � �#t t � '� � � � � � � � � � � �� ... -. � _ �� . �,�±' ,�+�� f �, • `' ' "` `� , :, __ _ _ - . _,_ � . . ._ :� *.g..._1 .. : —`--,.. z- � -.....:. ��nb ._. . . . ..., .. . � 1 � 1 1 1. 1 � � � . Understanding Minnesota Racing and Where it Stands on a Nationat Level Racino legislation will grow the equine industry through the creation of the Minnesota Equine Industry Improvement Fund. Under the proposed legisiation, approximately 7% of gross gaming revenue from video lotteryterminals will be dedicated to the Minnesota Equine Industry Improvement Fund. The Minnesota Racing Commission will administer this fund with the ultimate goal of maximizing the economic impact of Minnesota's equine and racing industries. Currently, Minnesota's racing breeds all race for purses that rank among the bottom on a National level. � Nat' I Average Compared to National Racing Breed Facility # of Races Purse Per Race purse Per Race Nat'I Average Purse Ranking Standardbred Running Aces 460 $4,486 $9,022 - 50% 42"d Quarter Horse Canterbury Park 89 $8,052 $14,458 - 44% 32"d Thoroughbred Canterbury Park 476 $13,232 $22,554 - 40% 55`n How the Minnesota Equine Industry Improvement Fund Will Be Divided � , - � ._ 9 � �;�� , � � , � , � � 20°10 ' ' - ' ' �.- .__._._ . , � �% � � , . , �. Using the Minnesota Equine Industry Improvement Fund to Implement the 10-10-15 Plan Money allocated into the Minnesota Equine Industry Improvement Fund would be sufficient to implement the 10-10-15 Plan that has been proposed by the Equine Development Coalition of Minnesota. This plan would make Minnesota's standardbred and quarter horse racing programs among the top 10 in the country and Minnesota's thoroughbred program among the top 15 in the country measured by average purse per race. Here's what Minnesota racing could look like in 2015 following the implementation of the 10-10-15 Plan: � � � Racing Breed Facility 2015 Purse Per Race ° Standardbred Running Aces $18,643 Quarter Horse Canterbury Park $20,283 Thoroughbred Canterbury Park $39,743 �. �s��.r�� .�t�.�►r� ��t�� Racino Bill E� l�n�tion and Overview This Racino bill authorizes the Minnesota State Lottery to operate video lottery terminals on the premises of a Class A license holder (a racetrack) as described in Minnesota Statute §240. Under this bill, the racetrack will act as the landlord, the facilitator and will provide the necessary labor, while the Lottery will own or lease, maintain and test the gaming machines. Gross gaming revenue (total amount wagered less the total amount returned to the customer in payouts and prizes) generated at these facilities will be divided between the state, the track, the Minnesota State Lottery and Minnesota's horse industry, The Minnesota State Lottery will retain 15% of gross gaming revenue to maintain, purchase or lease, account for and test all video lottery terminals. The remaining amount of the lottery's share after these expenses (net lottery proceeds) will be allocated as designated by the Minnesota Constitution (60% to the general fund and 40% to the environmental trust fund). The Lottery will deposit approximately 7% of gross gaming revenue into the Minnesota Equine Industry Improvement Fund which will be distributed by the Minnesota Racing Commission. This fund will supplement existing purses at Minnesota's racetracks, provide incentives for people to breed horses in the state of Minnesota and create a grant program for Minnesota's non-racing equines. Additionally, the state will receive a gaming activity fee (to be used at the discretion of the Legislature) that will increase based on gross gaming revenue. This fee will be graduated between 25%-40% and will be applied to gross gaming revenue at each facility. Therefore, as gross gaming revenue increases, the state will receive a greater percentage of the revenue. (One percent of this amount will be dedicated to compulsive gaming treatment and education.) From the remaining gross gaming revenues, the track is required to make payments to local governments and cover all other expenses involved in running and building the facility. Specifically, the track must remit 1% of its commission to each the city and the county government where the track is located (the total payment to local government is equal to approximately 1% of gross gaming revenue). �cina ��nss Gan�ing Revenue - � Ciaser Look �t Reven�+� �istribution The graph below visually depicts how gross gaming revenue (total amount wagered less the total amount returned to the customer in payouts and prizes) would be distributed among Racino stakeholders. Racetrack Net Gaming Activity Fee# (1 % to Compulsive Gaming Treatment) Cash Flow* 4% 25 - 40% Infrastructure Upkeep & Improvements* gq ��; Minnesota State Lottery `� / 15% ,,�e �' `s: �:; Minnesota Equine ` � Industry Fund � �� 7%a Racino 0 eratin P 9 Expenses* \ 35% Corporate Taxes* Local Governments 3% 1% '' - These values are projected "- The gaming activity fee is a graduated rate applied to specific levels of gross gaming revenue generated at each facility. Based on estimates from Minnesota Management and Budget, $130 Million in Gaming Activity Fees should be generated annually by 2015. ; � ��.�.��t�'� ��c�.n �r��.u�t.� � � � � A Brief History of th� R�cing Industry in Minnesota In 1982, 64% of Minnesotans overwhelmingly approved a constitutional amendment to allow pari-mutuel betting in the state of Minnesota, This amendment allowed the type of wagering required to operate a racetrack and provided the enabling legislation that laid the legal groundwork for today's racetracks. The Downs Days In 1984, ground is broken for Minnesota's first pari-mutuel racetrack. Canterbury Downs opened in Shakopee, MN in lune of 1985. Shortly thereafter, casino gaming and the Minnesota State Lottery opened for business. The additional competition proved difficult for the racetrack and in December of 1992, financial concerns forced Canterbury Downs to close its doors after the Minnesota Supreme Court struck down off-track betting as C�T�'Rl3UR .Y. unconstitutional. In 1994, off-track betting failed as a constitutional amendment by a p o w N 5 mere 6,000 votes, Rebirth as Canterbury Park In May 1994, Canterbury reopened for business under a new ownership team consisting of Minnesota horsemen Curtis and Randy Sampson and Dale Schenian. In August 1994, Canterbury conducted a public offering of its stock, attracting hundreds of Minnesota j � �, investors, In May 1995, the name was changed to Canterbury Park and live thoroughbred ( � and quarter horse racing returned to the state of Minnesota. In 1999, the Minnesota '� � legislature authorized legislation that allowed Canterbury Park to open a 50 table card _ __ �_ _ • - • _— room, The Card Casino revenue dedicated to race purses immediately helped stimulate �" -- - J growth in Minnesota's equine industry. Between 2000 and 2005, thoroughbred breeding in the state of Minnesota increased by 100% (171 foals in 2000 compared to 342 in 2005). Running Aces loins the Field In 2005, the Minnesota Racing Commission granted North Metro Harness Initiative �� LLC the last license in the seven county metro area available by law. Soon thereafter, G q� E North Metro Harness Initiative began construction of a new standardbred racetrack in Up�►� R ,_', F� Columbus Township, Running Aces Harness Park opened for live racing in April of 2008 2 l�y�; � and, following the statutory requirement of 50 days of live racing, opened a Card Casino = �� that July. Today, both tracks operate overlapping race meets during the summer and � .� � � operate 50-table Card Casinos year-round. Racino� ave C�anged the industry In the decade since Racino legislation was first introduced in the state of Minnesota, the entire landscape of horse racing has changed throughout the country. In 1997, the first year Racino legislation was discussed in the state of Minnesota, only four states (seven horse tracks) had Racinos. Since then, ten additional states have passed legislation authorizing Racinos. Today, more than 50 tracks operate as Racinos throughout North America. The wide purse disparity between racing facilities (those with Racinos and those without) has made it increasingly difficult for racing industries without video lottery terminals or slot machines to compete. Racino legislation is the tool that is growing the industry throughout the country. . ,. i i �1��...s.,.. I ��r�� u a�� t��.�t � ♦♦ � Racino Popularity Soars to New Heights in a 2010 Independent Poll (Survey USA March 3, 2010) One proposal would allow slot machines at two Twin Cities horse tracks, creating «racinos" and collecting $125 Million in revenue for the state each year. Do you approve? or disapprove? of this proposal? Approve - 80% Disapprove - 18% Not Sure - 2% �l�pr�v�l by Party Affiliation Approval by Minnesota Reg�o� Republican Democrat Independent Metro South West Northeast 72% 87% 81 % 80% 75% 80% 80% 2�09 Independent Poll Shows Racina 5upport Approaching 80% (Survey USA ay 1�, 2I109� Should slot machines be allowed at Canterbury Park Horseracing track? Yes - 79% No - 18% Not Sure - 3% ��:�,., Racino All Party Affiliation Political Ideology Legislation Rep. Dem. Ind. Cons. Lib. Mod. Yes 79% 84% 76% 78% 78% 73% 83% No 18% 13% 21 % 19% 18% 23% 16% Not Sure 3% 3% 3% 3% 5% 5% 2% Racino Gender Age Region Legislation Male Female 18-34 35-49 50-64 65+ Metro South West NE Yes 82% 76% 88% 77% 74% 70% 80% 76% 82% 71 % No 18% 19% 10% 20% 22% 25% 17% 18% 16% 27% Not Sure 1% 5% 2% 2% 4% 4% 3% 6% 2% 2% � ��r�� .�� ,�r��t�.tut��r��. � � Former Chief lustice Magnuson - Minnesota Constitution Allows Racinos Note: The Following Letter of Opinion was Written by Former Chief Justice of the Minnesota Supreme Court Eric Magnuson and OriginallyAppeared on Minnesota Public Radio's Website in a Commentary Dated January 4, 2012. Whether and how to expand legalized gambling in Minnesota is a significant social and political issue. It is not, � i however, an issue of constitutional magnitude, Gambling generally is not prohibited by the Minnesota Constitution, and legislative authorization of expanded gaming at horse-racing tracks, or °racinos," is completely consistent with -� `�a , the Minnesota Constitution and other forms of legalized gambling that have been in place for decades. �; � The Minnesota Constitution Allows Racir��a� � As a brief review of Minnesota constitutional history makes dear, there is no constitutional prohibition of racinos 1' or slot machines in Minnesota. When first enacted, the Minnesota Constitution provided that °[t]he legislature shall ,� �� never authorize any lottery or sale of lottery tickets." This prohibition on lotteries was a response to the Louisiana ��i' :# ; lottery of the 1850s, a notorious state-run lottery that led to bribery and corruption of public officials. But the ,' provision was never seen as a prohibition of all gambling in Minnesota. Former Chief Justice of the Minnesota The term "lottery" as used in the Constitution had a clear meaning, at the time the Constitution was adopted: the sale Supreme ca�n e.�� Magnuson makes of lottery tickets to multiple individuals all competing against each other for a prize. Indeed, because the Minnesota �r abundantly clear that rne.e r5 �o constitutional prohibition of Racinos or Constitution prohibited only lotteries in this narrow sense, card games, betting on horses, bingo, pull tabs, charitable slotmachinesin Minnesota. raffles and other games involving chance have long been recognized as constitutionally permissible. In 1988, Minnesota's Constitution was amended to allow a state lottery. But that amendment did nothing to change the basic meaning of "lottery." Lotteries are distinct from other games of chance. The racino proposal to allow slot machines at horse-racing tracks does not fit within the constitutional definition of a"lottery" because multiple contestants do not compete for a single prize when playing a slot machine. Thus, the constitutional prohibition on lotteries does not apply to these games, The highest courts of other states including New York, Florida and Arkansas have expressly interpreted their similar constitutional provisions in just that fashion. l.ike Other States, Video Lottery Terminals are a Legai Minnesota Lottery Game While no constitutional amendment is needed for the Legislature to authorize slot machines at racinos, or to regulate them and collect a portion of the revenue they generate, the Legislature could also legally choose to allow video lottery terminals (VLTs) under the constitutional lottery provision. This is a path taken by other states such as New York, Kansas, South Dakota and West Virginia, and it is how legislation authorizing racinos, introduced in the last legislative session, is structured. VLTs, which function very much like slot machines, would be operated and regulated by the state in much the same way that lottery sales are now handled. In the states that have chosen that alternative, the courts have held VLTs constitutionally appropriate so long as the state oversees their operation. The state may contract with third parties to perform the actual day-to-day functions of the lottery, but the state runs the lottery itself. ta#tery's �gf Pr�c��ds �tol� �o ta State Trust Fund Some critics have argued that lottery-operated slot machines will not be beneficial because Minnesota's Constitution requires that 40 percent of "net proceeds" from a state-operated lottery be credited to the state environmental and natural resources fund until the year 2025. As many other state courts have acknowledged, "net proceeds" in this context are calculated after prizes, expenses and taxes are paid. Today the state already annually receives millions of dollars in lottery-generated money before those "net proceeds" are determined through payments in lieu of sales tax and unclaimed lottery prizes, as well as the undesignated 60 percent of the net lottery proceeds. This money goes directly to the state's general fund and other funds. In addition, net proceeds are calculated after deducting legitimate and reasonable expenses incurred by the state lottery and the entities with whom they contract to perform the everyday tasks of selling lottery tickets and collecting lottery proceeds, These are all factors that the Legislature can consider and balance in order to ensure that VLTs generate appropriate revenue. The bottom line is that, despite claims to the contrary, there is simply no constitutional prohibition of racinos or slot machines in Minnesota. Whether authorized by the Legislature independently or as part of the state lottery, racinos can constitutionally generate needed funds for the state of Minnesota. —. �.�� u�r�t�. ��. ��t�.�r�� Q• �an Minneso#a depend on receiving Racino revenue quickly? Ar Yes. Video Lottery Terminals could be up and running at Canterbury Park and Running Aces within six months. Additionally, Eric Magnuson, former Chief lustice of the Minnesota Supreme Court, has written that Racinos are legal within the state of Minnesota and any litigation challenging the validity of Racino legislation would likely be concluded quickly. Q. �� Fti�nesota`s current garoi�g c�rtopact� grant excfusivi#y tg the existing Tribal casi�wa�? �. Racino Now does not advocate an� change in the existing gaming compacts. However, Minnesota's gaming compacts do not grant casino gaming exclusivity to Native American communities, Many have been led to believe that the authorization of additional gaming facilities would break these agreements, but that's simply not true. The legislature acknowledged that the current compacts don't grant exclusivity when it passed legislation allowing card club gaming in 1999. The state would not break any pre-existing agreements if it decides to authorize non-tribal casino gaming. Q. �r� llacie� �,rat#�ry T�rmit►��s legal in Minnesnta? A, Yes. According to the Indian Gaming Regulatory Act of 1988, Native American casinos are only allowed to offer casino games that are already legal within the state where the tribe is located. According to former Chief Justice Magnuson, the Legislature could legally choose to allow video lottery terminals (VLTs) under the constitutional lottery provision. This is a path taken by other states such as New York, Kansas, South Dakota and West Virginia, and it is how legislation authorizing Racinos is structured. VLTs, which function very much like slot machines, would be operated and regulated by the state in much the same way that lottery sales are now handled. In the states that have chosen this alternative, the courts have held VLTs constitutionally appropriate so long as the state oversees their operation. Q. �va�ald Racino operation be delayed by a lengthy lawsuit? �. No. While litigation may be filed, it is highly unlikely that an injunction would be granted that would cease legal gaming operations during the court case. Additionally, Magnuson's opinion states that any court case challenging the legality of Racinos would be concluded quickly. Q. Wouid Racino legislatian canst�tute an expansinn of gambl�r�g? A, No. Racinos would utilize the same types of games already in use at Minnesota's 18 existing casinos. The video lottery terminals would be installed at Canterbury Park and Running Aces Harness Park, where gambling already exists 365 days a year. Q. H�wr rt�uch �� a� Racino legislation generate for the Stat� �f ��s�ta? A. The most recent fiscal note prepared by Minnesota Management & Budget estimates that Racinos could generate at least $260 million in new revenue for the state during every two-year budget cycle. Q. t�lltiii the state help finance or subsid�ze th� development �� iacinos? �. No. Racino construction would be paid for in full by Canterbury Park and Running Aces Harness Park. These facilities have never relied on state funding for construction or operations and would continue to operate as private sector business entities (Canterbury Park is publicly traded on the NASDAQ: Ticker Symbol CPHC). _, ur�.Tr1 I� ry I'� �Y� ��.I'�I'��£��t� � � ✓ Minnesota Gambling - Revenue and Gaming Tax Statistics ■ � _ - $1.46 Billion $0 $189.1 Million $127.9 Million $181.73 Million $37.1 Million $53.0 Million $9.6 Million Revenue Gaming Taxes Revenue Gaming Taxes Revenue Gaming Taxes Revenue Gaming Taxes & Purses Native American Casinos' State Lottery � Charitable Gaming' Horse Racing & Card Clubs' (CY 2008 Statistics) (FY 2011 Statistics) (FY 2011 Statistics) (CY 2010 Statistics) O Native American tasinos in Minnesota Minnesota's Native American gaming industry revenue totaled $1.46 billion in 2008. There were 35 facilities, including smaller satellite bingo facilities, operated by 11 tribes. According to the Minnesota Indian Gaming Association, 18 of these facilities are currently considered casinos (see next page). These facilities offer slot machines, blackjack, poker, and bingo. In 2008, there were 21,946 gaming machines (a four percent increase from 2007) and 367 table games. Sources: Casirio City Press, Alo�i Meister, Ph.D.: "Casino Ciry's 2009 lndian Gamiiig htdnstry Report." &"The Miroiesota lndian Gaming Association: "Minraesota's Triba! Casinos." � The Mi�nesa#a �tat� lottery During fiscal year 2011, the Minnesota State Lottery contributed more than $100 million to the State for the eighth consecutive year. Throughout the fiscal year, the Lottery recorded $189.1 million in revenue (sales less prizes paid). Scratch game sales topped $354.8 million during 2011 and helped drive $504.4 million in total lottery sales, an all-time record. More than 3,000 outlets across Minnesota were authorized Lottery retailers in 2011. Source: Mimiesata Stnte [.ottery: "Fiscal Year 20/1 An�uta[ Reporl." Q tharitab3e Gambling in Minnesota During the 2011 fiscal year, Minnesota's charitable gambling industry recorded $181.73 million in net receipts from $989.9 million in sales. In 2011, the state of Minnesota approved 2,728 charitable gambling locations, an additional 2,340 exempt organizations that conduct limited gambling consisting of a total of 3,275 gambling activities and another 303 excluded organizations that conducted 543 unique bingo activities. Source: Miruiesotu Gamhling Conbo/ Baurd: "201! Annual Repart of the Mimiesota Ca�rihling Contro/ Board." Q Nnrse Raring & Card Clubs in Minnesota In 2010, Minnesota's two racetracks, Canterbury Park and Running Aces Park (50 tables each) combined to generate $53.0 million in gaming revenues. These revenues were then used for operations and purse awards. Pursuant to Minnesota Statute §240.135, racetrack licensees are required to use 10% of the first $6 million in card casino revenues, and 14% of revenues that exceed $6 million, for purses. Additionally, purses are paid for at each facility through a percentage of handle on live and simulcast races. Source: Ca�verburv Park & The Minnesota Racing Conm�ission: "2009 Annttal Report of ihe Miiu�esota Racing Commissfon." I u��a�.Y� �.r� ��.r�Y��t� � � � � Minnesota's Existing Casinos - Locations, Gaming Options & Slot Machine Counts` Black Bear C�sin+� br R�sart Carlton, MN 2,000 Slots • 20 Table Games • Bingo • Poker (�rrr�-ds�-t.ut�� s�rsta ; Duluth, MN � � O ;�` More than 750 Slots • 4 Table Games • Bingo • Poker , � Q �€�rt�n�. B�y C�sino ', � � Tower, MN � O ; 750 Slots • 14 Table Games • Bingo • Poker �ra�!! C�s�r€�a �€r�ckl�:y : 4 Hinckley, MN �� More than 2,400 Slots • 32 Table Games • Bingo • Poker � �;rarrd t�si�ta� �1�13e �aes � Onamia, MN O Q More than 1,900 Slots • 24 Table Games • Bingo • Poker I Grand Portage tasino O �' � Grand Portage, MN ( More than 450 Slots • Bingo lackpot Junction ..,,::::9 a.rai�a - neu �,a�e Morton, MN Red Lake, MN 1,250 Slots • 28 Table Games • Bingo • Poker More than 250 Slots • 4 Table Games • Poker €.it�� i;,: {as�r��d Seven Cla�s - Tt�i�� ° �°��ils � Prior Lake, MN Thief River Falls, MN 800 Slots • 28 Table Games More than 750 Slots • 4 Table Games • Bingo • Poker Myst�i t�akc tasir��:� 5�:��r ��,��<. , �r � Prior Lake, MN Warroad, MN More than 4,000 Slots • 88 Table Games • Bingo More than 480 Slots • 5 Table Games • Bingo M<. ;hts Casinsr �r Casino � Walker, MN � Mahnomen, MN More than 900 Slots • 14 Table Games • Poker More than 1,000 Slots • 23 Table Games • Bingo • Poker F'aiace Casin� Treasure Islar�.� ��t & Casi�o Cass Lake, MN Welch, MN More than 500 Slots • 4 Table Games • Bingo 2,500 Slots • 40 Table Games • Bingo • Poker �'r�sr€�'s Edg� ; , -::;.. VVhitf: �ak Cas��.a; Granite Falls, MN ; Deer River, MN More than 750 Slots • 8 Table Games • Bingo • Poker More than 300 Slots • 2 Table Games • Bingo • Poker