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4. Discussion of Proposed Racino Legislation
TO: FROM: SUBJECT: DATE: CITY OF SHAKOPEE Memorandum Mayor and City Council Mark McNeill, City Administrator Racino Discussion March 22, 2011 Comment: At the workshop meeting of March 22 there will be a presentation by Canterbury Park CEO Randy Sampson concerning status of a Racino bill, which is anticipated to be considered by the 2011 state legislature. A news conference has been set for 10:00am Monday, March 21, at the State Office Building in St. Paul to unveil the proposed legislation. As the information will not be public until that time, no written information is available. Mr. Sampson has requested to appear before the Council to describe the legislation. He indicates that the presentation to the City Council is for information only, and he is not seeking formal action at this time. kJa,u(1,0 Mark McNeill MM:cn City Administrator lti... N :e, e s RacIno public Support j $, } _ 1 Racino Popularity Soars to New Heights in a 2010 Independent Poll A SurveyUSA Poll released on March 3, 2010 showed that 80% of Minnesotans now approve of racino legislation while only 18% disapprove. Channel 5 News anchor Cyndy Brucato, who reported the poll numbers during the evening newscast, noted that racino legislation, "sure is popular with the public." This poll confirms the results of a similar poll conducted by SurveyUSA in 2009 that showed 79% of Minnesotans were in favor of allowing slot machines at Canterbury Park. The detailed information provided within the 2010 SurveyUSA poll shows that Racino legislation is a popular concept among individuals throughout the state and across the entire political spectrum. Approval by Party Affiliation Approval by Minnesota Region Party Affiliation % Approval Region % Approval Metro 80% Republican 72% South 75% Democrat 87% West 80% Independent 81% Northeast 80% Both SurveyUSA polls illustrate how Racino legislation has continued to gather the support of the citizens of Minnesota throughout the past decade. They both mark significant increases over the first Racino poll conducted in 1997 (60% approval) and a series of polls conducted in 2003 and 2004 (70% approval). SurveyUSA Poll - 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 I li' each year. Do you approve? or disapprove? of this proposal? Approve - 80% Disapprove - 18% Not Sure - 2% Racino All Party Affiliation Political Ideology Legislation Rep. Dem. Ind. Cons. Lib. Mod. Approve 80% 72% 87% 81% 68% 84% 88% Disapprove 18% 26% 12% 17% 29% 14% 11% Not Sure 2% 2% 1% 2% 3% 2% 1% Racino Gender Age Region Legislation Male Female 18 -34 35 -49 50 -64 65+ Metro South West NE Approve 84% 76% 78% 83% 81% 74% 80% 75% 80% 80% Disapprove 15% 20% 18% 15% 17% 24% 16% 24% 18% 20% Not Sure 1% 4% 3% 1% 1% 2% 3% 1% 2% 0% Racino public Support a .e ddkY k d ■ SurveyUSA Poll - May 12, 2009 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% Decision Resources LTD Poll - March 3, 2004 MPR /Pioneer Press Poll - May 1, 2003 Do you support or oppose the Racino proposal that would add Do you support a proposal to have the state operate a casino slot and video games at Canterbury Park? at Canterbury Park racetrack? Support - 68% Oppose - 27% Undecided - 5% Support - 70% Oppose - 24% Undecided - 6% 4 1. 11 4 1111P h Star Tribune Minnesota Poll - April 29, 2003 Star Tribune Minnesota Poll - April 1997 Would you favor or oppose what's being called a ‘Racino,' that Would you favor or oppose the state legislature allowing slot is, casino -type gambling at Canterbury Park, if a portion of machines at Canterbury Park? the profits were to go to the state's general fund? Favor - 70% Oppose - 25% Undecided - 5% Favor- 60% Oppose - 33% No Opinion - 7% 4 11, 1 t111,1 ow Racinos Create Jobs 4 , Understanding How Racinos Will Create Jobs in Multiple Economic Sectors Racino legislation is unique in that it will help create jobs throughout many sectors. Most notably, Racino legislation will create jobs in the construction industry, the hospitality industry and throughout multiple areas of Minnesota's agriculture industry. Racinos - Great at Creating Jobs in Agriculture - ._ - , 23,028 Jobs Many people understand Racino legislation creates on -site jobs as current facilities are renovated to accommodate video lottery terminals and additional staff is hired to run the facility. However, many aren't aware of the affects Racino legislation can have on a state's equine industry. A recent study commissioned by the Pennsylvania Equine Coalition shows the impact Racino legislation (passed in Pennsylvania in 2006) can have on a state's equine industry. Although not a perfect comparison (Pennsylvania has six racetracks, compared to Minnesota's two) this diagram shows that Racinos can dramatically impact employment within a state's equine industry. 2001 Horse Racing Industry Employment - Pennsylvania 2000 Minnesota's breeding Industry - An Economic Engine At the crux of job creation stands the racehorse breeder. In order to increase the number of equine jobs within a given state, the breeders must determine that the market demands more horses. Market demand is almost always correlated to one factor - the amount of available prize money. Prize money, often referred to as purse money, drives any state's racing industry. The more purse money available within a given state, the more money there is to spend on horse care, horse training, horse breeding and all other aspects of a state's horse industry. In short, increased purse money leads to improved racing conditions and higher demand in the racehorse market and this creates more jobs. This scenario is what led to the creation of thousands of jobs in Pennsylvania. O Racing Conditions Exist © Breed Horses © Sell Horses Q Race Horses "wg- 07- s:N xa tier k 11`111. Arlt ELI; . £ �) • 1;;; Racetracks with purses must exist in Then breeders will produce horses Some breeders will sell their horses Horses then race for purse money. order for a racing industry to exist. to compete for this purse money. and others will race their own stock. Higher purses equal more horses. The bottom Line - Setter Purses Create More Horses and More Jobs Improving the earning power of a racehorse (by increasing purses) increases the likelihood an individual will invest in a horse. The more people that are willing to invest in a horse, the more that will be bred in a given state. The more horses bred in a given state, the more people that are required to take care of the equine population. Currently, states with Racino legislation are experiencing growth in their equine racing populations because their horses have higher earning potentials when compared to horses in states without Racino legislation. Conversely, states without Racinos are losing ground as owners, breeders, trainers and other equine professionals are opting to move to states where better racing conditions exist. ow Racinos Create Jobs �, , ~ { I :` Exploring Other Jobs Within Minnesota's Racing Industry Horse racing creates a lot of jobs due to the fact that horses are very labor intensive animals. Teaching a young horse to race can take many months or even years. Many individuals are responsible for the development of a racehorse from birth to the racetrack. Typically, at a minimum, it takes two years, a lot of human power, thousands of dollars and a bit of good luck to get a horse to the races. Preparing an experienced horse for racing also takes a significant amount of hard work. Trainers, farmers, horse transportation workers, farriers, veterinarians, stable hands and many other individuals are responsible for getting a horse in shape to run a race. While at the racetrack, horses are exercised, fed and cleaned every clay, rain or shine. Unfortunately, there hasn't been a recent study conducted in the state of Minnesota to determine how many people are employed due to the presence of racing in the state. The Minnesota Racing Commission last prepared an economic impact study in 1990. That study estimated that 7,657 jobs (in full -time equivalent units) were directly tied to the presence of Canterbury Downs. p ssv 1 Nik Goodwin Racehorse Jockey Style Crown Nutrition Bemidji, MN Racehorse Feed Supplier Ada, MN Running Aces Columbus, MN • Curt $ Sharon Johnson Thoroughbred Breeders Detroit Lakes, MN Nevada Win Racehorse Trainer Mahtowa, MN t sr Y N §. A i'lh I Dr. Jennifer Seivig Equine Veterinarian Savage, MN Canterbury Park Shakopee, MN — 1 4 1 ' ' 1 C Rodney Von Olden Kirk Washburn Quarter Horse Breeder Craig Wallop Horseshoer Alpha, MN Kenyon, MN Grain Farmer Blooming Prairie, MN ambling in Minnesota . ` Minnesota Gambling - Revenue and Gaming Tax Statistics $1.46 Billion $0 $186.2 Million $118.25 Million $179.77 Million $35.8 Million $52.18 Million $10.2 Million Revenue Gaming Taxes Revenue Gaming Taxes Revenue Gaming Taxes Revenue Purses & Gaming Taxes Native American Casinos t State Lottery 2 Charitable Gaming 3 Norse Racing 6 Card Clubs ' (2008 Statistics) (FY 2009 Statistics) (FY 2010 Statistics) (2009 Statistics) O Native American Casinos 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: Casino City Press, Alan Meister, Ph.D.: "Casino City's 2009 Indian Gaming Industry Report." & "The Minnesota Indian Gaming Association: "Minnesota's Tribal Casinos." O The Minnesota State Lottery During fiscal year 2009, the Minnesota State Lottery continued to experience the brisk sales pace that began in 2008. During the 2009 fiscal year, the Lottery recorded approximately $186.2 million in revenue (sales less prizes paid). Increased sales of scratch games ($324.9 million, an increase of almost $27.0 million) helped drive a total lottery sales of $481.2 million, an all -time record. Nearly 3,000 outlets across Minnesota were authorized Lottery retailers in 2009. Source: Minnesota State Lottery: "Fiscal Year 2009 Annual Report." O Charitable Gambling in Minnesota During the 2010 fiscal year, Minnesota's charitable gambling industry recorded $179.77 million in net receipts from $980.1 million in sales. In 2010, the state of Minnesota approved 3,205 charitable gambling locations, an additional 1,031 exempt organizations that conduct limited gambling consisting of a total of 3,149 gambling activities and another 517 excluded organizations that conducted 546 unique bingo activities. Source: Minnesota Gambling Control Board: "Annual Report of the Minnesota Gambling Control Board." O Horse Racing S Card Clubs in Minnesota In 2009, Minnesota's two racetracks, Canterbury Park and Running Aces Park (50 tables each) combined to generate $52.18 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. Gaming Taxes only include the amount paid by Canterbury Park. Tax information for North Metro Harness Initiative, LLC was not available. Source: Canterbury Park & The Minnesota Racing Commission: "2009 Annual Report of the Minnesota Racing Commission." t l F �k Gambling in Minneota i ,,,,,,,,, ,, f :,----- 8' r' i WI " Minnesota's Existing Casinos - Locations, Gaming Options 6 Slot Machine Counts* 4110 Black bear Casino 6 Resort Carlton, MN 2 ,000 Slots • 20 Table Games • Bingo • Poker 15 O Fond -du -Luth Casino Duluth, MN 14 11 6 M ore than 750 Slots • 4 Table Games • Bingo • Poker t 3 3 C fortune Bay Casino 16 18 1 2 Town MN 1 p 7 50 Slots • 14 Table Games • Bingo • Poker Grand Casino Hinckley 5 4 Hinckley, MN 4 More than 2,400 Slots • 32 Table Games • Bingo • Poker O Grand Casino Mille Lacs 1 Z Onamia, MN 9 8 M ore than 1,900 Slots • 24 Table Games • Bingo • Poker Grand Portage Casino 7 1 7 6 Grand Portage, MN More than 450 Slots • Bingo 0 Jackpot Junction Seven Clans - Red Lake Morton, MN Red Lake, MN 1 ,250 Slots • 28 Table Games • Bingo • Poker More than 250 Slots • 4 Table Games • Poker Little Six Casino Seven Clans - Thief River Falls 8 Prior Lake, MN 14 Thief River Falls, MN 800 Slots • 28 Table Games More than 750 Slots • 4 Table Games • Bingo • Poker Mystic Lake Casino Seven Clans - Warroad 9 Prior Lake, MN Warroad, MN More than 4,000 Slots • 88 Table Games • Bingo More than 480 Slots • 5 Table Games • Bingo Northern Lights Casino Shooting Star Casino 1 Q Walker MN 16 Mahnomen, MN More than 900 Slots • 14 Table Games • Poker More than 1,000 Slots • 23 Table Games • Bingo • Poker palace Casino Treasure Island Resort 6 Casino Cass Lake, MN Welch, MN M ore than 500 Slots • 4 Table Games • Bingo 2,500 Slots • 40 Table Games • Bingo • Poker 0 Prairie's Edge Casino White Oak Casino Granite Falls, MN 19 Deer Rivet MN More than 750 • 8 Table Games • Bingo • Poker More than 300 Slots • 2 Table Games • Bingo • Poker * All slot machine counts and other gaming information gathered from individual property's websites and www.indiangaming.com. other RacIno States rF -- , Delaware Racino Operating Arrangement & Economic Statistics Public /Private Racino Arrangement Video Lottery Terminals - State Lottery Operated Delaware Racino Information Current # of Operating Racinos 3 Facility # of VLTs 2009 Direct Racino Employees 2,363 Delaware Park 2,400 Legalization Date 1994 Dover Downs 2,700 First Racino Opening Date 1995 Harrington Raceway 1,800 Tax Revenue Dedication General Fund 2009 Racino State Tax Distributions $227.55 Million Racino Revenue Share (Percentage of Gross Gaming Revenue)2 elaware Park State Tax 43.5% Local Tax 0% Lottery Fee 6% Horse Industry 10% ver Downs Impact of Racinos: ton Raceway "The horses, the blacksmiths, vets ... a lot goes into a race, a meet, not just the jockey ... Any place the slots go, it stimulates the agribusiness of horse racing." Charles Lockhart, Vice President of Horse Racing at Dover Downs Examiner, March 24, 2010 Sources: American Gaming Association: 2010 State of the States: "Economic Impact: Racetrack Casinos" 2 Delaware State Lottery Florida Racino Operating Arrangement & Economic Statistics/ Public /Private Racino Arrangement Privately Operated Facilities Florida Racino Information Current # of Operating Racinos 4 Facility # of Slot Machines 2009 Direct Racino Employees 2,156 Calder Race Course 1,200 Legalization Date 2006 Gulfstream Park 900 First Racino Opening Date 2006 Mardi Gras Racing 1,500 Tax Revenue Dedication Education Pompano Park 1,500 2009 Racino State Tax Distributions $108.37 Million Racino Revenue Share (Percentage of Gross Gaming Revenue) State Tax 35% Local Tax 0% Horse Industry 8.75% Impact of Racinos: "Had slots not come to Pompano Park when they did ... [We] would be out of Pompano Park business today." G ulfstrea ardi Gras Racing Michael Bloom, Vice President & General Manager of Isle Casino at Pompano Park Calder Race Course Miami Herald, April 9, 2009 Sources: ` American Gaming Association: 2010 State of the States: "Economic Impact: Racetrack Casinos" 2 Florida Bureau of Professional Regulation Other Racino States „ A t . tf A Indiana Racino Operating Arrangement & Economic Statistics' Indiana Racino Information Public /Private Racino Arrangement Privately Operated Facilities Facility # of Slot Machines Current # of Operating Racinos 2 Hoosier Park 2,000 2009 Direct Racino Employees 1,847 Indiana Downs 2,000 Legalization Date 2007 First Racino Opening Date 2008 Tax Revenue Dedication Property Taxes & Local Government 2009 Racino State Tax Distributions $115.27 Million Racino Revenue Share (Percentage of Gross Gaming Revenue) State Tax 25 %130 %135% (Based on Gaming Revenue) Local Tax 3% Horse Industry 15% Downs Impact of Racinos: "It's been extremely gratifying to see the growth we've undergone here at Hoosier Park and throughout the equine industry [as a result of gaming]." Jeff Smith, General Manager of Racing at Hoosier Park Daily Racing Form, October 7, 2010 Sources: ' American Gaming Association: 2010 State of the States: "Economic Impact: Racetrack Casinos" 2 Casino Association of Indiana Iowa Racino Operating Arrangement & Economic Statistics' Public /Private Racino Arrangement Privately Operated Facilities Iowa Racino Information' Current # of Operating Racinos 3 Facility # of Slot Machines 2009 Direct Racino Employees 2,586 Bluffs Run Racetrack 1,900 Legalization Date 1994 Dubuque Greyhound Park 1,000 First Racino Opening Date 1995 Prairie Meadows 1,900 Tax Revenue Dedication Infrastructure, Local Government & Education 2009 Racino State Tax Distributions $101.13 Million Racino Revenue Share (Percentage of Gross Gaming Revenue) State Tax 22% - 24% (Based on Gaming Revenue) Local Tax 0% Horse Industry 11% Impact of Racinos: "[ Racinos] are truly a huge success story. They have been a catalyst for economic development and they are part of the mix of what makes a vibrant community." Wes Ehrecke, President of the Iowa Gaming Association Columbus Dispatch, October 16, 2006 Sources: ' American Gaming Association: 2010 State of the States: "Economic Impact: Racetrack Casinos" 2 Iowa Racing and Gaming Commission other Racino States „ 3, tee. a Louisiana Racino Operating Arrangement & Economic Statistics' Louisiana Racino Information Public /Private Racino Arrangement Privately Operated Facilities Facility # of Slot Machines Current # of Operating Racinos 4 Delta Downs 1,600 2009 Direct Racino Employees 2,260 Louisiana Downs 1,300 Legalization Date 1994 Evangeline Downs 1,600 First Racino Opening Date 1994 Fair Grounds 600 Tax Revenue Dedication General Fund & Local Parishes 2009 Racino State Tax Distributions $74.29 Million Racino Revenue Share (Percentage of Gross Gaming Revenue) State Tax 15% Local Tax 0% Horse Industry 18% Impact of Racinos: ns "There are 45,000 people [with jobs] in racing ... we're going to image the state Delta Down around it. [Horse racing] is going to be a part of what Louisiana is." Mitch Landrieu, Former Lieutenant Governor of Louisiana (Current Mayor of New Orleans) The Blood- Horse, April 2, 2004 Sources: ' American Gaming Association: 2010 State of the States: "Economic Impact: Racetrack Casinos" 2 Louisiana Gaming Control Board Maine Racino Operating Arrangement & Economic Statistics' Public /Private Racino Arrangement Privately Operated Facilities Maine Racino lnformation Current # of Operating Racinos 1 Facility # of Slot Machines 2009 Direct Racino Employees 303 Bangor Raceway 1,000 Legalization Date 2004 Scarborough Downs Opening Soon (1,000) First Racino Opening Date 2005 Tax Revenue Dedication Education, Health Care & Agriculture 2009 Racino State Tax Distributions $29.08 Million Racino Revenue Share (Percentage of Gross Gaming Revenue) State Tax 27% Local Tax 0% Horse Industry 13% Impact of Racinos: "[Racing] really does encompass a large amount of people, a large amount of i livelihood, it's open space ... [A racino] will keep the industry alive." Sharon Terry, Owner of Scarborough Downs arborough Downs MaineBiz, March 9, 2009 Sources: ' American Gaming Association: 2010 State of the States: "Economic Impact: Racetrack Casinos" 2 Maine Gambling Control Board Other Racino States T New Mexico Racino Operating Arrangement & Economic Statistics' Public /Private Racino Arrangement Privately Operated Facilities New Mexico Racino Information' Current # of Operating Racinos 5 Facility # of Slot Machines 2009 Direct Racino Employees 1,446 Albuquerque Downs 300 Legalization Date 1997 Ruidoso Downs 300 First Racino Opening Date 1999 Sunland Park 700 Tax Revenue Dedication General Fund Sunray Park 500 2009 Racino State Tax Distributions $63.42 Million Zia Park 700 Racino Revenue Share (Percentage of Gross Gaming Revenue)' State Tax 26% Local Tax 0% Horse Industry 20% Impact of Racinos: "There has been a renaissance in New Mexico horse racing. The industry has roared back to life." Scott Sanland, Sunland Park Racetrack & Casino Spokesperson Zia Park Albuquerque Journal, January 16, 2003 Sunland Park Sources: ' American Gaming Association: 2010 State of the States: "Economic Impact: Racetrack Casinos" ' New Mexico Gaming Control Board New York Racino Operating Arrangement & Economic Statistics' Public /Private Racino Arrangement Video Lottery Terminals - State Lottery Operated New York Racino Information' Current # of Operating Racinos 8 Facility # of VLTs 2009 Direct Racino Employees 3,180 Aqueduct Race Course Opening Soon (4,525) Legalization Date 2001 Batavia Downs 605 First Racino Opening Date 2004 Buffalo Raceway 960 Tax Revenue Dedication Education Finger Lakes Race Track 1,199 2009 Racino State Tax Distributions $455.48 Million Monticello Raceway 1,090 Saratoga Raceway 1,770 Racino Revenue Share (Percentage of Gross Gaming Revenue)' State Tax 44.75% Tioga Downs 775 Local Tax 0% Vernon Downs 761 Yonkers Raceway 5,310 Lottery Fee 10% Horse Industry 10% Impact of Racinos: Vernon Dow "It sweetens the pot for racetracks and helps the thoroughbred industry. " Batavia Down re Track Raceway P P 9 ce Track Buffalo Racew Sen. John Bonacic (R), New York State Senator The Blood- Horse, February 12, 2004 icello Raceway Yonkers Race Sources: educt Race Course ' American Gaming Association: 2010 State of the States: "Economic Impact: Racetrack Casinos" ' New York State Lottery Other Racino States a Oklahoma Racino Operating Arrangement & Economic Statistics' Public /Private Racino Arrangement Privately Operated Facilities Oklahoma Racino Information Current # of Operating Racinos 2 Facility # of Slot Machines 2009 Direct Racino Employees 1,097 Remington Park 650 Legalization Date 2004 Will Rogers Downs 250 First Racino Opening Date 2005 Tax Revenue Dedication Education 2009 Racino State Tax Distributions $13.78 Million Racino Revenue Share (Percentage of Gross Gaming Revenue)2 State Tax 1 O % -30% (Brackets Based on Gaming Revenue) Local Tax 0% gars Downs Horse Industry 20 % -30% (Brackets Based on Gaming Revenue) rk Impact of Racinos: "Oklahoma already has gaming in more than 80 tribal casinos ... It's not going away. We can stick our heads in the sand and pretend it doesn't exist or we can regulate it, produce new funding for education and save our horse industry." Gov. Brad Henry, Governor of Oklahoma, January 20, 2004 Sources: ' American Gaming Association: 2010 State of the States: "Economic Impact: Racetrack Casinos" 2 State of Oklahoma - Office of the State Auditor and Inspector Pennsylvania Racino Operating Arrangement & Economic Statistics' Public /Private Racino Arrangement Privately Operated Facilities Pennsylvania Racino Information Current # of Operating Racinos 6 Facility # of Slot Machines 2009 Direct Racino Employees 5,799 Chester Downs 2,857 Legalization Date 2004 Meadows Racetrack 3,440 First Racino Opening Date 2006 Penn National 2,440 Tax Revenue Dedication Property Taxes, Local Gov't & Econ. Development Philadelphia Park 3,297 2009 Racino State Tax Distributions $742.69 Million Pocono Downs 2,208 Racino Revenue Share (Percentage of Gross Gaming Revenue)2 Presque Isle Downs 1,820 State Tax 38.1% Local Tax 4% Horse Industry 7.9% Presque Isle Downs Impact of Racinos: ono Downs "It is clear that the success of slot machine gaming has reinvigorated the racing industry and has created over 40,000 jobs within our agricultural industries." delphia Park Greg Fajt, Chairman of the Pennsylvania Gaming Control Board ester Downs Washington County Observer- Reporter, December 18, 2010 Sources: ' American Gaming Association: 2010 State of the States: "Economic Impact: Racetrack Casinos" 2 Pennsylvania Gaming Control Board other Racino States Rhode Island Racino Operating Arrangement & Economic Statistics' Public /Private Racino Arrangement Video Lottery Terminals - State Lottery Operated Rhode Island Racino Information' Current # of Operating Racinos 2 Facility # of VLTs 2009 Gaming Facility Employees 1,300 Newport Grand 1,100 Legalization Date 1992 Twin River 4,700 First Racino Opening Date 1992 Tax Revenue Dedication General Fund 2009 Racino State Tax Distributions $292.09 Million Racino Revenue Share (Percentage of Gross Gaming Revenue) State Tax 63.75% Twin River Local Tax 1.35% Lottery Fee 9.5% Impact of Racinos: port Grand "We didn't know the potential when we first started. Since then, it's been a tremendous money -maker for the state." Gerald Aubin, Executive Director of the Rhode Island Lottery Commission Denver Post, August 31, 2003 S Sources: ' American Gaming Association: 2010 State of the States: "Economic Impact: Racetrack Casinos" ' Rhode Island Lottery West Virginia Racino Operating Arrangement & Economic Statistics/ Public /Private Racino Arrangement Video Lottery Terminals - State Lottery Operated West Virginia Racino Information' Current # of Operating Racinos 4 Facility # of VLTs 2009 Gaming Facility Employees 4,688 Charles Town Racing 4,600 Legalization Date 1994 Mountaineer Park 2,700 First Racino Opening Date 1994 Tri -State Casino 1,000 Tax Revenue Dedication Education, Veterans & Tourism Wheeling Island 1,800 2009 Racino State Tax Distributions $408.37 Million Racino Revenue Share (Percentage of Gross Gaming Revenue) State Tax 35% Mountaineer Park Local Tax 4.5% Horse Industry 14% Wheeling Island rles Town Racing Impact of Racinos: "The idea that [video lottery] would be used as a linchpin and this place would mo totally explode didn't enter my mind. I truly did not see the magnitude of it." Tamara Petit, Marketing Director at Mountaineer Park Slot Machines in West Virginia - A Case Study, October 2002 Sources: ' American Gaming Association: 2010 State of the States: "Economic Impact: Racetrack Casinos" 2 West Virginia State Lottery g ? ry 3 � ommon Racino Questions :re , 0. Do Minnesota's current gaming compacts grant exclusivity to the existing Tribal casinos? A. 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 state would not break any pre- existing agreements if it decides to authorize non- tribal casino gaming. Racino Now does not advocate any change in the existing gaming compacts. The Indian Gaming Regulatory Act of 1988 does not allow the state to levy taxes or fees on Minnesota's Native American casinos unless the Native American casinos specifically agree to reopen their gaming compacts and consent to be taxed. Additionally, the legislature acknowledged that the current compacts don't grant exclusivity when it passed legislation allowing card club gaming in 1999. Cl. How many jobs can Racino legislation generate? A. Racino legislation would directly generate thousands of new jobs, during construction and once the facilities are open for business. Additionally, Racino legislation will create and save thousands of jobs in Minnesota's rural economy as better purses at the tracks will create more jobs throughout the state's equine industry. 0. What impact would a Racino have on the horse industry in Minnesota? A. The passage of Racino legislation would allow Minnesota racetracks to increase purses and spur significant growth in the size and quality of the horse industry in the state. A study completed by the University of Minnesota in 2004 suggests that horse racing is the one of the best ways to substantially improve the economic impact of the entire horse industry within the state. More recently, Pennsylvania's Secretary of Agriculture, Russell C. Redding said that Racinos in the state of Pennsylvania have added more than 44,000 equine - related jobs over the past five years. Additionally, Redding said that the equine industry's total value has increased by $3.4 billion (a 300% increase) since the addition of alternative gaming at the state's racetracks. 0. Would Racino legislation constitute an expansion of gambling? 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. 0. How much money can Racino legislation generate for the State of Minnesota? A. The most recent study estimates that Racinos could generate at least $250 million in new revenue for the state during every two - year budget cycle. 0. Where would that tax money go? A. The tax revenue would be deposited in the state treasury. It could be used for additional job creation, tax relief, education, transportation, health care, public works, or helping reduce the budget deficit. Racino Now and Minnesota's racing industry believe that Minnesota's legislators are best suited to determine how to use this revenue. 0. Will the state help finance or subsidize the development of Racinos? A. 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 and would continue to operate as private sector business entities (Canterbury Park is publicly traded on the NASDAQ: Ticker Symbol CPHC). \ _" 4 \ y x_.17 ;° r Racino Legislation �� Oct Octails I Racino Bill Explanation 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 provide, 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 lottery and the 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 under the current law (60% to the general fund and 40% to the environmental trust fund). Additionally, the state will receive a gaming activity fee that will be progressive based on total gross gaming revenue. This fee will be graduated between 25 % -40% and will be applied to gross gaming revenue within certain brackets at each facility. Therefore, as gross gaming revenue increases, the state will receive a greater percentage of the revenue. From the remaining gross gaming revenues, the track is required to: make payments to the racehorse industry improvement fund, make payments to local governments and cover all other expenses involved in running the facility. Specifically, the track must pay 14% of its commission (an amount equal to approximately 8% of gross gaming revenue) to the racehorse industry improvement fund. Additionally, 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 1.2% of gross gaming revenue). Racino Gross Gaming Revenue - A Closer Look at Revenue Distribution 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. Racehorse Industry Racetrack Net Improvement Fund* Cash Flow* 8% 3.3% Infrastructure Upkeep Corporate Taxes* & Improvements* 2.5% 8% Gaming Activity Fee# 25 -40% w Racino Operating Expenses* 35% Local Governments Minnesota State Lottery 1.2% 15% * - These values are projected - The gaming activity fee will vary based on the total amount of gross gaming revenue generated at each facility to t� Racino Legislation DetaIls � = , f, Roles of Racetracks, The State Lottery The Racing Commission This Racino Bill authorizes the placement of video lottery terminals at the state's racetracks. The Minnesota State Lottery and the Minnesota Racing Commission are both important stakeholders, as they will have roles acting as the operator and the regulator of these gaming machines. Each organization has additional responsibilities under this bill in order to ensure that the gaming machines are operated in the proper manner. These additional duties are: Canterbury Park 6 The Minnesota The Minnesota Racing Running Aces State Lottery Commission Class A Racetrack Operator of Gaming Current Racetrack & Card Description License Holder Machines Casino Regulator • Make payments to racehorse • Contract for casino location • Issue licenses for industry industry improvement fund with Class A license holders participants • Make payments to local • Own or lease gaming • Enforce all laws and rules governments machines for use at the facility • Collect fees and allocate • Finance the construction of • Examine, test, select and the racehorse industry the facility used for gaming maintain gaming machines improvement fund operations and maintain facility • Supervise accounting of Duties • Create and pay for all money from machines marketing and promotional material associated with the • Post notices regarding Responsibilities facility problem gaming assistance and develop a plan for • Employ personnel for gaming identifying problems machine operations • Approve all advertising and • Bear costs of all operational promotional material relating to expenses not directly tied to gaming machines operating the gaming machines • Implement all security relating to gaming operations Revenues for A legislated percentage of A legislated percentage of Collect fees from Class A gaming gross gaming license holders to reimburse Duties gross amin revenue ross amin revenue costs of regulation • e bo ut Minnesota Racrng t , _ talk /1 • Now ace/JO About Racino Now Racino Now is a non - profit organization dedicated to promoting and improving business conditions for members of Minnesota's pari- mutuel horse racing industry by advocating for legislation to permit video lottery terminals at Minnesota's racetracks. Founded in 2009, Racino Now exists to put Minnesota's racing industry on a path for the future. This path will create new jobs throughout the entire state, save existing jobs tied to the state's horse racing industry and generate hundreds of millions of dollars in new revenue for the state. Currently, more than fifty racetracks, located in twelve states and Canada, are operating Racinos. Additionally, at least six other states (Arizona, Illinois, Kentucky, Ohio, Massachusetts and Texas) are currently considering similar legislation. We believe that 2011 is the year to authorize Racino legislation in order to create jobs, generate revenue that all Minnesotans will benefit from, and to put the racing industry on solid footing for years to come. Minnesota's Racing Organizations and Regulatory Body Minnesota Racing Commission The Minnesota Racing Commission regulates horse racing and card playing in Minnesota and ensures that it is conducted in the public interest. Additionally, the Racing Commission aspires to take all necessary steps in ensuring the integrity of racing and card playing in Minnesota thus promoting the breeding of race horses in order to stimulate agriculture and rural agribusiness. Minnesota Horsemen's Benevolent and Protective Association The Horsemen's Benevolent and Protective Association represents owners and trainers racing at Canterbury Park. The HBPA seeks to improve business conditions for horsemen and their employees, advance the industry in general, promote cooperation and represent the interests of horsemen before government. Minnesota Thoroughbred Association The Minnesota Thoroughbred Association is dedicated to providing its membership with quality opportunities to breed, buy, sell, and race competitive Minnesota -bred horses and promoting the health of the horse racing and breeding industry statewide. Minnesota Quarter Horse Racing Association As an affiliate of the American Quarter Horse Association, the Minnesota Quarter Horse Racing Association's mission is to promote, preserve, and enhance the racing industry in the state of Minnesota, to provide beneficial services and representation locally and nationally and to encourage membership growth. Minnesota Harness Racing Inc. Minnesota harness racing horsemen are represented by Minnesota Harness Racing Inc. The group serves as the primary liaison between Minnesota's harness horsemen and Running Aces. The group also aims to promote harness racing throughout the state. bout Minnesota Racing �E . „, - A grief History of the Racing Industry in Minnesota In 1982, Minnesota voters overwhelmingly approved a constitutional amendment by a margin of 64 percent to 36 percent 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 June of 1985. Shortly thereafter, casino gaming 4 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 TERBURY down off-track betting as unconstitutional. Off -track betting had passed during the 1991 legislative session. The concept later failed as a constitutional amendment in D O W N S 1994 by a 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 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 which allowed Canterbury • > f� Park to open a 50 table card room. The Card Casino revenue dedicated to race CANTERBURY PARK purses immediately helped stimulate 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 Joins the Field In 2005, the Minnesota Racing Commission granted North Metro Harness Initiative LLC the last available license in the seven county metro area available by law. Soon G S H4R� thereafter, North Metro Harness Initiative began construction of a new standardbred C? Q► * � (I) racetrack in Columbus Township. Running Aces Harness Park opened for live racing \y in April of 2008 and, following the statutory requirement of 50 days of live racing, Z p opened a Card Casino that July. Today, both tracks operate overlapping race meets c t 4 (f) during the summer and operate 50 table Card Casinos year - round. Racinos Have Changed the Industry Unfortunately, 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, eight additional states have passed legislation authorizing Racino legislation. The wide revenue disparity between racing facilities (those with Racinos and those without) 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, it's a necessity.