MI Legislation Offers Some Hope for Racing

Michigan lawmakers have passed legislation designed to improve the condition of the struggling pari-mutuel horseracing industry.

The legislation, which was sent to Gov. Rick Snyder for his signature, creates a nine-member Horse Racing Advisory Commission that would fall under the Michigan Department of Agriculture and Rural Development. The commission would be charged with establishing "procedures governing the operation and promotion of horse racing" for the Michigan Gaming Control Board.

The commission would also make recommendations to the state legislature "with a goal of maintaining the long-term viability of horse racing in Michigan."

Simulcast revenue in Michigan currently is deposited into a common purse pool that gives 65% of revenue to Standardbred racing and 35% to Thoroughbred racing and other breeds. The legislation would make the pool "site-specific," which means purse revenue would stay with the horsemen based at each facility.

No less than 25% and no more than 40% of net simulcast commissions must be paid by the racing licensee. The legislation also calls for disposition of purse money held in escrow by the MGCB.

Michigan doesn't tax handle on live races but does have a 3.5% tax on simulcast wagers. A fiscal note says the state earns about $4 million a year from the simulcast tax and uses it to fund the state-restricted Agriculture Equine Industry Development Fund.

There are only two tracks left in Michigan with live racing: Hazel Park, which offers Thoroughbred racing, and Northville Downs, which offers Standardbred racing. At least six tracks have gone out of business over the past 10 years.

Among them are Great Lakes Downs and its replacement, Pinnacle Race Course, a Detroit-area facility that opened amid fanfare in 2008 but closed in late 2010 and has been demolished. Hazel Park, also just outside of Detroit, took over the state's Thoroughbred dates several years ago.

The Michigan Horsemen's Benevolent and Protective Association, in a memo to members, said the legislation that makes changes in the Horse Racing Act of 1995 will provide a more equitable environment.

"The current outdated statute is killing the industry by maintaining a purse distribution formula which, in effect, subsidizes one entity at the expense of the other," the memo states. "This problem is so egregious that in 2015, Northville Downs was able to extend its season by two months, and Hazel Park was forced to end its season two months early."

Hazel Park took $56.6 million in simulcast wagers last year, while Northville Downs had $45 million in simulcast bets. But because of the percentages used for the simulcast purse pool, Hazel Park purses earned $2.26 million and Northville Downs purses $2.82 million, according to the horsemen's memo.

The current 35% of the common pool that goes to Thoroughbred racing includes Quarter Horses, Arabians, Paints, and Appaloosas.

Under the new site-specific structure for purse revenue, Hazel Park would have earned $2.9 million and Northville Downs $2.3 million in 2015, the Michigan HBPA said. Harness racing fairs in the state also get more than $700,000 a year for purses from the AEIDF.