Did Running Aces violate state law?

Columbus track maintains Mystic Lake agreement nullified payments to Canterbury Park

 

Officials from Running Aces Harness Park (above) spoke their two cents to the Minnesota Racing Commission last week regarding a complaint filed by Canterbury Park. The Shakopee thoroughbred racetrack wants to see Running Aces lose its license after the Columbus facility stopped paying to pad Canterbury’s purses. (File photo)

Officials from Running Aces Harness Park (above) spoke their two cents to the Minnesota Racing Commission last week regarding a complaint filed by Canterbury Park. The Shakopee thoroughbred racetrack wants to see Running Aces lose its license after the Columbus facility stopped paying to pad Canterbury’s purses. (File photo)

Cliff Buchan
Staff Writer

If there is such a thing as kissing cousins, Running Aces Harness Park and Canterbury Park might well be considered battling brothers. There is little loved being shared by the two these days.

It’s been that way since the Columbus harness park took shape a decade ago and the thoroughbred racing track in Shakopee balked over the existence of a second horse track in the metro area. The two tracks have coexisted since 2008 when Running Aces opened and agreed to a purse agreement and revenue sharing from its card room to protect race purses at Canterbury.

But that goodwill dissolved last June when Canterbury Park and the Minnesota Horsemen’s Benevolent & Protective Association signed a 10-year marketing agreement with the Shakopee Mdewakanton Sioux Community, the operators of Mystic Lake Casino. In all the agreement nets the Shakopee track nearly $83 million.

Now the two tracks have landed in district court and before the Minnesota Racing Commission. The horsemen’s association filed a complaint in January asking the MRC to revoke Running Aces’ Class A license, alleging that Running Aces violated state statutes by failing to perform requirements made in its license application.

The MRC complaint comes as the two tracks battle in Hennepin County District Court in Minneapolis where Running Aces filed suit contending the horsemen’s association voided the purse fund agreement with Canterbury Park by entering the agreement with the Sioux Community.

The lawsuit was filed last September and follows a decision by the Running Aces board in August to terminate the 3 percent revenue sharing payment. Through the end of February, the late payments have reached $347,000.

In a related move last month, Running Aces began negotiations with Canterbury Park for a new simulcast agreement. For the past five years, Running Aces has paid Canterbury $150,000 a year. The fee is in addition to fees Running Aces must pay to tracks where the simulcast originates.

Running Aces has said the fee paid to Canterbury is not connected to supporting purses and wants it terminated. As of Feb. 19, the two parks now simulcast only events involving breeds that race at the respective tracks: standardbred horses at Running Aces and thoroughbreds at Canterbury Park.

MRC Role

While the court matter in Minneapolis awaits a ruling on a request by the horsemen’s association to send the dispute to an arbitrator, the MRC has commenced its deliberations to determine if Running Aces has violated state law and impacted its license standing. The judge also may hear the case or dismiss the lawsuit.

The commission during a near three-hour work session on Thursday, March 7 at Columbus City Hall took testimony from Running Aces regarding the license revocation request and collected comments from the public.

Thomas A. Keller III, attorney for Running Aces, told the MRC that the purse agreements clearly spelled out that the agreement would be null and void in the event racino legislation is approved by the state allowing video gaming and slot machines at race tracks in Minnesota. Under the Shakopee tribal agreement, the horsemen’s association and Canterbury Park agreed to oppose and lobby against any proposed legislation that would establish racino, he said.

Such an agreement constitutes a breach of contract, Keller said. By agreeing to oppose racino over the 10-year period of the tribal agreement, terms of the purse agreement were violated, Keller said.

“For 10 years that agreement has been broken,” Keller said.

Keller also questioned why the MRC was being drawn into the dispute when the matter was in district court. “What’s going on here?” Keller asked.

Up until the tribal agreement, both tracks have pushed for racino legislation, Keller said.

More Comments

Jesse Overton, MRC chair, was the target of barbs during testimony.

John Derus, a Running Aces board member, asked for a fair hearing from the entire commission, hinting that the board’s leadership had not been fair. Calling the hearing “frivolous,” Derus asked why there was so little commission vetting of the Mystic Lake agreement last summer.

“We didn’t need an undertaker,” Derus said. “We need an undertaking.”

Overton explained that the MRC was not taking sides in the dispute and was responding as required to a complaint filed by the horsemen’s association. It would be the commission’s task, based on evidence and testimony, to render a decision, he said.

“You see it as opposition when you don’t get the answers you want,” Overton said.

James Lane, MRC vice chair, reviewed details of the decision in 2005 to grant the license to Running Aces. That decision followed a 2004 license denial that was reversed only after Running Aces agreed to promises to enter a purse agreement with Canterbury Park.

“They just don’t evaporate,” Lane said of the license stipulations tied to the initial approval of the Running Aces license.

Left unanswered is the question of perpetuity of the purse agreement.

Keller, responding to Lane, said the formal purse agreement with Canterbury and the horsemen’s association came after the license was approved and contained the language tied to racino. “It proves my point,” Keller said.

Public Comments

A number of Columbus residents and track advocates testified to the commission last week, including former Mayor Mel Mettler, the man at the city helm during the Running Aces planning. Mettler said the track has proved to be “viable” after overcoming many hurdles and obstacles.

Several residents pointed to the track’s economic impact with 550 year-round employees and an additional 100 seasonal workers in the summer. Its workforce is second only in numbers to that of the Forest Lake School District, track officials said.

The track had net card room revenue of $22.1 million last year compared to $18.5 million in 2009, the first full year of operation. Total business revenue at Running Aces reached $29.1 million in 2012, compared to total revenues of $24.8 million in 2009.

In 2012, Running Aces reported $19.1 million in in total employee payroll and more than $7 million in total taxes.

Can the two sides resolve the issue and halt the license revocation process?

Columbus resident Jody Krebs, a planning commission member and former school board member, questioned if the license challenge would go away if Running Aces resumed making purse agreement payments while the court matter is pending.

Overton said he could not speak for the Canterbury Park interests but suspected the dispute could be softened. Overton said he has encouraged the two parties to resolve their differences.

Lane questioned the logic of the continued dispute over the purse agreement. With $347,000 outstanding as of the end of February, he said the amount would only continue to grow.

Commissioner David Roe also called for a resolution to the dispute, saying that many of the issues being argued today mirrored the arguments waged in the legislature from 1971-1983 when horse racing was debated and finally approved.

Next Step

The next meeting of the commission is slated for 4 p.m., Thursday, March 21 at the Leatherdale Equine Center on the St. Paul campus of the University of Minnesota.

The Running Aces license may be an agenda item but it is not clear if the commission will take action at the meeting. Another work session may be called to discuss the question, said Mary Manney, executive deputy director of the racing commission.

If the license ends up being revoked, the MRC ruling would likely be sent to an administrative law judge as part of the standard appeal process, Manney said.

  • Pat McMahon

    In 2012, Running Aces reported $19.1 million in in total employee payroll and more than $7 million in total taxes.

    My guess very little of that 7 million in taxes goes to the city of Columbus.

    • Tax guy

      @ pat McMahon, You are wrong. Running Aces pays the same Local, State and federal taxes that any other business would pay. You don’t know your facts. Running Aces is paying a competitor to stay in business, does that make sense to you? Why would Burger King pay Mcdonalds to open a restaurant that’s an hour away, that’s what Running Aces is being asked to do. Does that make sense?

      • jennefer phillips

        Tax guy
        If Burger King was Violating a rule that said they could not open if they would create a competitive situation, you can be sure they would agree to pay a percentage to McDonald’s to offset the business revenue they would be cannibalizing in order to get their permit to open.

  • Just saying

    Has anyone noticed that Running Aces has their name plastered all over the Super Rink in Blaine but does nothing to support our local ice arena in Forest Lake

    • Tax guy

      Why is that a big deal? It’s called advertising, a business will put it’s name anywhere they are allowed to. Take a look at the amount of charitible donations Running Aces has made to many Forest Lake charities and schools. Again, looking to start an issue where there isn’t one.

      • Just Saying

        You miss the point; the many high school hockey associations that call the Blaine Super Rink home are receiving financial support from Running Aces when they buy signs in each of the eight ice arenas at the Super Rink. How about doing the same in Running Aces home arena?

        You comment “a business will put it’s name anywhere they are allowed to” implies that Forest Lake won’t allow Running Aces to put a sign up in the ice arena; that just isn’t true.

        • goofeeder

          Running Aces is a casino, and it is in Columbus. It does not have a “home arena”.

          Businesses can advertise wherever they like, and to think that Running Aces somehow owes Forest Lake, or anyone for that matter, anything at all is not only stupid, but ignorant,

    • http://www.EricLangness.com Eric Langness

      Could it be that FLAS has a policy against allowing a gambling organization from advertising on school grounds?

      Could it be that their ‘target market’ isn’t our youth and more people from age groups old enough to gamble attend events in Blaine?

      My guess is that it is a business decision that Running Aces has made in marketing and has little to do with whom they choose to support. I recall they were firm supporters in many local charitable activities including those in the local public schools.

      • Just saying

        Uh, FLAAA sells pulltabs to raise money; Friar Tucks advertises in the ice arena – they sell pulltabs; I believe the pulltabs support FLAAA

        • Resident

          FLAAA does sell pull-tabs, at the bar and other establishments geared for adults, NOT on the field where the children play.

          Its your choice to bring your child to a bar so you can play pull-tabs, but do you really need to gamble while you’re watching your child play sports? Isn’t that their time to spend with you?

          • Just Saying

            You seem to have missed something; no one is talking about selling pull tabs at the ice arena

        • http://www.EricLangness.com Eric Langness

          FLAAA is a private organization separate from the ISD-831 public school district.

  • Pat McMahon

    You are correct I don’t know the facts about the 7 million dollars in taxes that are being paid.
    All I stayed was that my guess is that a very small amount of that 7 million in taxes goes to the Columbus/Forest lake area.

    For those of us who live with-in 5-7 miles of the track and have to put up with the traffic, noise, and lights its not worth having the horses race for 3 months out of the year

    If you know that amount please share it us.
    Maybe I’m wrong

  • Happy Day

    Hey Just Saying – just because they support the Super Rink doesn’t mean they couldn’t support the FL rink. Perhaps you can lead the charge and volunteer for FLAAA by reaching out to Running Aces and suggesting they advertise in FL? Yeah, didn’t think so.

    • Just saying

      Wouldn’t say it if I didn’t know it had already been done.

      Just saying – calm down

  • Also, just saying

    I agree, advertising is great along with donations to support the Local community. The question referenced the Forest Lake Ice Arena and why Running Aces doesn’t advertise there and support their own community?

  • Claire Lundgren

    Running Aces has never been about helping the horse racing industry. When the Canterbury horsemen’s groups lead the charge for Racino, the main focus was always about the money needed to save the industry. The Racino would have been a means to an end. The presence of slot machines is not conducive to attracting racing fans but, with no other options available, it appeared to be the only way to save racing. Until the Indian Tribes arrived and offered a great solution, the racing industry was slowly dying. When Running Aces was in the initial stages it became obvious that the dollars spent on betting the races was going to be spread thinner. It appeared that the north metro track would not make it without cooperation from Canterbury. Canterbury and the horsemen’s group obliged and worked out an agreement to share the simulcast room money. Canterbury then sent payments to Running Aces for their share of the handle from harness racing. That agreement is a contract and Running Aces is in breach of that contract. Although the agreement with Mystc Lake Casino is not relevant, it should be noted that the horsemen from Canterbury offered to help Running Aces to work out a similar agreement with the northern tribes. They refused that offer because it would mean they might have to do some work. It becomes obvious that Running Aces is not mad because the horsemen have been left out but they are angry that the Canterbury horsemen no longer want to fight for a casino when they have been given a better solution to their plight.

  • Horse Guy

    Running Aces agreed to paid a competitor a portion of their card club revenue to actually GET a license. The money is hardly needed for Canterbury to “stay in business”. RA was DENIED a license until they agreed to that provision. When they told the MRC they had come to agreement with the HBPA, they were granted a license then they signed the deal. For Keller to claim NOW that ‘well, that was signed after the fact’ so it’s irrelevant is completely disingenuous and he should know that (and I’m sure he does). Ultimately Southwest Casinos, the company that built RA gambled on racinos and lost, going bankrupt in the process. Now the out of state private equity company firm that owns the track, wants their return because THEY bet on racino and lost.

    Why doesn’t RA seek their own deal exactly like Canterbury’s with the Mille Lac’s Band? Because the out of state ownership wants the $$$ for the bottom line NOT for the horsemen diametrically OPPOSITE of Canterbury. A question I’d like to hear answered directly (and they won’t) by RA management; If presented a deal under the same parameters as the Canterbury/SMSC deal with 100% of the money going to purses, would you take it? Yes or no? Ask them if 100% of THIS money they are withholding will go to THEIR purses? NO, it will NOT. I don’t want to hear about how magnanimous RA is – they are out to enrich management and ownership at the expense of their horsemen. Period. And they are going down because they miscalculated and want to try and take everyone they can with them. Disgusting.

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