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Racetrack Amends Lawsuit As Talks With Tribes Falter Ahead Of Minnesota Sports Betting House Vote

Written By Matthew Kredell | Updated:
Amended Lawsuit

Following an unproductive meeting between representatives of tribes and horse racetracks Monday, Running Aces Casino and Racetrack has amended a lawsuit seeking additional leverage in Minnesota sports betting negotiations.

The amended lawsuit alleges that Minnesota tribes are violating the Indian Gaming Regulatory Act (IGRA) by offering slot machines not allowed anywhere else in the state.

“What people don’t understand about IGRA was the intent was never to give tribes a monopoly on video games of chance or any sort of gambling,” Running Aces CEO Taro Ito told PlayUSA. “The intent of IGRA was always to create a level playing field and allow tribes to do what others are doing in the state.”

Running Aces filed the original complaint last month against executives for casinos run by two of the largest Minnesota gaming tribes, the Mille Lacs Band of Ojibwe and Prairie Island Indian Community, alleging their compacts only permit them to offer blackjack but they offer other table games.

Since the Minnesota horse racing industry can’t compete with Indian tribes in terms of political influence, Running Aces is doing everything it can to gain leverage in the final week of the legislative session.

Last week, a Minnesota House committee combined sports betting with HF5274 to prohibit tracks from offering historic horse racing (HHR). The Minnesota House had HF5274 on the agenda for House floor passage Wednesday but didn’t get to it after 13 hours of discussing five other bills. The sports betting legislation was tabled to when the House reconvenes Friday.

Federal court already decided similar case in favor of tribes

The amended complaint adds executives from casinos operated by Minnesota’s most successful gaming tribe, the Shakopee Mdewakanton Sioux Community.

As sovereign nations, tribes cannot be sued by commercial entities. So the lawsuit goes after casino executives for allegedly offering illegal games with a civil RICO claim, which was designed to allow victims to hold powerful entities accountable for their involvement in organized crime.

Running Aces contends that IGRA only allows tribes to offer gaming allowed elsewhere in the state. Video games of chance are specifically illegal in Minnesota, which is why the tracks can offer table games but not slots.

Tribal exclusivity to offer gaming not legal in the state outside tribal lands through state compacts under IGRA already has been put to the test in California.

In Artichoke Joe’s v. Norton, a California cardroom challenged that allowing only Indian tribes to conduct Class III gaming violated IGRA and the constitutional guarantee of equal protection.

IGRA established that if a state allows a gaming activity “for any purpose by any person, organization, or entity” then it must allow Indian tribes to engage in the same activity.

The US Ninth Circuit Court of Appeals ruled in 2003 that “any person, organization, or entity” doesn’t need to mean a commercial entity. It could mean another Indian tribe.

Running Aces wants to test that theory in the US Eighth Circuit Court of Appeals.

“The US Ninth Circuit Court of Appeals ruled that somebody else is another Indian tribe, which to me makes no sense at all,” Ito said. “We’ll take chances in Eighth District, which is totally different than California. It’s certainly a big gamble for [tribes] because the downside risk is their monopoly of a multibillion-dollar industry.”

Tribes and tracks far apart on sports betting revenue share

Last month, the Minnesota Racing Commission authorized Canterbury Park and Running Aces to offer HHR machines beginning May 21. The Shakopee filed a lawsuit to stop that from happening.

The House bill offers tracks a total of $625,000 annually in revenue share from online sports betting and requires the money only go to horse racing purses. That is less than an offer made in the Senate at the end of last session.

This year tracks have significantly more tied to the bill. They have motivation to defeat the bill so HHR can get its day in court. A favorable decision there would mean much more to tracks than sports betting.

The House would like to have an agreement in place between tribes and tracks before passing the bill Wednesday.

However, Ito said that track and tribal representatives met Monday and no progress was made. Ito said the tribes made no offer to the tracks and rejected horse racing offers.

Running Aces is asking for $17.86 million revenue share for horse racing and for fewer restrictions on utilizing the money. That figure would equate to $5 million for the track based on the current 72-28 ratio for splitting money between Canterbury and Running Aces.

Ito said the desire for $5 million comes from reports that table game revenues at racetracks in neighboring Iowa decreased by 10% after sports betting legalization.

“They’re continuing with a sports betting bill that basically doesn’t give us anything. I mean, Zack is essentially offering us $105,000, and that’s crazy. They’re giving charities 30-to-40 million. Both tracks and horse associations are going to be negatively affected by this sports betting exclusivity to tribes.”

It appears Senate Republicans won’t support the bill unless the Minnesota horse racing industry is on board. That leaves a lot of work to do before the Minnesota legislature adjourns May 20.

Photo by Shutterstock/Westock Productions
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Matthew Kredell

Matthew Kredell serves as senior lead writer of legislative affairs involving online gambling at PlayUSA. He began covering efforts to legalize and regulate online gambling in 2007 after federal passage of the Unlawful Internet Gambling Enforcement Act disrupted his hobby of playing small-stakes online poker. He has since interviewed more than 300 lawmakers around the country and written extensively about online gambling legislation. He has led coverage of bills to legalize online gambling in most states. A lifelong Angeleno and USC journalism alum, Matthew started his career working as a sportswriter for a decade at the Los Angeles Daily News. He has written on a variety of topics for Playboy Magazine, Men’s Journal, Los Angeles magazine, LA Weekly and ESPN.com.

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