Michigan Advances Parimutuel, Online Poker Measures

Legislation to remove the formula used to pay horse racetracks from a pool and allow them to keep money generated there to pay expenses and prize to winning horses awaits the signature of Michigan Governor Rich Snyder. Also, the state Senate is considering an online gaming bill.

Legislation designed to help Michigan’s two remaining horse racetracks are awaiting Governor Rick Snyder’s signature to become law. At least six tracks have gone out of business in the past decade. Today Hazel Park offers Thoroughbred racing, and Northville Downs offers Standardbred racing.

The measure would allow “site specific” purse revenue to let each track keep money generated there to pay expenses and prizes to winning horses. Michigan doesn’t tax handle on live races but does have a 3.5 percent tax on simulcast wagers. Currently simulcast revenue is deposited into a common purse pool that gives 65 percent of revenue to Standardbred racing and 35 percent to Thoroughbred racing and other breeds.

Commenting on the legislation, the Michigan Horsemen’s Benevolent and Protective Association said, “The current outdated statute is killing the industry by maintaining a purse distribution formula which, in effect, subsidizes one entity at the expense of the other. 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.”

The legislation also would make it illegal for anyone without a license for live horse racing in Michigan to accept online wagers from Michigan residents. Horse racetrack owners, who want to redirect internet betting, especially support this aspect of the bill. Also, the measure would allow bettors to place bets on live and simulcast races at the state’s two racetracks from their smartphones.

The legislation also sets up a nine-member Horse Racing Advisory Commission under the Michigan Department of Agriculture and Rural Development which would design “procedures governing the operation and promotion of horse racing” for the Michigan Gaming Control Board. The commission also would recommend legislation “with the goal of maintaining the long-term viability of horse racing in Michigan.”

The state once hosted nine racetracks; in 1999 racing generated $13.2 million in revenue for the state on wagers of $416 million. The industry created 42,300 jobs at tracks and farms. But by 2015, revenue declined to $3.5 million on wagers of $106 million, according to Michigan’s annual horse racing report.

Snyder’s spokesman Ari Adler said the governor is reviewing the legislation.

In the meantime, a Senate committee in an 8-1 vote approved SB 889, state Senator Mike Kowall’s bill that would allow online poker. Under the measure, operators would be required to pay a $100,000 application fee and a $5 million license fee, plus be subject to a 10 percent tax. Only land-based casinos within Michigan could apply for an online gambling license. The bill also would establish a Division of Internet Gaming within in the Michigan Gaming Control Board.

The legislative session will close at the end of this month.