Funding Woes Jeopardize North Dakota Track

The North Dakota Racing Commission is running out of money to subsidize the racetrack at the North Dakota Horse Park in Fargo, and the track may not survive without new revenue streams, a track official said.

"I guess all we can say right now is, it's an unknown," said Jim Tilton, president of Horse Race North Dakota.

A state audit made public April 5 said the racing commission has spent about $4.4 million on construction and operation of the track, which opened in 2003. Auditors told a legislative oversight committee the commission wouldn't be able to maintain spending because of a sharp decline in wagering revenues.

Money to support the facility came from Racing Services Inc., which handled off-track betting in the state. The company president was convicted on federal charges earlier this year. Taxes paid to the racing commission by Racing Services fell from $600,000 in 2003 to $30,000 in 2004.

"They aren't going to be able to count on us unless we get some new revenues in," racing commission director Dean Meyer said the racing operation at the North Dakota Horse Park.

Meyer said the commission likely would be able to support live horse racing for about 2 1/2 years.

North Dakota lawmakers, however, are wary of spending more money on the track. The audit was reviewed by the legislature's Audit and Fiscal Review Committee, which requested the racing commission report.

"They tell me that the smartest gamblers are the ones that know when to fold," Sen. John Andrist said. "How could we get out of this and totally privatize it?"

State officials said Racing Services owes North Dakota about $6.5 million in taxes, which could be impossible to collect. The company is being liquidated in a bankruptcy proceeding, and has been ordered to forfeit $99 million.

Tilton acknowledged the track would be difficult to maintain. "If people are not willing to support the situation, then maybe it's a situation like many others that just don't make it," he said. "We'd like to see it make it. We have a pretty significant amount of money invested in the track."

Tilton said track officials were disappointed the legislature defeated proposals to aid the track, including a property tax exemption and installation of Instant Racing machines, which employ recycled races in a pari-mutuel, video-gaming format.

The audit also shows construction costs have far exceeded the initial price tag estimated by architects. The largest single share of the racing commission's spending on the track--about $2.8 million--has gone to construction.

In its first two seasons of racing, bets on races have raised about $47,500 in state taxes, auditors said.

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