North Dakota Commission May See Changes

by the Associated Press

State officials in North Dakota are calling for changes to the commission that oversees horse racing and a wagering business under investigation by state and federal authorities.

Attorney General Wayne Stenehjem said state law should be changed to clarify that his office controls the state Racing Commission and its director. The commission's director said his staff is too small to handle the state's large horse-betting industry.

The Racing Commission regulates and promotes North Dakota's horse racing industry, and controls how some tax revenues raised from horse race wagering are spent. It has five voting members.

Racing Services Inc. of Fargo, which operates 10 North Dakota sites that broadcast and take bets on horse races, was put into receivership in August after disclosures that the company owed about $6.5 million in back taxes.

The company underreported almost $100 million in wagers over seven months, and a state and federal investigation into Racing Services' operations is continuing, authorities say.

Current law puts the commission in the attorney general's office, but the governor appoints commission members and the commission hires and directs its staff.

"We'll be introducing a bill," Stenehjem said. "The first thing to be decided by the Legislature is, where is the correct place for the home of the Racing Commission? If it is in my office, it needs to be complete. If they don't want to do that, then it needs to go over to the governor's office."

The Racing Commission's dual role of both regulating and promoting racing also should be separated, Stenehjem said.

Gov. John Hoeven agrees with Stenehjem that authority over the commission should rest with the attorney general, Hoeven spokesman Don Canton said.

"The attorney general needs more statutory authority over the commission and we'll support him in that," Canton said.

Paul Bowlinger, the state racing director, said he needs a bigger staff. Bowlinger's office currently has an administrative assistant and an accountant who does auditing on a contract basis.

"We have the smallest office and the smallest staff to run half of what Las Vegas does," Bowlinger said.

He said the amount of bets placed in the state, also called "handle," has increased significantly.

"I would like one more auditor," Bowlinger said. "We went from a handle of $5 (million) or $6 million to $170 million with absolutely no increase from the general fund to support the regulation."

House Minority Leader Merle Boucher, D-Rolette, said the commission should have taken action against Racing Services sooner than it did. The commission and Bowlinger "had to be real remiss in their job, their responsibilities, in not being on top of this ($100 million in unreported betting)," Boucher said.

Boucher also said lawmakers should look into regulation of off-track betting before the next regular legislative session in 2005.

"I think even before we come into session, in the very near future, we need to have the Racing Commission, the director of the Racing Commission come in, and give a full report, a full disclosure of what's been going on," Boucher said.

"First of all, if we don't get our $6.7 (million) or $6.8 million -- which could be a possibility, and this whole business dries up -- we've appropriated money to do certain things (in state government)."

Boucher said the probe should come at the next quarterly meeting of the legislative Budget Section, which is made up of floor leaders and lawmakers from House and Senate appropriations committees.

A former racing commissioner agrees with Bowlinger that the small staff and a volunteer board is not enough to deal with an off-track betting industry the size of North Dakota's.

"I felt uncomfortable that we didn't have the experience," said Lance Hagen of Bismarck, who left the commission last year. "We're a part-time board to oversee an industry that accounts for 20 percent of total gaming revenues in the state."

Regulation of simulcast betting should be moved into the attorney general's Gaming Division, Hagen said, "and leave the live racing to the commission."