New Mexico Delays Action on Racetrack License

by Hector San Miguel

The New Mexico Racing Commission has delayed action for 60 to 90 days on awarding a license for a new racetrack in Hobbs near the Texas border.

Julian Luna, executive director of the racing commission, said the panel was expected to take action Aug. 27 on applications it had received but decided to hold off to investigate potential problems with two of the applicants--former Delta Downs owner Shawn Scott, and R.D. Hubbard, chairman of Ruidoso Downs.

Scott wants to build $30-million racetrack and casino called Lea Downs. Hubbard wants to spend $27.5 million to construct a track and casino called Zia Park.

There is a third applicant for the Hobbs license. Ken Newton, the former owner of the now-closed Downs at Santa Fe, wants to build a $30-million racetrack and casino north of downtown Hobbs. It would be called Saddleback Park.

The background investigation on Newton is still ongoing, Luna said. The next commission meeting is scheduled for Sept. 17-18 in Albuquerque.

"Because of recent information we had received in regard to an issue with R.D. Hubbard in Indiana, and also a contract dispute with Shawn Scott, the commission ordered the staff and myself to look into those issues and report back to the commission, and see if and when we can schedule another hearing on the matter," Luna said.

The commission will probably take action within the next 60 to 90 days after the staff has completed its probe.

The Indiana Gaming Commission fined Hubbard and Pinnacle Entertainment in July after allegations arose that prostitutes were brought to the company's Belterra Casino to entertain high rollers on a weekend. Hubbard, formerly chairman of Pinnacle Entertainment, resigned and was ordered by the commission to sell his stock in the company, pay a $740,000 fine, and surrender his Indiana casino license.

Pinnacle was ordered to pay a $2.26-million fine and will have to close its doors at Belterra for two days. The company reported it would eventually pay $6.49 million to cover the fine and other expenses related to the matter.

The commission stopped short of finding Hubbard unsuitable to have a gaming license even though it ordered him to surrender his Indiana license.
Asked what effect it would have on Hubbard's racetrack license application, Luna said: "We are taking a look at our statutes and our laws and ensuring that indeed it doesn't affect his application here."

Scott is having legal problems with the former owners of Delta Downs, the Vinton, La., racetrack he bought in 1999 for $10 million and sold to Boyd Gaming in 2001 for $130.1 million. As part of the original contract with the previous owners, Scott had agreed to pay a $3-million bonus to them if the track was able to get slot machines, which it did.

The sales agreement states that more than 30 of the original shareholders of Delta Downs would receive an additional sum of not more than $3 million if voters in the parish approved of slot machines at the facility. It says Scott would pay the bonus if the track's facilities were in good condition and met health and safety standards. Scott spent millions of dollars on the track after he bought it.

Scott has since refused to pay the bonus because he believes the sellers failed to meet the conditions. The contract dispute is reportedly in arbitration.

Former New Mexico Gov. Toney Anaya, who is working as a consultant for Scott, said the contract dispute has nothing to with Scott's suitability to have a racetrack license.

"We are a horse racing commission," Luna said. "We are not a gaming and casino commission. So, what we do is look at it from the perspective of what it's going to do for horse racing in New Mexico. The potential applicants chose a particular area in New Mexico, and they felt that horse racing and a casino facility would go in that location. The community supported it, and then they brought in their applications to the racing commission.

"Our concerns are naturally going to be financial in regard to Shawn Scott and the other issue with Mr. Hubbard. We want to see if it affected anything here in New Mexico. We are going to look at all the different aspects in regards to both issues."