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Tuesday, December 29, 2009
State Law Could Block Racino Move
By Charles D. Brunt
Journal Staff Writer
State statutes governing horse racing and slot machines could derail Ruidoso Downs' plan to move the racino to Las Cruces.
Officials with Ruidoso Downs Racetrack/Billy the Kid Casino, owned by millionaire businessman R.D. Hubbard, have said that, unless the upcoming Legislature agrees to cut the tax the racino pays on its slot machine revenues, it will seek to move from the city of Ruidoso Downs to Las Cruces.
Citing competition from nearby tribal casinos, Ruidoso Downs has tried twice since 2008 to trim its tax rate. The state's five — soon to be six — racinos pay the state 26 percent of their "net win," the amount wagered on their slot machines minus payouts and approved regulatory fees.
Ruidoso Downs wants legislators to allow it to pay 10 percent on the first $10 million of its net win, and the full 26 percent on any net win over that amount. Because the legislation would apply only to racinos with an annual net win of less than $14 million, only Ruidoso Downs would qualify for the tax break, unless the new La Mesa Racetrack and Casino, slated to host its first races in May in Raton, falls below that threshold.
Since 2006, Ruidoso Downs' net win has declined an average of 15.3 percent per year, bottoming out at $7.4 million in 2008, according to the state Taxation and Revenue Department.
According to Ruidoso Downs' "statements of operations" filed with the Racing Commission, the racino lost more than $2.2 million in 2008. The only other racino to lose money that year was the Downs at Albuquerque, which reported a loss of just under $2 million.
In both cases, the tracks made money on their slot machine and simulcast operations, but not enough to offset losses from horse racing.
The proposed tax break for Ruidoso Downs, estimated to cost the state about $1.3 million in lost annual revenue, died in a Senate committee in 2008 and 2009.
Ruidoso Downs followed each defeat with talk of relocating the racino. This year, racino officials have formally asked the New Mexico Racing Commission to approve its 2011 live race dates for a track in Las Cruces.
But two state statutes, and Sunland Park Race Track and Casino, stand in the way.
Julian Luna, the Racing Commission's executive director, said state law prevents a racino located within 80 miles of another racino from conducting simulcast wagering unless the racinos have a written agreement governing simulcast wagering during live horse race meets.
Simulcast wagering — betting on live televised horse races from other tracks — can account for a majority of a racino's annual wagers, Luna said.
"About 80 percent of the money generated in horse racing nowadays is through simulcasting," he said.
A Las Cruces track would be within 50 miles of Sunland Park.
The statute came into play in 2005 when Pojoaque Pueblo applied for a racing license to reopen the shuttered Downs at Santa Fe.
"When Pojoaque wanted to get a license to reopen their track in Santa Fe, that was the issue that the Downs at Albuquerque brought up — that Santa Fe would not be allowed to simulcast because they were within that 80-mile radius of Albuquerque," Luna said. "They (Downs at Albuquerque) took a very strong position against it."
Whether Sunland Park would consider a simulcast agreement with a relocated Ruidoso Downs in its backyard is unclear. Calls seeking comment from Sunland Park general manager Harold Payne, racing director Dustin Dix and lobbyist Scott Scanland were not returned last week.
In November, when Ruidoso Downs applied for 2011 race dates in Las Cruces, Scanland said Sunland Park would "aggressively protect our customer base."
Ann McGovern, president and general manager at Ruidoso Downs, said she doesn't view the simulcast regulation as insurmountable.
"We realize we would need to work with Sunland Park, and we feel confident that we'll be able to do that," she said.
Asked whether a refusal by Sunland Park to negotiate an agreement would preclude a potential relocation, McGovern said, "I really don't anticipate that happening. I feel confident that we'll be able to work out something that's agreeable to Sunland Park and to us."
McGovern said simulcast wagering accounts for 33 percent of Ruidoso Downs' on-track wagering.
The simulcast agreement could be the least of the problems facing Ruidoso Downs' planned relocation, said Tania Maestas, an assistant state attorney general who represents the state before the Racing Commission and the New Mexico Gaming Control Board.
Maestas said another state law allows racinos to operate slot machines only on days it is simulcasting or conducting live races. "It goes even further to say that if you don't have that written (simulcast) agreement, you can't operate (gaming) machines," she said.
"It's really a knockdown barrier if you don't get that," she said. "I don't see how it's feasible, at least financially, to maintain two tracks without that agreement."
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