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Racinos seek major expansion of gambling in NM

The casino at the Downs of Albuquerque has been closed since March but racetrack casino owners are proposing a huge expansion in the five state racinos.(Jim Thompson/Albuquerque Journal )

ALBUQUERQUE, N.M. — New Mexico’s horse racetracks and racinos are proposing a sweeping expansion in their state-regulated gambling, including internet gaming and 24-hour casino operations.

In addition, according to draft legislation obtained by the Journal, the state’s five racetrack casinos would be allowed to have an unlimited number of video slot machines, table games and on-site sports betting parlors.

“We call it opening up New Mexico gaming,” said Sunland Park Racetrack and Casino lobbyist Scott Scanland. “This is a mature industry now and the state has more than 20 years of experience in overseeing the gaming industry.”

The changes could mean an end to the state’s gambling compacts with Native American tribes, which produces about $70 million a year in revenue sharing for the state.

Under current law, racetrack casinos are limited to 600 slot machines each and can operate up to 18 hours a day or 122 hours a week, which translates into 16 hours a day, as long as horse racing or simulcasts of horse races are offered at the associated racetrack. Those limitations would be removed, although the racinos would still contribute a percentage of profits to the racetrack purses.

Scanland acknowledged the proposal is a major overhaul of the industry and the revenue streams the state takes in from it.

(Roberto E. Rosales/Journal)

New Mexico has racinos that operate in tandem with horse racing tracks in Albuquerque, Sunland Park, Farmington, Ruidoso and Hobbs. The racino gaming provides significant support to the horse racing industry, including a percentage of revenue to race purses.

The proposed legislation also would throw out many of the compromises that were made with gambling opponents that allowed the racetracks to open casinos in the 1990s. Among them:

• Alcohol would be allowed to be served on the casino floor.

• ATMs would be allowed on the casino floor.

• Casinos would be allowed to establish lines of credit for individual customers.

• Casinos would be allowed to offer complimentary meals, hotel rooms and golf games to gamblers.

• The central monitoring for slot machine activity by the Gaming Control Board would end.

Restricting alcohol, access to ATMs, credit from casinos and freebies like rooms and meals were put into the existing laws at the behest of gaming opponents concerned with gambling addiction.

Guy Clark

Guy Clark, an Albuquerque dentist who has lobbied against gaming for decades, called the proposal “a massive expansion of gambling that we have never seen before.”

“It is a betrayal of any attempt to restrict the amount of gambling addiction,” he said, adding that the racinos’ proposal removes “all the safeguards put in place to prevent increased gambling addiction.”

Rick Baugh

Rick Baugh, general manager of Sunland Park Racetrack and Casino, said the industry has come a long way in dealing with people addicted to gambling.

“All the tracks have teams of trained people who know how to talk with problem gamblers,” Baugh said in a telephone interview. “We don’t want their money. We want people who know this is entertainment and have the discretionary dollars to enjoy it.”

Pandemic restrictions

Operators of the racinos have long chafed at what they say is the competitive advantage tribal casinos have because they have virtually none of the restrictions imposed on racinos. Right now, all the racinos are closed under the governor’s emergency health order while some Native American casinos like Isleta and Route 66 are open for business.

The governor has no jurisdiction over the Native American casinos and the state racinos have asked her to allow them to operate at 50% capacity. Horse racing is allowed, but fans are prohibited in the grandstands. On-site betting also is prohibited.

The state’s compacts with the tribes that run 21 casinos across New Mexico include an agreement that the hours of operation and number of slot machines at racetracks be limited.

Under the compacts tribal casinos pay the state around $70 million to $80 million a year in revenue sharing.

While a study put forth by the racinos shows an increase in state tax revenue when the number of slot machines, table games and sports gambling are allowed, it does not include the $70 million a year the state receives in revenue sharing from the tribes.

The draft legislation does not name any sponsors but was accompanied by an economic study sponsored by the racinos outlining the potential income from different scenarios on expanding legalized gambling.

The Legislative Finance Committee is scheduled to hear from the industry about the proposal at its Oct. 1 meeting. The presentation is scheduled to be made by representatives of Sunland Park Racetrack and Casino under the heading of “restructuring gaming regulation and fees.”

Among the industry talking points for the LFC is that it allows New Mexico to “join the big leagues in the gaming world.”

Scanland said the racetracks had shared the proposed bill with tribes to get their input and possible objections.

“We didn’t want to surprise anyone,” Scanland said. “We wanted to start the process early.”

Most of those changes would give the racinos a revenue boost in indirect revenue, according to an economic study by Union Gaming Analytics.

The study initiated by the racinos and the New Mexico Horseman’s Association examined different scenarios including the addition of a sixth racetrack that was taken off the table by the governor last year.

The increased revenue from the racinos comes to around $40 million depending on different factors, including the amount of expansion of gaming each racino undertakes.

Bridging the gap between the Indian gaming revenue the state will lose and what the racinos will pay requires opening the sixth racetrack and legalizing internet casino gaming.

“A huge chunk of the market is moving toward internet gaming,” Scanland said. “It is the wave of the future.”

Clark said that “wave” will come at a cost.

“Online casino gambling is the most addictive form of gambling available,” Clark said. “There is already a big push back in the United Kingdom, Canada and Australia because of the terrible effect of online gambling on young people.”

He said the racetrack racinos will argue they are putting in safeguards, but young adults and teens will infiltrate the system.

“Children younger than 16 have gambling apps on their phones in England,” Clark said.

The increase in revenue to the state also is dependent on the expansion of gambling facilities, hotels and other amenities like golf courses to offer more of a tourist resort experience.

The draft bill leaves open what tax rates would be imposed on different forms of gambling.

Internet and sports gambling are viewed as the next big thing in legalized gaming.

A recent article in The Wall Street Journal said shares in online sports gambling companies have been skyrocketing during the COVID-19 pandemic, which had closed many casinos across the country and in New Mexico.

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