Tribes-Track Tension Escalates With New Additions To Racing Commission

The rivalry between Minnesota’s two primary gambling stakeholders took yet another interesting turn.

To the dismay of the state’s horse racing track operators, Gov. Tim Walz appointed two tribal leaders to the Minnesota Racing Commission on June 21.

During this year’s legislative session, lawmakers introduced several bills to legalize Minnesota sports betting. All of these bills would have given the tribes exclusive control of the entire market.

Predictably, track operators weren’t happy. Racetracks are typically eligible for a license in other states where sports betting is regulated.

In response, track operators tried to expand gaming options at their tracks. However, the tribes fought those efforts with lawsuits and political pressure.

Track operators called the governor’s decision to appoint leaders from tribes with casino operations a conflict of interest. Those two new members will now serve on a commission overseeing and promoting their casinos’ direct competition.

Walz defends picks, says they are qualified

To replace two outgoing members, Walz appointed Melanie Benjamin and Johnny Johnson to the nine-member commission. Benjamin is a chief executive of the Mille Lacs Band of Ojibwe. Johnson is president of the Prairie Island Indian Community’s tribal council.

The new members start their five-year terms on July 1.

The Mille Lacs Band opened the Grand Casino Mille Lacs and Grand Casino Hinckley in 1991. The Prairie Island Indian Community’s Treasure Island Casino in Welch opened two years later.

Walz defended his decision to MPR News. He said they were qualified for the position because of their gaming industry experience.

“(Benjamin and Johnson are) two Minnesota citizens that have extensive experience in regulation, especially around gambling, and they’re citizens and have every right to be on there.”

Tracks say appointment of “competitors” is inappropriate

Regardless of their industry experience, the track operators are angry about the choices. They believe it puts the tribes in a position to give them access to the tracks’ confidential business affairs.

Randy Sampson, CEO of Canterbury Park in Shakopee, released a statement calling the appointments inappropriate:

“We do not believe it is appropriate for competitors of the racetracks to serve in the role of our regulators, and it would be difficult to find a precedent for the recent appointments of long-time leaders of tribal nations that own two of the state’s largest casino operations as members of the Minnesota Racing Commission.”

Tribe has filed lawsuits against Racing Commission

Running Aces CEO Taro Ito told the Star-Tribune that Walz’s appointments were a “slap in the face” of the state’s horse racing industry.

“Explain to me how this is possible when the same two individuals have similar duties to tribal casinos, which have a court action against the very commission they will be a part of?”

Late last year, Running Aces asked the commission to allow it to operate a machine that spreads blackjack through video terminals. The commission obliged.

In response, the Shakopee Mdewakanton Sioux Community filed a lawsuit asking the court to overturn the commission’s approval. The tribe owns Mystic Lake Casino Hotel and Little Six Casino in Prior Lake.

They said the systems were illegal and called for the removal of all terminals. The tribe argued that these machines amounted to video games of chance.

The lawsuit claimed those games are only permitted at tribal casinos under state law. A verdict is still pending.

Lawmakers passed bill limiting commission’s power to expand gaming

This spring, the tracks tried to expand their gaming options again. The Racing Commission approved the addition of historical horse racing machines to the Minnesota tracks.

To consumers, HHR machines look and feel nearly identical to slot machines. However, the machines’ results are based on past horse races, and not random chance like a normal slot machines.

Once again, the Shakopee Mdewakanton Sioux Tribe filed a lawsuit. The tribe petitioned the Court of Appeals to overturn the commission’s approval of HHR machines at the tracks on similar grounds.

The tracks sought to add the HHR machines as a new revenue source after it became clear they likely wouldn’t be part of a sports betting bill. The tribe argued that the machines resembled video slot machines too closely, which tribal casinos have exclusivity over.

State lawmakers took action on the issue before the court could rule on the suit. They added language into one of the lead sports betting bills explicitly barring the tracks from hosting HHR machines. They also restricted the commission from approving any gambling expansion at the tracks.

At the end of the current state legislative session, when it was apparent that a sports betting bill would not pass, lawmakers passed a separate bill with those HHR provisions.

Appointees are from tribes named in track lawsuit

Once the battle over HHR machines ignited, the tracks fought back. In April, Running Aces filed a federal RICO lawsuit against three casinos operated by the two tribes Walz just added to the Racing Commission.

The suit claimed that Grand Casino Hinckley, Grand Casino Mille Lacs and Treasure Island operated card games beyond blackjack not covered in the tribes’ gaming compacts. Running Aces later amended the lawsuit to include the Shakopee Mdewakanton Sioux tribe’s casinos, saying Minnesota law prohibits them from offering video slots and other video games.

At the time the suit was amended, Running Aces’ Ito issued a statement that suggested the goal of the federal lawsuit was to challenge the tribes’ right to exclusivity for any form of gaming:

“For decades, tribal casinos and certain politicians have been falsely perpetuating that they are entitled to an exclusive right on gaming in the state of Minnesota, including electronic video games of chance. To the contrary, under the Indian Gaming Regulatory Act of 1988, which is a federal law, such an exclusive right is in fact prohibited.”