A bill aims to more fairly split purses at state’s last two racetracks

A bill that aims to more fairly distribute purses between thoroughbred and standardbred (harness) racetracks is now in the Senate.

LANSING — An update to Michigan's 20-year-old horse racing statute pending in the state Senate could reconfigure the way purse money is paid out to the state's two remaining racing tracks.

Senate Bill 504, introduced by Sen. David Robertson, R-Grand Blanc Township, would update a 1995 state law that deals with everything from revenue distribution to the number of days of live racing (Robertson did not return messages seeking comment).

Perhaps the biggest change in his bill? What supporters call a "breed-specific distribution model," requiring that 100 percent of the money wagered on thoroughbred and standardbred (the breed used for harness racing) simulcast races stays with the respective horsemen's groups for the following year's purses.

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Current practice splits the wagers placed on simulcast thoroughbred and standardbred races. After winning bettors receive their payouts and a 3.5 percent state tax is paid, the remainder of the common purse pool is divided with roughly 60 percent going to standardbred groups and about 40 percent going to thoroughbred groups, said George Kutlenios, president of the Howell-based Michigan Horsemen's Benevolent & Protective Association, which represents thoroughbred racers.

That tilts the funding balance in favor of standardbred (harness racing) groups.

The issue now is whether that's fair, considering seven race tracks have closed across the state since 1998. Just two remain — Hazel Park Raceway, which operates as a thoroughbred track, and Northville Downs, which holds live harness races.

"Why can't we just make it fair?" Kutlenios said.

Top executives at Hazel Park and Northville Downs disagree on the structure of purse changes.

Dan Adkins, vice president of Southfield-based real estate developer Hartman and Tyner Inc., and vice president of the Hazel Park track, said any challenge mounted by the standardbred industry is an effort to keep its share of the revenue pool intact, since harness racing benefits most from the existing setup.

Yet revenue splitting is "always going to be a constant battle between the groups that do operate in Michigan, and the reason why it's such a battle is because that pot continues to shrink year after year," said Mike Carlo, operations manager of family-owned Northville Downs. "Everybody, naturally, is trying to hold on to the biggest piece that they can, and I don't begrudge anybody for trying to do that."

Betting at Michigan's horse tracks has been sliding for 15 years, with wagers falling nearly 8 percent in 2014 compared with the previous year, according to an annual report issued in April by the Michigan Gaming Control Board, which regulates the industry.

The $116.8 million horse bettors waged in 2014 generated state tax revenue of $3.9 million, a loss of nearly 13 percent from the year before. Northville Downs reported a combined $40.6 million last year in live and simulcast wagers, with all but $465,000 coming from simulcast races. Hazel Park had a total of $60.4 million in bets placed.

The two tracks do agree on this: The horse racing industry needs to generate additional income if it is to remain viable.

Horse racing has lost ground in Michigan as gamblers increasingly have other options — casinos, expanded lottery games and fantasy sports. But Michigan governors have resisted efforts to allow horse tracks to install slot machines or video lottery terminals for new revenue.

Gov. Rick Snyder opposes the "racino" concept, despite understanding that the horse racing industry is struggling, said spokesman Dave Murray.

A bill from Rep. Robert Kosowski, D-Westland, would allow casinos to offer sports betting and take bets on simulcast horse races — something track executives oppose without receiving something from the casinos.

Carlo, of Northville Downs, said he was skeptical of the latest proposals.

"At the end of the day, if we just change the law so that everybody's going to get a different percentage of the existing pot, I'm not interested in even being a part of it because that's a waste of time," he said. "Until we find a way to generate more revenue in the state of Michigan on horse racing, it's a futile attempt at saying we have a future. We have future when we have more revenue coming in."