Michigan Historical Horse Racing Bill Passes Senate, But Casino Opposition Remains

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The historical horse racing bill was approved by the Michigan Senate last week, however, the HHR legislation still faces obstacles before it can reach its final destination.

On November 2, Senate Bill 396 received bipartisan support and passed with a vote of 27-8, coinciding with the day a substitute was proposed in committee.

Even after making modifications to address their concerns, state Senator Dan Lauwers informs Playinmichigan that the casinos and tribes in the state remain opposed to the legislation.

However, the bill did not progress due to a resolution being reached to eliminate opposition. The bill was able to move forward because Lauwers, who sponsored the bill, holds the position of Senate Majority Floor Leader and had the influence to push it ahead. Additionally, several influential senators also back the proposed legislation.

Lauwers explained that the reason for moving it was to ensure a possibility of completing it before the year’s end and to maintain the progress for an industry that is struggling to survive.

After being sent to the House, the bill is faced with the challenges of countering the opposition from the casino industry and the limited time remaining in the legislative session.

Casinos refuse to engage with HHR sponsors

For the third year in a row, Michigan lawmakers have made efforts to pass an HHR bill, but it has been thwarted in the past two years due to opposition from the casino industry.

In an attempt to appease casino representatives and discourage their opposition, the sponsors of the bill made efforts to engage them in discussions about their desired provisions. Multiple meetings were conducted after the bill’s introduction in May, unfortunately, none of these sessions yielded any productive outcomes.

Lauwers expressed frustration over the collaboration between lawmakers and casinos to introduce online gambling and sports betting in Michigan. However, he pointed out that despite this cooperation, the casinos were not reciprocating by assisting lawmakers in efforts to preserve horse racing.

In the past, we have collaborated with casinos and requested their cooperation on this matter. We have engaged in discussions with them and made efforts to address the concerns that have been raised over time. However, despite our request for clear and specific changes, they have not provided us with any specifics. As a result, we have proceeded with advancing the bill and we remain open to further dialogue with casinos as it progresses through the House.

Casinos appear to have reservations regarding the introduction of historical horse racing (HHR), which could potentially transform racetracks into racinos. Despite HHR machines providing pari-mutuel betting options based on previous race outcomes, their gameplay closely resembles that of slot machines.

Lauwers clarified that our intention with HHR is absolutely not to harm the casino industry in any manner. Our goal is not to establish a racino or engage in direct competition with casinos. Our sole aim is to ensure the survival of the horse racing industry, which used to be a thriving multibillion-dollar industry in this state.

Changes made in Michigan HHR substitute

Despite not receiving any requests from the casino industry, the sponsors attempted to predict the changes it might desire by taking into account previous discussions. Notable modifications in the substitute comprise:

• Michigan only allows a maximum of three racetracks.
• The maximum number of HHR terminals allowed per track is restricted to 1,500.
• It is stipulated that racetracks cannot be located within a 40-mile radius of any tribal casino that possesses a hotel, as well as any county that is identified as a competitive market in tribal compacts.
• It is prohibited for any new racetrack to be situated within a 40-mile radius of another racetrack.
• HHR revenue now includes the inclusion of the School Aid Fund and City of Detroit as recipients.
• The tax rate for HHR has been raised to 19% on net win, aligning it with the tax rate that casinos pay on their retail casino net win.
• Earlier this year, a definition of pari-mutuel wagering was passed in Kentucky, leading to a revised understanding of this form of betting.

Despite tribes’ opposition to HHR, they did express their concerns to the sponsors by emphasizing their disapproval of constructing racetracks within tribal exclusivity zones. Ensuring that HHR does not violate tribal gaming compacts is a significant obstacle to its approval.

To address Gov. Gretchen Whitmer’s concerns about potential tax revenue loss from casino gaming, a solution has been proposed to modify the tax rate while also allocating a portion of the revenue to the School Aid Fund and Detroit. This approach ensures that any decrease in casino gaming revenue does not negatively impact these entities.

Future of Michigan horse racing at stake

Lauwers emphasized that this bill marked the ultimate effort and stressed its urgency to be passed within the current year. This critical step was deemed necessary as the industry’s survival hangs in the balance, desperately requiring a fresh source of income to sustain itself beyond the near future.

Lauwers provided an explanation:

In 1933, the introduction of gambling and betting in this state began at racetracks, laying the foundation for Michigan’s current gaming industry. Initially, there were nine tracks, but now only one remains. At its peak, the horse racing industry employed approximately 40,000 individuals. It’s not just about the racetrack itself; it encompasses breeders, trainers, farmers, and veterinarians. Our aim is to provide them with a new pari-mutuel wagering tool, enabling them to sustain themselves independently.

Northville Downs, located near Detroit, stands as Michigan’s sole remaining racetrack, exclusively hosting standardbred harness racing. Unfortunately, thoroughbred racing has become non-existent within the state, leading to the practice of sending locally bred thoroughbred horses to other states.

Nevertheless, in 2018, AmRace & Sports LLC acquired Sports Creek Raceway with the commitment to revive thoroughbred racing in Michigan, despite the track having ceased operations in 2014.

According to Lauwers, the operator will solely resume the track with HHR. However, time is limited. If the HHR bill fails to pass this year, AmRace might proceed to sell the location to developers who will repurpose it for other uses.

The Michigan Gaming Control Board has recently granted Northville Downs approval for a total of 62 live racing days in 2022. The racing season is scheduled to commence on March 11.

Can Michigan pass HHR bill before year’s end?

There are only six days left on the Michigan legislative calendar that are guaranteed to have sessions, and an additional three days can be added if necessary.

Lauwers aimed to pass historical horse racing in the Senate prior to the Thanksgiving break, commencing on Thursday. The legislature is set to reconvene on November 30th, with scheduled meetings on Tuesday, Wednesday, and Thursday for both that week and the following week.

There are two possibilities for the end of the legislative session: either on December 9th or extending it for an additional three days the following week, as determined by legislative leaders.

For the HHR bill to successfully pass, numerous actions must be taken within a limited time frame. However, Lauwers maintains a positive outlook despite the challenges. The Regulatory Reform Committee has been tasked by the House to handle the bill.

Lauwers expressed confidence in our prospects in the House, stating, “Considering the presence of legislators with experience in the horse racing industry, we believe we have a favorable pathway.”

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