SF4714

Purpose

• This bill aims to regulate how advance deposit wagering (ADW) proceeds are used to support Minnesota’s horse racing industry. It redefines ADW, solidifies how source market fees are distributed, and ties funding to purses, breeding programs (breeders awards), and industry regulation.

Key Definitions

• Advance deposit wager (ADW): a wager placed through an advance deposit wagering provider on a horse race that is conducted outside the state.
• Advance deposit wagering provider: the operator handling ADW transactions.

Main Provisions

• Redefinition of ADW (Section 1)

  • ADW is defined as a wager placed through an ADW provider on a horse race conducted outside Minnesota.

• Source market fees and distribution (Section 2)

  • Purpose and use:
  • The legislature states that the proceeds from ADW authorized by this chapter should be used to support and improve Minnesota’s horse racing industry by increasing purses, supporting breeding, and ensuring adequate regulation for participant protection.
  • Fees and allocation:
  • Source market fees are set by contract (in addition to other fees like host fees).
  • Class A or Class B licensees must pay all source market fees they receive from an ADW provider as follows:
    • 28% to a licensed racetrack that primarily conducts standardbred racing.
    • 72% to a licensed racetrack that primarily conducts Thoroughbred and Quarter Horse racing.
  • Use of funds for races outside Minnesota:
  • At least 50% of total source market fees for outside-state races must be set aside for breeders awards and purses.
  • From the set aside, at least 33% must be paid by the racetrack to the state for deposit to the breeders fund, to be used solely for breeders awards.
  • The remaining amount (after breeders fund deposits) goes to purse accounts for races held at the racetrack, under agreements with horsepersons associations representing the majority breed at the track.
  • Use of funds for races within Minnesota:
  • For races conducted within the state, at least 50% of total source market fees must be set aside for purses and paid to purse accounts under agreements with horsepersons associations representing the majority breed at the track.
  • License status and transfers:
  • No source market fees may be paid to a licensed racetrack if that racetrack’s license has been revoked or not renewed.
  • If a racetrack’s license is revoked or not renewed, source market fees payable to that racetrack shall be paid to the other licensed racetrack.

Significant Changes to Existing Law

• Scope of ADW:
  • Expands or clarifies ADW to be tied to wagers on races conducted outside Minnesota, affecting how ADW proceeds are captured and distributed.
• Funding allocations:
  • Establishes explicit percentages and dedicated uses for source market fees, including:
  • A fixed split between standardbred-serving tracks (28%) and TB/Quarter Horse-serving tracks (72%).
  • Mandates that outside-state ADW proceeds be allocated at least 50% to breeders awards/purses, with a portion (at least 33% of that set-aside) sent to the breeders fund and used for breeders awards.
  • Requires a portion of funds to go to purse accounts at tracks for races held at the track, per agreements with racehorse associations.
  • Within-state races must allocate at least 50% of fees to purses.
• Protections and contingencies:
  • If a license is revoked or not renewed, fees default to the other licensed track, and a revoked track cannot receive fees.
• Administrative approach:
  • Source market fees are to be established by contract, adding a contractual layer to fee setting beyond existing host fees.

Potential Impacts

• Financial support for breeding and purses:
  • Increases and guarantees funding for breeders awards and purse accounts, potentially improving prize money and breeding programs in Minnesota.
• Regulatory and industry protection:
  • Ties funding to regulatory adequacy and participant protection, aiming for stronger oversight of the industry.
• Operational effects for ADW providers:
  • Establishes clear fee splits and allocation rules, which could affect how ADW providers partner with Minnesota racetracks.
• Risk and transition considerations:
  • If a racetrack loses its license, funds shift to the other track, which could impact competition and resource distribution between tracks.

Relevant Terms - advance deposit wagering (ADW) - advance deposit wagering provider - source market fees - host fees - licensed racetrack - standardbred - Thoroughbred - Quarter Horse - breeders fund - breeders awards - purse accounts - horsepersons associations - class A licensee - class B licensee - outside the state (races conducted outside Minnesota) - within the state (races conducted in Minnesota) - revocation / not renewed (license status)