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Lincoln judge reverses Racing Commission decision on horse race funds

December 23, 2018

Horse racing tracks in Lincoln and Omaha do not have to pool money they collect for breeder purses with similar funds from tracks in Grand Island and Columbus, a Lincoln judge has ruled.

The decision is a legal blow to those smaller-city tracks, which have shared in the pooled funds for nearly two decades. It is likely to be appealed.

In her order, Lancaster County District Judge Susan Strong ruled that the Nebraska State Racing Commission in February exceeded its authority when it ordered Omaha Exposition and Racing Inc., which operates Horsemen’s Park in Omaha and Lincoln Race Course, to turn over the funds to be distributed by the Nebraska Thoroughbred Breeders Association.

Strong said, despite the racing commission’s ruling finding otherwise, the statutes are “clear and unambiguous.”

Neb. Rev. Stat. 2-1207(2) requires licensed racetracks to collect funds to be used to promote horse breeding in Nebraska. And Section 2-1207.01 directs how and where the funds are to be disbursed — at the racetrack where the funds are generated.

“The Nebraska Legislature did not empower any entity other than the licensed racetracks with responsibility to collect such funds and did not delegate custody of such funds to anyone other than the licensed racetracks,” she wrote.

Regardless, for 19 years, the State Racing Commission followed and approved of an agreement between the Nebraska Horsemen’s Benevolent & Protective Association (HBPA) and the Nebraska Thoroughbred Breeders Association (NTBA) to disburse breeder funds to Fonner Park in Grand Island, State Fair Park in Lincoln and Agricultural Park in Columbus.

This dispute arose in 2017, when the thoroughbred breeders group asked the racing commission to order bookkeepers at the state’s horse tracks, including the Omaha and Lincoln tracks, to turn the funds over to them to distribute.

State statute requires licensed horse tracks to deduct a certain amount from wagers to promote horse breeding in Nebraska and be distributed as breeder and stallion awards.

But, unlike other states, Nebraska’s law doesn’t spell out who should be the custodian of the funds.

In its 4-0-1 decision, the Racing Commission concluded that the NTBA was the proper entity to hold them because “its purposes squarely align” with the goal of collecting the breeder funds.

But in a decision Dec. 13, Strong reversed that decision, saying the commission had exceeded its authority.

“Although prior agreements approved by the commission and past practices imply that the NTBA should be permitted to take the ... funds from (Omaha Exposition and Racing) and distribute them to other racetracks, no Nebraska statute entitles the Commission to order that the funds be turned over to the NTBA for distribution in that manner,” the judge wrote. “In fact, the statutes provide that the funds should be collected and dispersed by the racetrack where the funds are generated.”

Strong said as long as the Lincoln and Omaha racetracks continue to conduct live races, they are to deduct funds from wagers and distribute them as purses at the same racetrack.

Then she went further, saying there was no authority requiring some other entity to be the custodian of the funds, “and certainly no authority that another entity may distribute payments of such funds to any Nebraska racetrack at its discretion.”

“The past practice of subsidizing other racetracks by allowing the NTBA to allocate a portion of the funds generated under 2-1207(2) to the various tracks by deciding on what an equitable amount of breeder purses should be is contrary to the statutes and cannot be sanctioned by this court,” Strong said.

Since Ak-Sar-Ben closed in 1995 and State Fair Park wrapped up its last extended meet in 2012, the bulk of the live horse racing in Nebraska has occurred in Grand Island and Columbus. In 2017, however, wagering on simulcast and live races totaled $34.9 million in Omaha, $16.4 million in Lincoln, $12.8 million in Grand Island and $3.8 million in Columbus.

According to the order, 1 percent of the money handled at the tracks in Omaha and Lincoln amounted to about $512,000 in 2017, much of which would’ve gone to Grand Island and Columbus under the Racing Commission’s order.

“While pleased with the Order, (Omaha Exposition and Racing) respects and wishes nothing but the best for Fonner Park and its many dedicated sisters and brothers working to support continued thoroughbred horse breeding and racing in our great state,” attorney Chris Jerram said in an emailed statement.

The Racing Commission approved 31 days of live racing in Grand Island next year, 14 days in Columbus, nine days in Omaha and 3 days in Lincoln.

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