Racing Commission to resume racino license discussion Friday

December 19, 2018

The New Mexico Racing Commission has scheduled a special meeting for Friday, raising the possibility it may issue a lucrative license for a new horse-racing track to allies of Gov. Susana Martinez just days before she leaves office.

The agenda calls for commissioners to discuss the new license, as well as a court petition seeking to block the commission — at least temporarily — from making a decision on which of five competing companies will get the license.

“There’s flexibility in that agenda that would allow the commission to go a couple different ways,” said Ismael “Izzy” Trejo, executive director of the Racing Commission. “Which way it is going to go, I don’t know.”

Martinez, whose appointees run the Racing Commission, leaves office Dec. 31.

A decision Friday to issue a new track license would represent yet another course correction for the commissioners during the sometimes rocky licensing process.

At a meeting Dec. 6, the Racing Commission voted to postpone any decision on the license until the court petition seeking to block it from taking such action has been resolved. A hearing on the petition before a state District Court judge in Albuquerque hasn’t been scheduled, but there is no court order in place preventing the Racing Commission from issuing the license.

Hidalgo Downs, a company that wants to build a track and slot machine casino in Lordsburg, filed the petition. It argues the Racing Commission should be prohibited from issuing the new license until it has a second study conducted on the feasibility of what would be the state’s sixth track and casino, or so-called racino.

Hidalgo Downs said a feasibility study done for the commission this fall was flawed. The study found a Lordsburg racino would produce far less slot machine revenue and state taxes than racinos proposed for Clovis or Tucumcari.

Two of the three companies that want to build a racino in Clovis and the company proposing the racino in Tucumcari have political links to Martinez through their investors or company representatives.

The winner of the competition for the new license stands to make millions of dollars.

The last racino built in New Mexico was constructed in Hobbs, and the owners of its license sold the racino for $200 million about a year after the facility was completed. The racino’s construction cost was about $45 million.

The state’s compacts with American Indian gaming tribes permit the licensing of six racinos. In exchange for limiting off-reservation gambling, the state receives a share of the tribes’ take from their slot machines.

The Racing Commission has been clear to issue the license for the sixth racino since 2013, but it didn’t announce it was seeking applications until May, with just seven months left in the Martinez administration.

The Racing Commission never publicly discussed its decision to seek applications before making the announcement in May. It has said the decision was sparked by new inquiries about the availability of a license but has never disclosed those inquiries.

At the commission’s Dec. 6 meeting, a chief deputy to state Attorney General Hector Balderas recommended postponing the licensing decision until the petition filed by Hidalgo Downs has been resolved. The lawyer said the delay would ensure a fair and impartial decision. The commission voted unanimously to accept the recommendation.

Trejo, the commission’s executive director, said the Attorney General’s Office will continue to provide legal advice at Friday’s meeting.

The Attorney General’s Office has moved for dismissal of the Hidalgo Downs petition, arguing that the petition is premature because the Racing Commission hasn’t yet made a licensing decision. After a decision is made, the Attorney General’s Office said, Hidalgo Downs may file a court challenge.

Clovis Racetrack and Casino, one of the companies seeking to build a racino on the outskirts of that Eastern New Mexico community, has filed a motion to intervene in the Hidalgo Downs case, as well as a motion to dismiss the petition.

The company is represented by Albuquerque attorney Robert Doughty III, who formerly served as Martinez’s chairman of the Racing Commission. Doughty has since been appointed by the governor to the University of New Mexico Board of Regents.

Clovis Racetrack and Casino is headed by Shaun Hubbard, grandson of R.D. Hubbard, former longtime owner of the racino in Ruidoso Downs and one of the original owners of the license for the track and casino in Hobbs.

R.D. Hubbard, his wife and Hubbard companies have been major campaign contributors to Martinez.

Investors in L&M Entertainment, which is also seeking to build a racino in the Clovis area, and Coronado Partners, which has proposed a track and casino in Tucumcari, also include major political donors to the Republican governor.

Full House Resorts, a Las Vegas, Nev., company, is the third applicant that has proposed a racino in the Clovis area.

The state’s existing tracks oppose a new racino. They have cited an overall decline in the racing industry, a reduction in the number of New Mexico-bred horses and a projected drop in their casino revenues if more competition were allowed.

If the Racing Commission doesn’t make a licensing decision by the time she takes office, Gov.-elect Michelle Lujan Grisham could allow the process to continue, restart it or postpone indefinitely the issuance of a sixth track license.

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