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

The Michigan Senate passed its historical horse racing bill last week, but that doesn’t mean the HHR legislation has a clear path to the finish line.

The same day a substitute was offered in committee Nov. 2, Senate Bill 396 passed 27-8 with bipartisan support.

Despite changes made in an attempt to address their concerns, state Sen. Dan Lauwers tells Playinmichigan that casinos and tribes in the state still oppose the legislation.

But the bill didn’t advance because a resolution had been reached to clear the opposition. The bill moved because Lauwers, the sponsor, also serves as Senate Majority Floor Leader and had the sway to push it forward. Other key senators also support the legislation.

“We moved it because if we wanted any chance to get it done before the end of the year, we had to move it and continue the momentum for an industry that is fighting to stay alive,” Lauwers said.

The bill was sent to the House, where it will need to overcome the casino opposition and a short time left in the legislative session.

Casinos refuse to engage with HHR sponsors

This is the third consecutive year Michigan lawmakers have attempted to pass an HHR bill. Casino opposition killed it the past two years.

To get casino representatives to drop their opposition, the bill’s sponsors tried to get them to discuss what they want to see in a bill. They held several meetings since the bill was introduced in May, but none of them were productive.

Lauwers is frustrated that lawmakers worked with the casinos to get them internet gambling and Michigan sports wagering. But casinos won’t work with lawmakers to save horse racing. Lauwers said:

“We’ve worked with casinos in the past and asked them to work with us on this. We’ve had conversations with them and tried to address the concerns we’ve heard over the years. But when we asked them for specific changes they wanted, they never gave specifics. So we moved the bill forward, and we want to continue discussions with casinos as it moves its way through the House.”

Casinos seem concerned with historical horse racing allowing tracks to become racinos. Although HHR machines offer pari-mutuel wagering based on past racing results, they can play a lot like slot machines.

“In no way, shape or form are we looking to hurt the casino industry with HHR,” Lauwers said. “We are not looking to create a racino. We are not looking to really compete with casinos. We just want to make sure the horse racing industry, which was once a multibillion-dollar industry in this state, can actually survive.”

Changes made in Michigan HHR substitute

Although the casino industry didn’t ask for any changes, the sponsors tried to anticipate changes it would want based on past discussions. Key changes in the substitute include:

• Limits racetracks in Michigan to three.
• Limits each track to 1,500 HHR terminals.
• Added that racetracks can’t be within 40 miles of any tribal casino that has a hotel, nor any county listed as a competitive market in tribal compacts.
• Any new racetrack also can’t be located with 40 miles of another racetrack.
• Added the School Aid Fund and City of Detroit as destinations for HHR revenue.
• Increased the tax rate for HHR to 19% on net win, the same tax rate casinos pay on retail casino net win.
• A new definition of pari-mutuel wagering based on the definition passed in Kentucky earlier this year.

Although tribes also oppose HHR, they did provide feedback to the sponsors that they didn’t want any racetracks built in tribal exclusivity zones. One of the major barriers to passage is making sure HHR wouldn’t breach tribal gaming compacts.

Changing the tax rate and sharing revenue with the School Aid Fund and Detroit help address concerns from Gov. Gretchen Whitmer that, if HHR decreased casino gaming revenue, it would take tax revenue from those entities.

Future of Michigan horse racing at stake

When Lauwers introduced the bill, he said this was the final attempt and it needed to pass this year. That’s because the industry is on life support and won’t make it much longer without a new form of revenue.

Lauwers explained:

“The first form of gambling or wagering in this state in 1933 was at racetracks, building the backbone of what now is the gaming industry here in Michigan. We once had nine tracks, and now we have one. Nearly 40,000 people once worked within the horse racing industry. It’s not just the track. It’s an industry with breeders, trainers, farmers and veterinarians. And we’re trying to give them a new pari-mutuel wagering tool to be self-sustaining.”

The last operating racetrack in Michigan is Northville Downs near Detroit. And that track only offers standardbred harness racing. Thoroughbred racing no longer exists in Michigan. Thoroughbred horses bred in the state are sent off to other states.

However, in 2018,  AmRace & Sports LLC bought Sports Creek Raceway and pledged to bring thoroughbred racing back to Michigan. Sports Creek closed in 2014.

Lauwers said the operator will only restart the track with HHR, and time is running out. AmRace could move on and sell the location to developers who will put it to other use if the HHR bill doesn’t pass this year.

Meanwhile, Northville Downs recently was approved for 62 live racing days in 2022 by the Michigan Gaming Control Board. The season starts March 11.

Can Michigan pass HHR bill before year’s end?

Only six guaranteed session days remain on the Michigan legislative calendar, with three added days if needed.

Lauwers wanted to get historical horse racing through the Senate before the Thanksgiving break, which began Thursday. The legislature returns Nov. 30 to meet Tuesday, Wednesday and Thursday that week and the next.

The legislative session could end Dec. 9, or legislative leaders could decide to meet three more days the following week.

A lot will have to happen in a short time frame for the HHR bill to pass. But Lauwers remains optimistic. The House assigned the bill to the Regulatory Reform Committee.

“We feel we have a good pathway in the House,” Lauwers said. “We know some legislators who have backgrounds in the horse racing industry, so we feel pretty confident.”