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Off to the races? Amendment 68 could help Mesa County economy

By Charles Ashby
August 24, 2014

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A measure on this year’s ballot to create up to three casinos with horse racetracks in Colorado could become an economic boon to the Grand Valley, at least if local racehorse trainer Mark Schultz has anything to say about it.

Amendment 68 calls for allowing the state’s only horse track, Arapahoe Park in Aurora, to bring in casino gambling immediately, something it says it needs to support the horse racing side of its business in Colorado and stave off casino competition at its parent company, Twin River Casino in Rhode Island.

The measure also would allow for similar so-called racinos — a combination of live horse racing and casinos — in Mesa and Pueblo counties, but only after a racing track has been in operation in those locations for five years.

And since Arapahoe Park now is saying it’s not interested in opening up racinos in those two counties, a loose coalition of racehorse lovers in the valley is looking into the possibility of building a racino itself.

“This place is ideal for this,” said Schultz, who operates a racehorse training facility near 21 and L roads. “The way the race dates are, a fall meet here and you’d have a monopoly on the racing industry pretty much in the West because there’s nothing running between here and California. You’d have all the horses you’d want.”

PAST EFFORTS

In 2012, the managers of Arapahoe Park, Mile High Racing & Entertainment Inc. told Grand Junction residents and officials that it “absolutely” would bring horse racing back to the valley if the Colorado Legislature would approve a measure it was then considering. That bill, HB1280, would have allowed it to open video lottery terminal casinos at its Aurora track and at off-track betting parlors it operates in Pueblo and Mesa counties.

The bill didn’t pass, prompting the park and its parent company to push for this year’s amendment to expand casino gambling beyond the three mountain towns where it is legal in Colorado.

But now, racetrack officials say they have no interest in expanding into Mesa and Pueblo counties, and instead are solely focused on bringing casinos to its facility in Arapahoe County, track spokeswoman Becky Brooks said.

“Arapahoe is not interested in building over there, but there are people who are interested in building in Mesa County,” Brooks said. “We included (Mesa and Pueblo) in the ballot language because there had been interest over there, in the economic development and the jobs.”

Opponents of the ballot measure, who are wholly financed by the largest casino companies that operate in the state, say the amendment is a gimmick designed to benefit a single company.

That campaign, Don’t Turn Racetracks Into Casinos, has had difficulty pinning down who owns Arapahoe Park.

In 2005, the Rhode Island racino was ordered by state officials there to sell after two of its top executives were indicted and later convicted in federal court of trying to bribe the speaker of the Rhode Island House of Representatives.

The executives tried to give the speaker $4 million in exchange for blocking the opening of a nearby tribal casino and passing a new state law to allow it to install slot machines, something state voters later approved.

As a result, the track was purchased by several holding companies, but its current owners are unknown since 2011 when it emerged from bankruptcy protection, said Mark Grueskin, a Denver attorney hired by the opposition to discover who owns the company.

Arapahoe Park is owned by a series of shell companies, starting with Racing Associates of Colorado, Grueskin said. That company is 100 percent owned by Mile High Racing USA, which is wholly owned by Twin River Management Group Inc., he said.

It doesn’t end there, however.

That management group is wholly owned by Twin River Worldwide Holdings Inc., and no one knows who owns that company, Grueskin said.

As a result, the opposition argues that not only would the amendment cut into gaming profits in Central City, Black Hawk and Cripple Creek, but that Colorado money will leave the state to hands unknown.

Schultz, however, says that’s already the case. The major casinos that operate in the state all are owned by out-of-state interests, so profits from them already leave Colorado, he said.

Having a locally owned racino in Grand Junction, probably somewhere near Interstate 70 west of town, not only would create jobs, but spur the economy in other ways, such as creating more customers for area restaurants and hotels and selling hay and other necessities associated with horse racing, he said.

ECONOMIC BENEFIT

Currently, taxes from casino gambling fund a multitude of entities and projects beyond direct impact payments to the communities that have casinos, including community colleges, historic preservation and economic development programs.

In 2013, $92.7 million went to those things, an amount opponents say the amendment would put at risk because Front Range gamblers would go to Arapahoe Park rather than the gambling towns.

“If you take away the bulk of the business from the mountain casinos, they’re going to start shutting down,” said Katy Atkinson, a political consultant hired by the opposition to help fight the ballot measure. “Legislative Council is estimating that in year one they would lose 30 percent of their business, which would probably mean that some of the smaller ones would shut down. And it’s likely to snowball.”

The ballot measure calls for earmarking 34 percent of all gross revenue from the new casinos to public schools. Proponents say that revenue could be as high as $114 million a year from a facility in Arapahoe Park alone.

Opponents doubt that figure because it is more than all the state’s casinos pay in gambling taxes combined.

Still, if it proves to be true, the park could augment its annual income by more than $200 million, money it says it needs to provide for better purses in horse racing.

Schultz said that’s part of the problem with the sport. Back in the late 1970s and early 1980s, Colorado had numerous horse and dog tracks, including Uranium Downs at the Mesa County Fairgrounds.

Nowadays, Schultz finds himself traveling to California to race his quarter horses, although he occasionally still races at Arapahoe Park, which mostly offers thoroughbred racing.

Locating a track here not only would attract horse owners and spectators from across the Western Slope, but surrounding states as well, some from as far away as Idaho, Arizona and Montana, Schultz said.

“There’s investors waiting right now to see if this passes,” he said. “But the key to racing is gaming. These racinos are a huge economic benefit where they’re at. Riudoso Downs in New Mexico wouldn’t be around without it. The businesses there, they pay the taxes on the track to keep it there. If that track left, it would fold that town right up.”

Even though the measure requires a horse track to be in operation for at least five years before it can expand into casino gambling, Schultz said he’s confident investors would be willing to wait that long.

Once a casino could open, revenue from it would be used to increase prize money, which would attract more racing and more spectators, he said.

But Atkinson said there’s a catch. Once a company gets a license to open a casino, there’s nothing in the ballot measure that requires them to continue offering horse racing at Arapahoe Park or anywhere else.

The measure would allow the casinos to have “the greater of” 2,500 slot machines or whatever amount is requested by the racetrack and approved by the Limiting Gaming Control Commission. Atkinson said that’s outrageous, considering that the state’s largest casino has only 1,400 slot machines.

 

BALLOT CAMPAIGN

The efforts to get the measure passed or killed have already generated millions of dollars in campaign donations.

On one side, Mile High Racing has put about $4.1 million into the campaign coffers of the proponents, Coloradans for Better Schools. To date, it is the only entity to donate money toward that campaign.

On the other side, a slew of out-of-state casino chains, such as Isle of Capri and Ameristar, which operate major casinos in Black Hawk, have contributed a combined $9.1 million toward the opposition. That’s more than has been given in this year’s races for governor, attorney general and every other elected state office combined.

While the opponents have purchased full-page ads in newspapers across the state, the proponents are using other marketing techniques, such as sponsoring the Grand Junction Area Chamber of Commerce’s annual golf tournament next month.

Arapahoe Park is one of two main sponsors of that event, proceeds for which go to fund the chamber’s small-business development programs, chamber President and Chief Executive Officer Diane Schwenke said.

While the racetrack has been a chamber member for about three years — just before it pushed for the video lottery bill in the Legislature and got chamber support for it — the sponsorship came before chamber’s board of directors took a position on the ballot measure.

Schwenke said its sponsorship of the tournament was welcomed, but a bit awkward.

“There were no strings attached to that, and we made it absolutely certain that there wouldn’t be,” she said, referring to whether Arapahoe Park intended to use that sponsorship solely to campaign for the measure. “They will have their name on things, and we do allow sponsors to put things in their (swag) bags, but (the use of campaign advertising) hasn’t come up. We want to make sure there is no quid pro quo. We told them, ‘Just because you’re doing this for us, don’t expect that we will do something for you,’ and that is not the case.”

The park paid $3,000 to be an event sponsor, the same amount the other event sponsor, Shaw Construction, paid.

After hearing from representatives on both sides of the measure Thursday, the chamber’s board of directors overwhelmingly voted to support it, but contingent that whoever builds in Mesa County include an event center along with its racetrack and casino, Schwenke said.

She said while there’s nothing in the ballot measure to force track owners to build that center, it’s something the chamber would push for if such a project goes forward.

“There is no guarantee in the ballot language itself, but should this pass now we are on the record that this is what we will push for, and we will urge anyone who’s engaged in the activity that this is what needs to happen,” Schwenke said. “When you look at the negotiations for the impact fees and the discussions that would go on with any local government, it can be definitely part of the conversation.”

In 2003, the last time a similar measure to expand gambling was placed before voters, 81 percent of Coloradans — 78.5 percent of Mesa County residents — rejected it.

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