The future of racing in Colorado is in doubt, as operators of Arapahoe Park told the Colorado Horse Racing Association this week the track will shutter without the passage of Senate Bill 22-117.
The bill seeks to better define the term “gross receipts” as applied to money wagered on Colorado races from out-of-state.
The bill is summarized this way on the Colorado's General Assembly site:
“Current law prohibits a racing or simulcast facility licensee for the racing of greyhounds or horses to take more than a certain percentage of the gross receipts of any pari-mutuel wagering on the races or simulcast races. The bill states that, when 'gross receipts' is used in reference to money received by a licensee from an out-of-state simulcast facility, the term means money received by the licensee after the out-of-state simulcast facility has deducted the costs, signal fees, and taxes that it is required to pay to its regulatory and taxing authorities.”
The impetus behind the bill seems to be a change instituted by the state's Division of Racing Events partway through last racing season in the way the division calculates how much money the track may keep and how much is owed to other entities, including the horsemen's purse account. Attorney Tom Downey, who appeared at the meeting on behalf of Arapahoe Park, said the bill seeks only to formally define gross receipts in the same way they have been interpreted in practice for years.
“It is not a redefinition of gross receipts,” said Downey. “What is in the statutes currently, there is no definition of gross receipts so this creates a definition.
“The way the track has been run, the way the state auditors, for nearly two decades have interpreted the current statutes … [they've] interpreted the statute in exactly the same way.”
Downey described the reworking of the payout formula by the state's racing commission as “a bomb dropped on us in the middle of the season.”
Donia Amick, director of the Racing Events Division for the Colorado Department of Revenue, appeared on a teleconference meeting with the Colorado Horse Racing Association earlier this week, but because the legislation is pending, declined to give many details about the differences between the formula previously used to calculate the horsemen's portion of money wagered out-of-state and the formula the division began using sometime last year. Amick would not speculate on the difference in potential weekly or yearly payout to the horsemen's purse account under one formula versus the other, and would not comment on why the division had changed the way it required that money to be divided.
The closest anyone got to really defining the differences between the two methods of calculation was an analogy by Downey likening the process to purchasing a car out of state and bringing it into Colorado. Buyers pay sales tax on the vehicle in the state purchased, but do not pay it a second time when bringing the car into Colorado. Downey equated the division's new formula with double-taxing the income from out-of-state wagers on Colorado racing.
Shannon Rushton, director of racing and racing secretary for Arapahoe, said at the meeting he had been told the track would owe another $500,000 in taxes and money due to the horsemen's purse account under the commission's new interpretation of the formula in addition to what the track already pays.
Rushton also revealed the track lost $900,000 operating live racing two years ago, and $700,000 before that. Prior to the COVID-19 pandemic, it was just about breaking even – which raised questions for some horsemen as to whether Arapahoe would keep going even with the aid of the bill.
If the bill doesn't become law, the track has indicated it will shut down. Rushton said he has been instructed not to put out condition books for this year's racing season – just in case.
The Colorado Horse Racing Association voted 5-1 on Tuesday to oppose the bill, with two abstentions. Among other issues, the organization said it received no request from any of the parties for input from the horsemen.
“We gave Bally's Arapahoe Park and the bill's co-sponsors in the Senate every opportunity to provide any numbers at all that might demonstrate why this bill is necessary and they would not do it,” said Kim Oliver, CHA President, in a release. “This proposed legislation was filed without ever notifying or consulting with the horsemen's group despite the fact that the horsemen's purse account would be impacted.”
Amick did acknowledge during the Monday meeting that the Department of Revenue, together with the Thoroughbred Racing Protective Bureau, is in the middle of an inquiry as to whether Arapahoe has previously been paying into the horsemen's purse account improperly. Jim Mulvihill, CHA interim executive director, said he was told the results of that inquiry should be available in a couple of weeks, though it's not clear whether that will be too late to have an impact on the legislation.
SB22-117 is currently scheduled to be heard by the state's Finance Committee on Feb. 23 at 1:30 p.m.
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