Canterbury Park and tribe cut deal on gambling

The state's premier horseracing track is joining forces with one of the state's wealthiest tribes in a deal that will enrich purses at ailing Canterbury Park while strengthening the Shakopee Mdewakanton Sioux's local monopoly on casino-style gambling.

After years of expensive political fighting, Canterbury has agreed to ditch its longstanding plans to add video slot machines that would create a racino. In return, the tribe's nearby Mystic Lake casino will pay tens of millions of dollars to boost track winnings over the next decade.

The two say they also will work together to fend off future attempts to expand gambling in the metro area.

"This is a great day for Minnesota horse racing and for our organizations," said Randy Sampson, Canterbury's president and CEO. "This partnership sets aside long-standing political differences over gaming and allows us to devote our attention and resources to great horse racing and rebuilding a prosperous horse industry in Minnesota."

The new agreement forges a powerful alliance between Canterbury and the Shakopee tribe, cutting out of the deal Running Aces harness track and Minnesota taxpayers.

Racino backers had long touted their plan as a boon for the cash-strapped state, one that would at once break the tribal monopoly on casino gambling and yield $100 million in new gambling tax revenue the state could use to repay public schools or even build a new Minnesota Vikings stadium.

Now, Minnesota taxpayers will get nothing. Tribal casinos pay no state taxes.

"It's a sad day for Minnesota," said former state Sen. Dick Day, a lobbyist for Running Aces and former racino lobbyist for Canterbury.

Day said Canterbury settled for a fraction of what the track could have made as a racino. The tribe "paid a few million to Canterbury to shut them all up," he said.

Ending the feud

The agreement requires Mystic Lake to pay Canterbury $75 million over the next decade to increase race purses. The casino will pay $2.6 million this year, which will grow to $8 million a year by 2022. The casino and track also will create a new partnership to jointly market both attractions, for which Mystic will pay the track another $8.5 million.

The casino and the track feuded for years over Canterbury's attempts to add slot machines, which Mystic Lake said would cripple its business. Canterbury and Running Aces spent millions trying to persuade legislators while tribal casinos spent millions asking legislators to hold the line on gambling.

Casino and racetrack executives said their costly battle brought them to the realization that by becoming allies they could better achieve their core missions: making Canterbury a thriving racetrack and Mystic Lake a top casino destination.

"There's a natural synergy between Canterbury Park and Mystic Lake Casino Hotel that we're very enthusiastic about developing," said Edward Stevenson, president and CEO of SMSC Gaming Enterprise, which operates Mystic Lake.

Canterbury says it will now stand with the casino-owning tribes to actively fight any new gambling ventures, such as a casino at the Mall of America or downtown Minneapolis.

"We will oppose new forms of gaming that are inconsistent with this agreement," Sampson said.

The agreement still awaits approval from the Minnesota Racing Commission. Katharine Tinucci, a spokeswoman for Gov. Mark Dayton, said the governor has yet to review the contract. As a candidate, Dayton campaigned to build a state-run casino at the Mall of America as a means of raising revenue. Tinucci said further gambling expansion is not a top funding mechanism for Dayton.

Legislators who favored the racino proposal were disheartened by Monday's agreement, saying it strengthens the hand of tribal casinos, which already operate largely outside the state's purview.

Gambling at Minnesota's 18 Indian casinos totals billions of dollars a year and returns hundreds of millions of dollars to the casinos -- exactly how much is not known. The gambling compacts that the tribes signed with the state have no expiration date and require no sharing of revenue.

"It's a perfect example of what happens when you have a highly profitable monopoly," said Sen. Sean Nienow, R-Cambridge, who led an unsuccessful effort to use racino revenue to pay for the Vikings stadium. "Mystic Lake has essentially unlimited funds, and clearly decided that paying what essentially amounts to a bribe -- nearly $100 million -- was a better financial proposition than risking the possibility of competition. This is what happens when you mix money, gambling and politics."

Day said he believes the tribe raced to cut a deal, fearing the growing acceptance of racino in the Legislature. Polls showed that racinos had popular support among Minnesotans.

Now, Day said, it would be extraordinarily difficult to pass a racino proposal.

"Who is Canterbury to tell the taxpayers of Minnesota that we can't have a casino some day?" said Day, a Republican and former Senate minoity leader.

Eliminating uncertainty

Sampson said Canterbury only wanted to expand the gambling operation to increase purses and enhance the horse racing experience for owners and fans.

"The racino idea would have provided more of a business opportunity for us, so that was a tradeoff," Sampson said. "But obviously the certainty is what makes this a great deal for us. We don't have to wonder for the next 10 years if we are ever going to get racino."

Sampson said the new money allows the track to eventually double its race winnings. That will vault the struggling Canterbury into the top 25 tracks in the nation for purses, drawing higher quality thoroughbreds, trainers and jockeys.

"This is a huge deal," said Dan Kjorsvik, a racehorse owner from St. Louis Park.

A few years ago, Kjorsvik had 20 racehorses, but the soaring cost of ownership and sagging purses at Canterbury forced him to trim his stable to six.

"Anything to help supplement the purses and keep us going, I am all for it," Kjorsvik said. "I could definitely see myself getting back to where my numbers were a few years ago."

BY THE NUMBERS

18

Indian casinos in Minnesota

$15 billion

What those casinos bring in each year.

$600 million

is returned to the casinos.