Canterbury Park, Shakopee Mdewakanton Sioux cut deal that upends gambling debate

The catalyst for a landmark gambling deal cut between horseracing track Canterbury Park and the Shakopee Mdewakanton Sioux tribe was a minor bill that didn’t get a single hearing during the 2012 legislative session.

The bill, authored by Red Wing Republican Rep. Tim Kelly, would have opened up the state’s 20-plus-year-old tribal gambling agreements to not only allow new forms of gambling at tribal casinos — possibly including craps and roulette — but also authorize slot machines, or a racino, at the state’s two horseracing tracks. The catch: the racinos would be run by the tribes.

Kelly’s motivation was protecting one of the largest employers in his own district — the Prairie Island Indian Community’s Treasure Island Resort and Casino. In March, Kelly met with officials from Canterbury, which had been fighting to build a racino at its Shakopee track for more than a decade. But they had been repeatedly thwarted in their attempts over the years by opposition from a coalition of right- and left-wing politicians and the powerful lobbying arm of the tribes.

“He knew at that point that his bill wasn’t going anywhere,” Canterbury Park CEO and President Randy Sampson said of Kelly’s proposal. “Kelly’s specific plan wasn’t what ended up being the resolution, but the idea that he had to sit down was truly what got the ball rolling to begin with.”

What proceeded in the following weeks and months was a bipartisan effort, led by Gov. Mark Dayton, House Speaker Kurt Zellers and with support from Senate Minority Leader Tom Bakk, to craft a deal to essentially end the politically volatile and expensive Capitol debate over racino. Under the terms of the deal, Canterbury Park will end its long pursuit of slot machines in exchange for $75 million from the Shakopee tribe over 10 years to fatten its purses. The agreement also includes an extra $8.5 million from the tribe for joint marketing efforts. The deal is still subject to approval from the Minnesota Racing Commission, which has set a meeting for next Wednesday.

But possibly even more consequential to the Capitol sphere, the agreement requires Canterbury to oppose any kind of metro-area expanded gambling proposals – from a new casino at the Mall of America or in downtown Minneapolis to a state-tribal casino partnership. That also means blocking attempts to push a racino from the state’s other racetrack, Running Aces Harness Park, which got nothing out of the deal struck between the tribe and Canterbury. That part of the agreement has Capitol watchers split on what the future holds for expanded gambling talks in St. Paul.

“I think it will be virtually nonexistent,” GOP Rep. Pat Garofalo, chief author of a racino bill in the House this session, said of gambling debates at the Capitol. “We’ve taken care of all radioactive issues now. We’ve solved the budget deficit; we’ve solved the stadium issue; and now gambling. I guess we will have to fight about whether or not Pluto is a planet.”

How the gaming deal was done

It was only his first session at the Capitol, but thoroughbred horse breeder-turned racino lobbyist Jeff Hilger had managed to score a meeting with the governor not long after Canterbury officials met with Kelly.

Session 2012 had, thus far, not looked promising for the racino proposal. Carried originally by Senate Majority Leader Dave Senjem, the racino bill was yanked from its first hearing in the Senate Education Committee amid fear that the committee’s conservative members would kill it. In March, members of the State Government Committee threw several amendments at the proposal in a hearing, only to vote it down. Just a few days later the bill was revived for round two in the Senate Education Committee, but it was ultimately tabled for possible inclusion in an omnibus education bill.

Racino proponents made another attempt to get the controversial bill back in the mix, attaching it to a relatively obscure education bill in the Senate Finance Committee. The amendment, offered by Finance Chairwoman Claire Robling, passed on a 10-4 vote. But from there it stalled in the Rules Committee, where it was up to Senjem to move it forward. He said they didn’t have the votes.

“It became apparent that the racino bill was, if not dead, it was becoming quite a long shot,” Sampson said.

Hilger’s meeting with the governor was a plea for action, specifically from Hilger’s perspective as a horse breeder working in an ailing industry. Racing needed a shot of life, and Dayton had at one point seemed open to racino as a means for paying for a new Vikings stadium. But the stadium bill’s funding source had already been set in electronic pull tabs and bingo games, and the governor told Hilger that he didn’t think the Legislature had the votes to pass racino off the floor.

Dayton did say he was willing to lay the groundwork for a meeting between the Shakopee tribe and Canterbury to see if they could work something out. House Speaker Kurt Zellers took the lead on the other side of the aisle. “He didn’t really have a solution, but he wanted to eliminate that discussion for his own folks,” one gaming lobbyist said. “Suddenly they had bipartisan cover.”

“Let’s be honest, Mystic Lake and Canterbury have been fighting for years, and [Zellers] was instrumental in bringing them together,” Garofalo said. “I think not reaching this agreement would have meant both sides were rolling the dice.”

Over in the Senate, Senjem’s ability to push racino was hampered by his precarious leadership position. After the fall of former Majority Leader Amy Koch, Senjem was elected by a single vote to take over the reins of the caucus. All session he faced blowback and obstruction from the more conservative faction of his caucus, who would have preferred to see GOP Sen. David Hann as majority leader. It was Bakk who opened the door to the idea, Sampson said, also hoping to minimize what has historically been a caucus-dividing debate.

By the end of the session, it was clear to racino advocates that something had to be done soon. Some of the racino bill’s biggest champions in the Legislature, including GOP Sens. Claire Robling and Al DeKruif, and Republican Rep. Mark Buesgens, were retiring at the end of the year. In addition, members in both chambers were unsuccessful in multiple last-minute attempts on the floor to attach racino to the stadium bill.

“Some people didn’t vote for the amendment because they didn’t want to mess up the deal on the stadium,” Robling said. “But we didn’t have the votes to pass it even in its purest form. In reviewing the vote totals, I could tell we didn’t have the votes.”

The only time racino was successfully amended to the stadium was during a hearing in the Finance Committee, where GOP Sen. Sean Nienow attached it merely as a means to kill the bill. It was removed in the next committee stop.

Before long, Sampson arranged to sit down with Shakopee Business Council Chairman Stanley Crooks, who has been working with the tribe for more than two decades. Crooks and Sampson had become incredibly antagonistic toward one another after years of debating racino.

But the meeting was surprisingly cordial, Sampson and others said. It quickly became clear to the tribes that Canterbury genuinely wanted to revitalize the horse industry in the state, not just become rich off the proceeds from a new racino.“He truly, truly is a horseman,” Robling said of Sampson. “He was giving up a partial dream to keep a dream.”

“The fact that [Crooks] could give in is amazing, and you’ve got to give Randy Sampson credit for asking,” the gaming lobbyist said. “There had been some bad blood between those two over the years.”
The deal they negotiated would have two parts. First, the tribes would support a bill that would authorize Canterbury Park and Running Aces to increase the number of tables in their card rooms from 50 to 80 and increase the poker betting limit from $60 to $100. Then the two parties would work out the fine details of the latest agreement. When the deal was announced on Monday, Sampson said the tribe will add $2.6 million this year to the track’s purses, $5.3 million next year and eventually $8 million annually for 2018-2022.

What’s next for the Capitol gambling debate?

The deal will also prohibit Sampson and anyone else affiliated with Canterbury from supporting other metro-area expanded gambling proposals. In fact, they’ll have to actively oppose them. Sampson admits that will be a bit “awkward” after years of pushing for a racino.

That’s the part of the deal that Running Aces (and formerly Canterbury Park) lobbyist Dick Day says really gets under his skin. “The thing that really galled me is Canterbury now says they are going to stop everybody else, whether it’s a downtown casino or whether it’s a Mall of America casino or whether its Running Aces trying to do something,” Day said. “I can’t fathom that; I can’t go along with that. Minnesotans got screwed, that’s what I would say.”

Running Aces, which is owned by a wealthy East Coast hedge fund, was not included in the deal, but Sampson says that doesn’t stop them from doing something similar with the Mille Lacs Band of Ojibwe, which operates the Grand Casino Mille Lacs near their track. Day says it’s unclear if or how they will continue pushing for racino at the Capitol. “It will have to be called something else, because the racino name will be very difficult to talk about in Minnesota after this,” Day said.

By many accounts, Running Aces was merely riding on the coattails of Canterbury’s better-funded and organized efforts to push for a racino. It would likely take years for them to build up the organization that Canterbury had.

And with electronic pull tabs and bingo games now enacted as part of the new Vikings stadium, some are expecting a quiet gambling front at the Capitol next session. Canterbury and the Shakopee tribe were the two biggest spenders on either side of the gambling debate, and their partnership to oppose other gambling expansion will be formidable, sources say.

But few expect one of the most high-profile political debates to simply disappear as a result of the deal. For Day and others, the state could be looking for a new revenue source to fund the stadium very soon if electronic pull-tabs don’t generate enough money. “The pull-tab stuff is not going to fly and the governor and his revenue commissioner are suddenly going to be looking all around for money,” Day said. “That is going to open up this whole gaming thing all over again, there’s no doubt in my mind.”