Governor encourages consultation with Tribes over racing machines

11.15.2021 Dean Rhodes Gaming

By Dean Rhodes

Smoke Signals editor

SALEM – Gov. Kate Brown addressed a potential expansion of gaming in the state at a proposed destination resort near Grants Pass by urging the Oregon Racing Commission and its staff to conduct “meaningful consultation” with the nine federally recognized Tribes.

“Thank you for your work on behalf of Oregonians to carry out the statutory responsibility of the Oregon Racing Commission,” Brown wrote to commissioners on Tuesday, Nov. 9. “I write today to emphasize the importance of one of those responsibilities: The statutory obligation to meaningfully consult with Tribes on issues that may significantly impact them.”

The Oregon Racing Commission, established in 1933, is a five-member board regulating all aspects of the pari-mutuel industry in the state, including racing and on- and off-track wagering “for the good of the horses, the horsemen and women, the bettors, the licensees and the citizenry,” states the commission’s website. It currently has four members and is chaired by Diego Conde of the Conde Law Group in Lake Oswego.

In response to Brown’s letter, the commission’s scheduled Thursday, Nov. 18, report on Grants Pass Downs has been postponed until its Dec. 16 meeting.

Six Tribal leaders, including Grand Ronde Tribal Council Vice Chair Chris Mercier, signed an Oct. 6 letter to Brown and Oregon legislative leaders to express concerns about a new generation of historic racing machines that may be introduced into the Oregon gaming landscape at the proposed Flying Lark at Grants Pass Downs.

Dutch Bros founder Travis Boersman has submitted an application to state regulators to build the entertainment center adjacent to his Grants Pass Downs racetrack. The centerpiece will be more than 200 historic racing machines that allow guests to bet on horse races that have previously occurred on machines that are similar to slots.

While the state Constitution prohibits off-Reservation casinos, the Flying Lark seeks to take advantage of a 2013 law that allows commercial horse tracks to offer betting on historical horse racing machines.

Accompanying the letters, Tribal leaders submitted two studies by C3 Gaming Consultants Consortium and ECONorthwest that estimate the introduction of the historic racing machines at Grants Pass Downs will siphon off revenues currently being made by the Oregon Lottery and Oregon Tribes to the tune of $13 million and $6 million, respectively.

The ECONorthwest study also estimates that if the machines expand in the same numbers to the other four fairgrounds race tracks in Union, Prineville, Tillamook and Burns that the lost revenue will increase to $62 million for the Oregon Lottery and $31 million for Tribes. In addition, if the machines expand into the 11 off-track betting locations operated throughout Oregon by Grants Pass Downs at more than 200 machines per site, the losses could increase to $174 million for the Oregon Lottery and $86 million for Tribes.

“In the first scenario, Tribal income would fall approximately 5 percent,” the ECONorthwest study states. “In the second, where machines appear at all racetracks in the state, the amount Oregon Tribes earn from gaming and use to pay for necessary Tribal services would fall about 23 percent. With the third scenario, the loss would be 72 percent.”

Historic racing machines are electronic gaming devices on which a player places a wager and presses a button. A video showing the last few seconds of a race that occurred previously is displayed and prizes are awarded.

“For all intents and purposes, an (historic racing machine) is a video slot machine,” the ECONorthwest study states. “Gamblers insert money, select an amount to bet, press a button and watch a brief animated display. Once the display stops, the gambler learns if they won or lost their bet.”

The machines were originally introduced into Oregon at Portland Meadows Racetrack, which closed in 2019 and was subsequently demolished. The machines did not have a significant impact, according to the C3 study, because of the limited library of game titles, lackluster facility where they were located and general decline in interest in horse racing.

However, historic racing machines have undergone “significant” improvements in design, technology and marketing appeal, C3 states, and points to their introduction into gaming markets in the Midwest to bolster its contention that they will negatively affect Tribal casino and Oregon Lottery revenues.

 “Given the number of racetracks and OTB facilities in Oregon, the introduction of these new machines will alter the competitive landscape, and they are expected to cannibalize gaming revenue from the Oregon Lottery and Oregon Tribal casinos,” the C3 study states. “What policy makers must ask is do they want an expansion of gaming in the state and, if so, how will this increase in supply impact existing (Oregon Lottery) operations and Tribal casinos.”

Boersma offered a study that estimates Grants Pass Downs and the Flying Lark would generate more than $10.7 billion in spending in southern Oregon over 30 years of operation.

Ultimately, the ECONorthwest study concludes, if Grants Pass Downs and the Flying Lark are unable to increase the number of gamblers and the amount Oregonians gamble, the money it earns from historic racing machines will come at the expense of the Oregon Lottery and Tribes.

“It was nice to finally receive a letter from the governor in response to our concerns,” Grand Ronde Tribal member and lobbyist Justin Martin said. “That being said, it has still been both frustrating and confusing because we really don’t feel like our concerns have been taken seriously up to this point, and if we are even being accurately understood by the administration staff. We have continually reached out to Gov. Brown’s staff over the past year and until the Tribal op-ed (Oct. 20 in The Oregonian) it doesn’t even seem as if anyone was interested in hearing about this critical issue, especially some of her agencies. We absolutely understand the circumstances surrounding a pandemic, but these issues are still front and center for Indian Country and the state of Oregon.”

Although Brown said she will not tell Racing commissioners what to do, she expects them to follow Oregon’s Tribal consultation statutes. “Although it is not my role as governor to weigh in on agency licensing decisions, it is nonetheless my expectation … the Oregon Racing Commission will satisfy its statutory obligation to meaningfully consult with Tribal governments,” Brown wrote.

“Tribes really want there to be a pause with the ORC approving a full-blown private casino,” Martin said. “This is not asking much because as well all know that private casinos in Oregon are banned by the Constitution. We, as Tribes, aren’t asking for the governor to turn down this proposal or to have the ORC deny this application at this point in time. We are merely just asking the governor and the state to ‘take a deep breath’ and do true consultation with Tribes. We should also be looking at the issue and how it impacts governmental gambling, both Tribal gaming and the state Lottery, and how a decision of this magnitude would impact us, local business owners and the future of gambling in Oregon.

“The bottom line is this … there is no question, legally or by anyone looking at plans for the slot machines that the Flying Lark wants to install, that this would constitute a private casino. As responsible governments, we should be taking a deep breath, looking at all sides of the issue, and make wise and informed decisions for the benefit of Tribes and all Oregonians in the future.”