Racing Commission audit faults ambiguous gaming laws in Oregon

By Dean Rhodes

Publications coordinator

SALEM – An audit of the state Racing Commission released Wednesday, Aug. 9, by the Oregon Secretary of State Audits Division faults “ambiguous” state gaming laws that pose a risk to the state’s economic interests and sovereign Tribal nations.

“As technology changes, laws and rules need to be updated to minimize conflicts between existing statutes authorizing gambling on horse races with Oregon’s constitutional prohibition of casinos and limitation of lotteries,” the audit states.

In February 2022, the Oregon Racing Commission voted unanimously to deny TMB Racing 225 slot machine-like historic horse racing machines at the planned Flying Lark entertainment complex adjoining the racetrack at the Josephine County Fairgrounds in Grants Pass.

The decision was largely based on an opinion by the Oregon Department of Justice that categorically stated that TMB Racing’s plan violates the Oregon constitutional prohibition against casinos.

TMB Racing, a company formed by Dutch Bros Coffee co-founder Travis Boersma, drew opposition from the state’s Native American Tribes, including the Grand Ronde Tribe, which argued that allowing historic horse racing machines at the Flying Lark would be unfair since only Tribes are allowed to operate casinos in Oregon. Their approval, Tribes contended, would hurt not only Tribal casino revenues, but the Oregon Lottery as well.

After receiving a letter from Oregon Tribal representatives objecting to the racing machines, then-Gov. Kate Brown told Oregon Racing Commission members that they had a “statutory obligation” to consult with the Tribes. She also suggested that the commission seek a formal legal opinion from the Oregon Department of Justice on the legality of Boersma’s plans.

Boersma originally hoped to open the Flying Lark by October 2021 and then rescheduled to February 2022. With the Department of Justice ruling part of his business plan unconstitutional, he withdrew his business proposal.

Former Oregon Secretary of State Shemia Fagan announced in February 2022 that an audit of racing oversight and regulation by the Oregon Racing Commission would be in her office’s 2022-23 audit plan.

The Racing Commission collected approximately $7.8 million in revenues and more than $1.4 million went into the state’s general fund in the 2019-21 biennium.

“The controversy around the Flying Lark’s request … highlighted the contention among the state, Tribes and private industry, revealing various concerns and complexity around constitutional allowability and regulation authority over such gambling,” the audit states.

The audit recommended that the Oregon Legislature should consider, with stakeholder and Tribal input, providing additional clarity around the definition of a casino in state statutes. It also suggested the Legislature set specific limitations on user interfaces and player experiences for online and physical gambling products.

The audit also found delays in filling and replacing Racing Commission commissioners, ways to increase oversight and transparency of funds allocated to support the horse racing industry and limited documentation maintained of the commission’s reviews of historical horse racing machines.

“Everyone benefits when our laws are clear and fair,” said Secretary of State LaVonne Griffin-Valade. “The audit points out important areas of ambiguity that the Racing Commission, legislators and the governor’s office can address to ensure we have clarity, a fully staffed oversight commission and appropriate stakeholder input in our gambling statutes and enforcement.”

To read the full audit, visit the Oregon Secretary of State’s website.