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Other states fuel rise of online horse race betting in ND

BISMARCK -- More than a decade after legal issues left North Dakota's horse-betting industry in shambles, online wagering is on track to reach $600 million this year, generating more money for the state and horsemen, the head of the state Racing ...

BISMARCK -– More than a decade after legal issues left North Dakota’s horse-betting industry in shambles, online wagering is on track to reach $600 million this year, generating more money for the state and horsemen, the head of the state Racing Commission said Tuesday.

“Make no mistake about it, North Dakota has now become an important player in international wagering markets,” Gunner laCour told the Legislature’s interim Judiciary Committee.

Total online wagers, or “handle,” through the state’s 12 licensed account deposit wagering (ADW) companies jumped more than fivefold over the past five years, from about $82 million in fiscal year 2011 to more than $482 million for the year ending June 30, 2015, according to the commission’s biennial report.

LaCour said account wagering bets already have totaled $405 million during the first seven months of this fiscal year.

He attributes the steep increase primarily to the state’s strict regulatory standards. The commission requires background checks on ADW companies and their principals and employees, as well as a review by the attorney general’s office and independent monthly auditing.

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More than 99 percent of the bets are coming from outside the state, laCour said. Many jurisdictions have decided to do business with North Dakota’s ADWs because of the regulations, including some of the largest international wagering jurisdictions such as France, Sweden and Hong Kong, he said.

The Racing Commission taxes the bets at a rate of .0025 percent, splitting the proceeds equally between four funds: the state’s general fund, a breeders fund, a promotion fund that supports horse racing meets at the state’s two tracks in Fargo and Belcourt and a purse fund that provides prizes for the races.

During the last two-year budget cycle, account wagering generated $805,000 for the promotion fund, $503,500 for the purse fund, $232,000 for the breeders fund and $457,561 for the general fund, which laCour noted was $68,317 more than the commission’s general fund appropriation.

“This is an excellent report,” said Rep. Pamela Anderson, D-Fargo.

LaCour also updated lawmakers on the North Dakota Horse Park, which will host racing during three weekends in July after being closed last year for the third year since racing began at the Fargo track in 2003.

The commission approved the race dates on the condition that the two entities that own the track work out a plan to pay off debt from infrastructure that the city of Fargo installed for the park.

Horse Race North Dakota has taken over full control of the park and, with new partner Lien Games Racing LLC, is looking at ways to boost revenue, including possibly expanding off-track betting to sites in Bismarck, Jamestown and Dickinson, laCour said. Currently, only Fargo and Grand Forks have OTB sites.

Many of the OTB sites closed with the collapse of Fargo-based Racing Services Inc., which was forced into receivership in 2003 during a criminal investigation that accused owner Susan Bala of taking bets illegally. The year before that, total OTB wagers in the state totaled $214.5 million.

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Bala’s 2005 conviction was later overturned by a federal appeals court for lack of evidence. A federal judge also concluded that the state had improperly collected taxes from Racing Services for several years on account wagering, because state lawmakers didn’t explicitly approve taxing those bets until 2007.

LaCour said account wagering had bottomed out at about $50 million annually, and he expects the current rise will plateau at some point, noting the industry is getting saturated with betting sites.

“We can’t keep growing at that rate,” he said.

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