Racino bill gets first look, has uncertain future

With the state facing a projected $5 billion budget deficit, a lot of people thought passing bills to expand gambling would be a slam dunk at the Capitol.

But a proposal to allow slot machines at the state's two existing horse racing tracks -- the so-called racino bill -- appeared to be in trouble Thursday after a long-awaited committee hearing. There was no vote, and Republican supporters of the measure say they're not sure they can advance it in either the House or the Senate.

Opposition to expanded gambling is bipartisan and based on several factors. For many, it's a moral issue. But Rep. Larry Howes, R-Walker, said he doesn't like the racino bill being pitched as a way to save the horse industry.

"A lot of us complained about the federal government helping General Motors, and helping other entities and bailing things out. I don't think it's our job to bail out any industry," he said.

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Whatever the reason for the opposition, the racino bill has stalled out, even though Gov. Dayton has said he could support it under certain circumstances.

Republican legislative leaders have largely turned their backs on gambling revenue as they argue that state government is already overspending, and should live within its existing financial resources.

That's why this year's version of the racino bill would create a dedicated fund for job creation. Rep. Bob Gunther, R-Fairmont, the bill's chief sponsor, said the Minnesota Future Fund would get $135 million in revenue from the racino every two years.

"Ever since I've been elected to this body, the amount of money has slowly been eroded for economic development, to the point right now that if we had street lights at the borders of our state, they would all be bright red coming in and bright green going out," said Gunther. "We have no ammunition to compete with our neighboring states."

Gunther, who chairs the House Jobs and Economic Development Finance Committee, took about an hour and a half of testimony in what he called an informational hearing. Former state Sen. Dick Day, who resigned his seat in late 2009 to lobby full time for a racino bill, sounded concerned about its prospects.

"Come on, let's get with it, people. Don't be held up by 43 lobbyists at the Capitol. Please don't," said Day. "This state is out of money. We're not saying to put it in the general fund. But please use it to restore the Capitol. Please do it to buy some books, early childhood. But the biggest thing is jobs."

But racino opponents, including the Indian tribes that currently operate the only casinos in Minnesota, are also concerned about jobs. Karen Diver, chairwoman and CEO of the Fond du Lac band of Lake Superior Chippewa, said her tribe doesn't want to lose any of the 2,200 jobs it currently provides in northeastern Minnesota.

"There is this perception that is being pushed that gaming is unlimited wealth and that pie will continue to grow," said Diver. "We know just from within our own industry that this market is saturated, and that the pie will not get bigger. It will just get cut into smaller pieces."

After the hearing, Rep. Gunther said committee members would debate and vote on the bill later. But he also said he's not sure there are enough votes to advance it.

The lead Democrat on the committee, Rep. Tim Mahoney of St. Paul, made a similar assessment. Mahoney said he'll be one of many votes against racino.

"I've always voted against the expansion of gambling in any way, shape or form. I've always believed that gambling harms our state," said Mahoney. "And frankly, the tribal nations know I'd probably vote to take away gambling if I could."

Earlier in the week, a scheduled Senate hearing on the racino bill was abruptly canceled. The sponsor of that bill, Sen. Dave Senjem, R-Rochester, said he's also not sure if he has enough votes.

"It's a close vote. We're going to need help, one or two [votes]," said Senjem. "Or maybe they're with us today, gone tomorrow. It's a tight vote, but let's run it up and see what happens."