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STATE-BY-STATE NEWS UPDATE: The Racing States/First Quarter ARIZONA The landmark deal, which ends two years of negotiations, legalizes blackjack; increases the number of slot machines per casino from 500 to 998 but does not increase the total number of slots operating in the state; allows rural tribes to sell their unused slot machine allotments to urban tribes; limits the number of casinos operating in metropolitan Phoenix to seven; and enhances regulation. In addition, the state will receive a one percent share of casino revenue up to $25 million and as much as an eight percent share of revenues that exceed $100 million. The state could reap as much as $1 billion in casino taxes over the next ten years, according to a report by the Howard Consulting Group of Reno, Nevada. Indian leaders said the agreement with Hull would serve as the template for all future discussions of casino issues. The 23-year compact also confines gambling to reservation lands. The deal offered no relief to the state's racetracks. Amy Rezzonico, a spokeswoman for the Arizona Racetrack Alliance, said, "Hull's proposal, which clearly expands casino gaming, confirms the threat to the racing industry." The racetracks won a federal lawsuit last July that barred Hull from executing new casino compacts. In his decision, U.S. District Judge Robert Broomfield said that the legislative branch of the state government, not the executive branch, has the power to enact laws. Broomfield said the problem could be easily corrected if the Legislature ratified the compacts. The agreement between Hull and the tribes, if approved by the Legislature, should repair that loophole. "This is the only negotiated solution that all the tribes have agreed to," said David LaSarte, AIGA's executive director. "This is what the tribes feel is a fair solution for everybody. If we don't get a resolution of these issues in the Legislature, then we might outline these concepts in an initiative." On another Indian gaming front, the 3,440-member Colorado River Indian Tribes filed papers with the secretary of state Jan. 18 laying out a ballot initiative that would allow them to run casinos with up to 1,000 slot machines and permit them to trade unused allotments among themselves. The Colorado River tribes, which quit the Indian gaming association two years ago, now has less than six months to gather the necessary 101,762 petition signatures to put the measure on the November ballot. [See Legislative Updates- Ed.] Source: The Arizona Republic: Mary Jo Pitzl, Tom Zoellner COLORADO At the time of the sale, the state Division of Racing approved a plan to transfer the summer racing season for the Colorado Springs track to Pueblo Greyhound Park, also owned by Wembley. David Reitz, director of the racing division, said Wembley has received permission to do the same thing this year. Wembley will apply for 2003 racing dates early next year, at which time exact dates for the season will be set. Traditionally, Colorado Springs has had live greyhound racing from April 1 to Sept. 30. The racing division has advised Wembley that if the company plans to have live racing after Sept.30, the track will need to be heated to prevent injuries to dogs running on hard, frozen ground. According to Reitz, before live racing resumes, Wembley must make improvements to the 50-year-old facility. Kennels, the starting box, the roof over the 9,000-seat stadium and the judge's stand must be upgraded. Live racing next year is essential for Wembley to retain its Colorado Springs off-track betting business. Off-track betting is available only to active tracks. To qualify as active, PostTime must have live racing in 2003. Source: The Gazette: Rich Laden CONNECTICUT "We are put at a severe disadvantage when we have to pay taxes when we aren't making money," said Keelan, whose father, Edward Keelan, a New England greyhound-racing magnate, opened the track in 1976. First Selectman David Allard said the track is "a very good neighbor," but any request for a tax break would have to be decided by residents at a town meeting. "If the town is going to make some kind of concession," Allard said, "we would hope that the state would step forward as well." State officials aren't likely to make any economic concessions, however, unless the General Assembly chooses to step in. "The state's position has to be that this is a private industry, and the state can only go so far," said John Tontini, unit chief of the state's Division of Special Revenue (DSR), which regulates legalized gambling. State Rep. Michael Caron, R-Danielson, said it would be difficult to persuade legislators to help. "Every time you bring up this subject about a way to help the pari-mutuels, it's like, 'Oh, we have to help these guys again.'" The problem, Caron said, is that the track's customers "are dying off." New players are not coming in. He said he intends to push for legislation giving Plainfield at least temporary tax relief. Indian casinos operating in close proximity to the track have hastened Plainfield's decline, but attendance and revenue already had begun to drop before the opening of the Foxwoods Casino in 1992 and Mohegan Sun in 1996. Attendance fell from 1.5 million in 1977, the track's first full year of operation, to 591,000 in 1992. Since then, attendance has continued to drop to last year's low of 115,000. The wagering handle fell from $125.3 million in fiscal year 1977 to $15 million in fiscal year 2001. The Foxwoods and Mohegan Sun Casinos contributed a combined total of $318.9 million to the state's general fund in fiscal year 2000, the latest figures available from the DSR; the state lottery netted the state $253.5 million. Plainfield Greyhound Park contributed $210,483 in state taxes on its live racing handle. Sources: The Hartford Courant: Rick Green; Norwich Bulletin: Michael Lemanski KANSAS In his first public report on the case, Tracy Diel, the commission's interim executive director, told other commission members that new information still was coming to light and that the investigation was not completed. Diel also reported that the Wyandotte County district attorney's office has been alerted to the commission's investigation at the racetrack and will be asked to consider criminal charges. Diel told the commission that checks were made out to at least one racetrack employee and cashed, but the money was not used for track expenses. "That individual was getting cash to provide goods and services at The Woodlands, but was not procuring those goods and services," said Diel, who declined to name the employee. Diel said the scam apparently worked for as long as it did, perhaps a year, because of the plausible cover story the employee said he used - that some merchants preferred to deal in cash because of widespread concerns that the financially troubled track could close. Diel told commissioners the matter appeared to be a case of "a lack of control, a lack of accounting by management." He said investigators were reconstructing all suspicious expenditures, trying to determine who was involved in each one and whether an actual purchase was made. "The level of mismanagement on site makes it difficult to verify if something was bought or services were given," he said. Diel emphasized that none of the suspected acts of wrongdoing involved racing or the integrity of the track's wagering system. "At no time were wagers imperiled because of the goings-on behind the scenes," he said. No charges have been filed and no administrative action has been taken, Diel said. "We are pretty confident we know the individual who's involved," he said. "We need to determine if more people were involved, and where the money went. In January, Diane Krug, an assistant general manager and controller at the track, was fired, and general manager August Masciotra was placed on administrative leave; he was later fired. In the following weeks, four other employees who have family connections to Masciotra were also fired. The track's acting general manager, Larry Seckington, identified them at the commission hearing as Masciotra's daughter and son-in-law, Antoinette and Eugene Brundige; another daughter, Alicia Masciotra; and Eugene Brundige's brother, Mike Brundige. The racing commission confirmed Seckington's appointment as acting general manager of The Woodlands at a special meeting held Feb. 1. Seckington, an attorney, is also the corporate secretary of Kansas Racing LLC, the track's ownership group. Although August Masciotra had relatives on the payroll, Seckington said the group did not learn about it until last fall. Masciotra was confronted on the nepotism issue and was directed to institute reforms. Scott Beeler, August Masciotra's lawyer, attended the commission's meeting but made no public statement. In a later interview, Beeler expressed dismay that Diel had suggested crimes were committed but had stopped short of naming suspects and providing more details. "They are tainting people's reputations by their silence." Outside the commission meeting, Bill Grace, the track's principal owner, told a reporter for The Kansas City Star that a special audit of the track's books was under way and that it appeared the losses could exceed $200,000. The scandal could have a negative effect in the Kansas Legislature, where several bills legalizing slot machines for the financially struggling tracks are under consideration. Senate Majority Leader Lana Oleen, a slots opponent, said, "Having difficulties is unfortunate timing for them as we are wrestling with whether to give them additional dollars to manage." Sources: The Kansas City Star: Rick Alm; The Lawrence Journal-World: The Associated Press RHODE ISLAND In their wrongful-termination lawsuit, former president Francis "Skip" Sherman and chief financial officer David Brents, who had direct oversight of the Lincoln dog track, alleged they were terminated after they "refused to participate" in "an improper and illegal scheme" to pay millions of dollars to an unnamed Rhode Island attorney. They said the company refused to identify what services the lawyer would provide in exchange for the "multimillion-dollar payments." Wembley called the lawsuit's allegations "ludicrous" and filed a counter-suit, accusing both executives of financial misconduct during their 11 years with the company. Denver District Court Judge John W. Coughlin officially dismissed the case in December after an undisclosed settlement was reached and all the parties involved agreed not to discuss the case further. In an interview with the Providence Journal-Bulletin Jan. 17, Daniel Bucci, Lincoln Park's CEO, acknowledged the federal grand jury probe and said, "We didn't do anything wrong. We are open and willing and looking forward to any investigation that will stamp us free of any wrongdoing." In a letter to the director of the Rhode Island Lottery Commission last May after the allegations surfaced, Bucci stated that "discussions concerning a possible bonus to one of our lawyers did occur." He added, "However, no bonus was ever tendered to legal counsel, and in fact, when the firm was made aware of the discussion, it advised the company that it did not wish to receive one." News of the Rhode Island grand jury probe reported in the British press caused a 10 percent drop in Wembley's stock. In a statement to the London Stock Exchange Feb. 28, Wembley said that the allegations were unfounded. Sources: The Providence Journal-Sentinel: Katherine Gregg; The (London) Guardian: Simon Bowers WEST VIRGINIA The track's expansion plans were contingent upon the commission's approval of the additional VLTs. The expansion will include a hotel, a new gaming room, and additional dining and entertainment facilities. The number of VLTs is expected to increase to 2,400 within three years. In other news, the state racing commission paid a record $3.3 million from the Greyhound Breeders Development Fund to 64 kennel owners of West Virginia-bred greyhounds in 2001. The Legislature created the fund to provide an incentive for the greyhound breeding industry in the state. The Tomblin Kennel Inc. received $400,734, the largest payout from the fund. Freda Tomblin, whose son is Senate President Earl Ray Tomblin, owns the Tomblin Kennel. Her other son, Carl Tomblin, is also a greyhound breeder and received $222,323 from the fund. The money in the greyhound fund comes from 1.5 percent of the net revenue from the VLTs at the Tri-State and Wheeling dog tracks. Next year's payouts are expected to be even higher. Sources: The Intelligencer: Juliet A. Terry; The Charleston Gazette: Fanny Seiler
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