BISMARCK — Papers filed in connection with a long-running bankruptcy case involving a horse race betting company suggest that millions of dollars in disputed funds could go to charity.

The case involves Racing Services Inc., a company owned by Susan Bala that filed for bankruptcy in 2004, shortly after the company came under scrutiny by federal authorities.

A case was eventually brought in federal court and Bala was ultimately sentenced to prison on illegal gambling charges. She was released early after her convictions were overturned on appeal.

A federal judge ruled in 2014 that the state of North Dakota wasn't authorized to collect taxes on account wagering, a form of gambling that utilized services like RSI, during the time period involved and North Dakota agreed to pay RSI's bankruptcy estate about $15.9 million.

Early on in the bankruptcy case a large creditor — PW Enterprises — filed an initial claim of about $2.2 million.

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After the state agreed to pay the bankruptcy estate nearly $16 million, PWE amended its claim, boosting what it sought from the estate by about $10.8 million.

PWE owner Peter Wagner was described in court documents as a high-volume computer player who had agreements with RSI regarding things like gambling rebates.

In late 2018, a bankruptcy court judge denied PWE's amended claim, but approved the initial claim of about $2.2 million.

PWE appealed the decision, maintaining that under state law it was entitled to money North Dakota paid to the bankruptcy estate.

In the alternative, money returned to RSI should go to charities, PWE maintained.

North Dakota Attorney General Wayne Stenehjem recently filed a "friend of the court" brief supporting PWE's position.

Citing state law on parimutuel betting and how proceeds are to be handled once things like expenses are accounted for, Stenehjem maintained that as an alternative to awarding the returned money to gamblers like PWE, the money should be awarded to charities.

A brief filed by Bala asks the U.S. District Court to uphold the bankruptcy court's decision.

Bala's filing maintains that if the district court feels issues raised in PWE's appeal and the state's brief need resolving, the district court should send the case back to the bankruptcy court to decide those questions.