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Fargo company that runs horse betting owes 'substantial' amounts

BISMARCK -- The Fargo company that runs simulcast horse track betting in North Dakota must get current in submitting special funds from betting taxes, the state Racing Commission said Wednesday.

BISMARCK -- The Fargo company that runs simulcast horse track betting in North Dakota must get current in submitting special funds from betting taxes, the state Racing Commission said Wednesday.

The commission voted to give Racing Services Inc. until Aug. 15 to submit February, March and April special funds, and then stay current on a 30-day deadline.

Racing Director Paul Bowlinger said the amounts are "substantial," but would not elaborate.

Bowlinger said RSI also recently said it had under-reported its handle -- the total bet -- for some races and that he expects more amended reports to be filed.

Combined with the extensions RSI has continued to use, "I'm beginning to get uncomfortable," Bowlinger told commissioners.


It's a concern, said Commission Chairwoman Ann Mahoney, "because we have never had an under-reported handle before."

The special funds RSI pays are the portion of state off-track betting taxes used to fund the Racing Commission's activities.

The money goes to the purse fund for live races in North Dakota, the breeders' fund that rewards North Dakota horse breeders for raising and racing winning horses, and the promotion fund, which is the multimillion-dollar fund being tapped to construct the new Fargo horse track.

Bowlinger said RSI is and always has been current on submitting the portion of the betting taxes owed to the state general fund, and the problem is only with the special funds.

Susan Bala of RSI estimated in an interview after the meeting that the amounts she submits for the special funds are between $100,000 and $200,000 per month. She was not at Wednesday's meeting.

Bala said many of the country's small horse tracks have become increasingly slow in reconciling the winnings after races and are slow paying the money to RSI.

The commission's rule says RSI has 30 days after betting ceases each month to submit the special funds.

In October, 2001 the commission granted RSI's request to temporarily have an additional 60 days. Track business nationwide had been disrupted by the Sept. 11, 2001, terrorist attacks, Bowlinger said.


But that motion, meant to be only a temporary extension, has begun to look like a permanent extension. Bowlinger told commissioners that RSI has never caught up in the nearly two years since. For instance, January funds were paid June 3 and he expects February funds early this month.

Under a 30-day deadline, funds from January would have been due in early March, Mahoney said.

"She (Bala) may have, over time, begun to take it for granted."

Mahoney said Wednesday's motion puts RSI on notice that the 30-day rule is still in effect and should be complied with.

"We're not granting an extension for May, June and July," she said.

The motion included a warning that the commission reserves the right to assess any penalties for late payments.

Bala said the extension stayed in place because her receipts of money from tracks that owe her have remained slow.

"We have a couple of tracks that haven't paid in two years," she said.


Bala and Bowlinger said one track, Hialeah, in Florida, went broke owing RSI hundreds of thousands of dollars.

"It's more than $400,000," Bala said.

She said the commission can change its own deadlines any time and that it chose to "put latitude into the schedule" in 2001 because of problems in the industry.

But Mahoney said the extension was never put in state administrative rules, which have the force of law. Hearings, publication and other steps are needed to change rules.

"We did not change the rule," she said.

Readers can reach Forum reporter Janell Cole at (701) 224-0830

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