North Dakota Horse Park license pulled, but July races may still happen
FARGO — The North Dakota Horse Park in Fargo recently asked the North Dakota Racing Commission for permission to shorten the park's live racing season in July.
Instead, the commission yanked the horse park's 2019 license to conduct races.
The commission took the action at its meeting on Friday, May 31, following a statement that was read by the commission's executive director, Jack Schulz, who cited North Dakota administrative rules outlining who is and who is not eligible to be licensed to be involved in North Dakota horse racing.
In his statement, Schulz focused on one person in particular — Susan Bala — who as of Friday was a member of the horse park's board and was vice president and treasurer of the organization, according to Schulz.
In an apparent reference to Bala, Schulz said the state's administrative rules bar someone from being licensed if they are not of good moral character or have demonstrated a lack of financial responsibility in transactions related to racing or pari-mutuel wagering.
(The following is a snippet of audio from the statement Schulz made at Friday's racing commission meeting.)
Bala was owner of a company called Racing Services Inc., which filed for bankruptcy in 2004, shortly after the company came under scrutiny by federal authorities.
A criminal case was eventually brought in federal court , and Bala was ultimately sentenced to prison on illegal gambling charges. However, she was released early after her convictions were overturned on appeal .
In 2014, a federal judge ruled 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.
After the state agreed to pay the bankruptcy estate nearly $16 million , PWE amended its earlier claim, increasing what it sought from the estate by about $10.8 million.
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, PWE said, money returned to RSI should go to charities.
The appeals court has yet to rule on PWE's amended bankruptcy claim.
After her federal conviction was overturned, Bala attempted to secure what is called a certificate of innocence in federal court, but was denied.
Following Friday's meeting of the racing commission, Schulz declined to discuss details of what the commission found objectionable about the horse park's application to change the park's live race schedule this summer, but he said the park could submit a revised application and he said he's confident a race schedule will be approved in time for July racing.
On Wednesday, June 5, the racing commission held another meeting, part of which was closed to the public for an executive session.
The only public item on the agenda appeared to be reconsideration of the horse park's request for a change to the park's live race schedule this year, though it was unclear if a new application had been submitted.
Schulz declined to talk about what action, if any, resulted from the meeting and referred questions to the commission's legal counsel at the North Dakota Attorney General's Office.
A message left for the attorney was not returned by the time this story was published.
The horse park originally had six live racing events planned for July, but horse park officials want to reduce that number to four.
Schulz said prior to the May 31 meeting of the commission that the horse park's request was made for a number of reasons, including that the state's allocation to the park was reduced this year and the park had undergone a change in management.
Schulz said another factor was that the amount of purse money available to the horse park is less this year, and organizers felt it wasn't enough to adequately support six events. He said the horse park was looking to hold events on July 19, 20, 27 and 28.
Personnel changes at the horse park include the dismissal earlier this spring of Mike Schmitz, the park's manager.
Schmitz was terminated after a Facebook post on his personal account made derogatory comments about an individual.
The comments were tied to an article about a bill in the North Dakota Legislature that would help the horse park pay special assessments to the city of Fargo.
A message left with the North Dakota Horse Park was not returned at the time this story went to publication.
History of legal proceedings
In the statement Schulz read to the racing commission on Friday supporting his recommendation that the commission revoke the horse park's license, Schulz referenced research he did into federal court proceedings involving Bala.
He said that in turning down Bala's request for a certificate of innocence, the United States Court of Appeals for the Eighth Circuit listed a number of reasons for rejecting the request, including a finding that RSI and Bala "are not truly innocent" of state law violations.
Schulz said the appeals court also found that RSI and Bala collected and distributed $99 million of parimutuel account wagers "without paying one penny" to charities, or to the racing commission, or to the state treasurer "as North Dakota gambling laws require."
Schulz said based on that history, Bala could not be licensed under state rules.
The commission voted 3-1 on Friday to revoke the horse park's license, with commissioners Tim Kreidt, John Hanson and Mary Ann Durick voting to pull the license and Commissioner Dave Piepkorn, who is also a Fargo city commissioner, voting no.
Prior to casting her vote, Durick said: "The North Dakota Racing Commission's reputation is impeccable, and I would like to see it stay that way."
Piepkorn suggested more information would be helpful. "I think we're only hearing one side of the story," he said.
Bala was invited to comment for this story, but had not responded to questions at the time this story was published.