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State audit finds Minnesota horse-racing track shorted race purses,

ST. PAUL -- A report issued Tuesday by the state’s Office of the Legislative Auditor exposed an ongoing discrepancy at a Minnesota horse-racing track in Anoka County that shorted race purses hundreds of thousands of dollars over five years.

In its findings, the 25-page report determined Running Aces Harness Park in Columbus was $436,000 deficient in purse contributions owed to horse owners between 2008 and 2012 due to an inaccurate interpretation of state law. The track has since corrected the problem.

Much of the blame assigned in the report went to the Minnesota Racing Commission for failing to adequately oversee the track’s operations.

“We think that is kind of at the root of this,” said Legislative Auditor James Nobles. “If the racing commission had been doing its job, this would have never happened.”

Driving the discrepancy was a dispute over whether the 8.4 percent purse contribution required under state law be calculated from the track’s “handle” or the “takeout,” according to the report.

The handle is the amount collected from all betting pools. The takeout is the sum deducted from the handle by the licensee before winning bets are paid and is substantially smaller than the handle.

Running Aces was paying its purses from the takeout, which was a violation of state law, the report said.

The problem is the state law is confusing, and both Running Aces and Minnesota Harness Racing Inc. — which is commonly known as the Horsemen’s Association — agreed to base the calculation on the smaller pool of money, Nobles said.

Canterbury Park has long calculated its contribution based on the handle.

“I don’t have any evidence of willful neglect here,” Nobles said. “The law is not as clear as one would like it to be … and the (Horsemen’s Association) is complicit in this, too … There is a lot of blame to go around.”

A written statement provided by Running Aces stated the track has been working to address the discrepancy since it first became aware of it last year. It also called for a clarification of state law on the issue, a request also made in the auditor’s report.

The organization has reportedly made past claims that while its purse contributions may have been low, other benefits it extended to horse owners made up the difference.

Representatives from the Horsemen’s Association did not return calls for comment.

Given the shared responsibility for the oversight, the report states it may not be fair to require Running Aces to pay back the entire deficit, and that decision should be made by the racing commission.

Pay back could prove difficult to sort out given the multiple horse owners that may have been affected, Nobles said.

“I think the simplest approach would probably be to put this money in a pool for future horse winnings,” he said.

The Minnesota Racing Commission intends to meet with both parties to try to work out a solution, said Thomas DiPasquale, executive director of the commission since December.

Both the executive director and deputy director in charge during the five years in question have left the commission, one for a job at Running Aces.

DiPasquale said the commission has spent the past several months trying to tighten up its oversight practices to ensure proper handling of purse contributions.

The Minnesota House of Representatives Commerce Committee, which has jurisdiction over the racing commission, will hold a meeting July 22 to review the audit, said Rep. Joe Atkins, chairman of the committee.

The Pioneer Press is a media partner with Forum News Service.