A Lincoln judge has been asked to sort out a legal battle over who handles breeder funds collected at the state's horse tracks to be redistributed in purses.
Omaha Exposition and Racing Inc., which operates Horsemen's Park in Omaha and the Lincoln Race Course, is contesting a February decision by the Nebraska State Racing Commission.
The Nebraska Thoroughbred Breeders Association asked the racing commission to order bookkeepers at the state's horse tracks, including the Omaha and Lincoln tracks, to turn the funds over to them to distribute.
State statute requires licensed horse tracks to deduct a certain amount from wagers to promote agriculture and horse breeding in Nebraska and be distributed as breeder and stallion awards.
But, unlike other states, Nebraska's law doesn't spell out who should be the custodian of the funds.
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In its 4-0-1 decision, the State Racing Commission concluded that the NTBA was the proper entity to hold them because "its purposes squarely align" with the goal of collecting the breeder funds.
Racing commission chairman Dennis Lee said the Thoroughbred Breeders Association's mission, after all, is to promote the breeding, marketing and use of thoroughbred horses in the state.
Lee said there has been no evidence of misappropriation or failure of tracks to withhold the proper amount.
"However, a potential conflict of interest still exists," he wrote in the Feb. 21 order.
A week later, Omaha Exposition and Racing Inc. filed a petition asking for a judge to review the decision and reverse it.
"The commission had to engage in extraordinary mental gymnastics to try to create this ruse to justify an action to funnel money to Fonner Park," Christopher Jerram, the attorney representing the Omaha Exposition and Racing, said at a hearing Friday.
He argued that it was nonsensical that the Legislature ever would have intended for anyone other than the licensed tracks deducting the money to keep it for distribution.
Jerram said if Fonner Park needs money and wants to get it from this fund source, the battle is at the other end of Lincoln Mall, in the Legislature. Not in the state racing commission or this courtroom, he said.
Conflicts between the horsemen and the state's tracks are nothing new. At the start of this year, the racing commission used the threat of shutting down simulcast wagering at the state's tracks to try to resolve a dispute between the Grand Island track and the Nebraska Horsemen’s Benevolent and Protective Association.
At that time, the horsemen alleged that Fonner Park was withholding some of the breeder funds for its own operations.
Barry Lake, the attorney for the Horsemen's Benevolent & Protective Association, said for years the NTBA, a separate group, had been directing the Omaha and Lincoln tracks to transfer money to Fonner Park for purses and for general funds.
The Omaha and Lincoln tracks will combine to run live races on 11 dates this year, with cards featuring fewer races and smaller fields than at the Grand Island track that completed an extended 31-day meet.
However, the Omaha and Lincoln tracks generate significant traffic on simulcast wagering, where someone in Nebraska can bet on races at Aqueduct Racetrack in New York or Santa Anita Park in California.
Lake said when it was determined that breeders didn't have authority to force the Lincoln and Omaha tracks to relinquish the funds, it prompted the NTBA to go to the racing commission.
The funds have to be spent at the track where they're collected, Lake argued.
On the other side, William VonSeggern, the attorney for the breeders association, said the purpose of setting aside the money is to promote breeding and the horse racing industry in Nebraska, which helps them all.
"With all due respect to (Omaha Exposition and Racing), Nebraska horse racing can exist without a racetrack in Omaha. It did for years. … But what we can't go without are horses," he argued. "Which is why this case is of extreme importance."
VonSeggern said last year $512,000 was raised through wagering on simulcast races at the tracks in Lincoln and Omaha to be distributed to Nebraska breeders in all the races in the state, the bulk of which were run in Grand Island and Columbus.
If the lawsuit is successful, he said, that money would be distributed in Lincoln and Omaha to the 10 percent of the breeders who race there.
"If we cut out 90 percent … what's the practical effect?" VonSeggern asked. "People are going to quit breeding horses."
Jerram countered if Lincoln and Omaha got to keep more of the funds they could expand their meets and have more races.
John Walker, the attorney for Fonner Park, said a recent U.S. Supreme Court decision essentially legalizing sports betting across the country is going to exacerbate the issue and potential for conflicts.
For instance, maybe the tracks won't want to set aside money or will want to set aside less or use breeders money for operations, he said.
With that in mind, Walker said, "the ruling from the Nebraska Racing Commission really takes on and holds a lot more force and a lot more weight."
Strong took the case under advisement.