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F I S C A L I M P A C T R E P O R T

SPONSOR Rehm

ORIGINAL DATE

LAST UPDATED

2/2/08

HB 612

SHORT TITLE Race Track Licensee Selection by Auction

SB

ANALYST

Ortiz

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY08

FY09

NFI

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY08

FY09

FY10

Unknown

Unknown Recurring &

Non-recurring General Fund

(Parenthesis ( ) Indicate Revenue Decreases)

ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT (dollars in thousands)

FY08

FY09

FY10 3 Year

Total Cost

Recurring or

Non-Rec

Fund

Affected

Total

Unknown Unknown

Recurring &

Non-recurring General

Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Attorney General’s Office (AGO)

Gaming Control Board (GCB)

No Responses Received From

State Racing Commission (SRC)

House Bill 612 – Page

2

SUMMARY

Synopsis of Bill

House Bill 612 en

acts

a new provision in the Horse Racing Act (NMSA 60-1A-1 et seq. 1978) to

require the Racing Commission to award a racetrack licensee to the highest qualified

applicant/bidder at public auction, and to prevent the Commission from issuing a racetrack

license after March 5, 2008 except through public auction. However, the bill also provides that

if only one qualified person has filed an application for an available racetrack license, the

commission shall proceed to determine whether to issue the racetrack license “notwithstanding

the provisions of this section, as provided in other sections of the Horse Racing Act."

The bill provides for application procedures, notice of the auction, and conduct of the auction.

The bill prohibits the acceptance of sealed or electronically transmitted bids. The successful

bidder/applicant must meet all conditions for licensure stated in the Horse Racing Act and rules

of the commission.

FISCAL IMPLICATIONS

Gaming Control Board points out that this bill would generate an unknown amount of non-

recurring revenue based on the dollar amount of the winning bid. It would also generate an

unknown amount of recurring revenue based on taxes imposed on the pari-mutuel wagering at a

new racetrack.

Likewise this bill would result in unknown additional non-recurring operating expenses based on

the background investigations that would be required to be performed in order to determine

whether the bidders are qualified to hold a horse racetrack license. The bill does not provide a

means to recoup the cost of background investigations from the bidders. This bill would also

result in additional recurring operating expenses based on the need to regulate an additional

horse racetrack and gaming operator licensee.

SIGNIFICANT ISSUES

Several important concerns about this bill are raised by GCB, such as the bill does not permit the

New Mexico Racing Commission to set a minimum bid for the license and does not allow the

Racing Commission to reject a bid that it deems too low. Nor does the bill address the issue of

which fund would receive the revenues from the auction of the horse racetrack license or the use

to which those revenues could be put.

Next, the bill does not allow the Racing Commission to take factors other than auction bid into

consideration in awarding the license--for example the overall quality of the proposal, potential

local economic impact, overall potential for generating tax revenue, etc. This could result in

sacrificing long-term recurring tax revenue for a one-time, non-recurring bid payment.

Additionally, the bill does not address the issue of how qualifications of the winning bidder to

hold a horse racetrack gaming operator license would be addressed. This potentially could create

a situation in which the winning bidder for the horse racetrack license would be found ineligible

to hold a horse racetrack gaming operator license.

House Bill 612 – Page

3

Finally, the bill does not address the issue of whether a request to relocate an existing horse

racetrack license would be subject to the auction requirements of the bill.

OTHER SUBSTANTIVE ISSUES

The Attorney General’s Office points out that NMSA Section 60-1A-8 I (1978) provides: “If

there is more than one application for a racetrack license pending at the same time, the

commission shall determine the racing days that will be allotted to each successful applicant."

This bill will presumably render that provision irrelevant, as there will only be one successful

applicant awarded a racetrack license after public auction. However, the bill should not have any

effect on the Commission’s authority to allocate racing days among all racetrack licensees,

including new licensees who were granted licenses after public auction, as provided in NMAC

15.2.1.8I.

EO/nt