‘Regulatory overreach’: Judge rules New Mexico Commission can’t use stock market money to pay insurance premiums – Reuters


The following statement was issued by the New Mexico Horsemen’s Association on October 11, 2022.

The New Mexico Equestrians Association has won another legal victory in its ongoing disputes with the state racing commission and racetracks, with a judge calling the practice of misappropriating the purse money towards medical insurance premiums for jockeys and riders.

District Court Judge Victor S. Lopez determined in his Sept. 20 order that the New Mexico Racing Commission (NMRC) improperly required riders, through their purse accounts, to pay half of the racetrack insurance premiums for jockeys and practice riders, in violation of state law.

Gary C. Mitchell, general counsel for the New Mexico Horsemen’s Association (NMHA), applauded the decision, which he hailed as vital to the health of horse racing in the state.

“The battle is over the political power of racetracks wanting to reduce racetrack and racing operating expenses and enjoy greater revenue from their casinos,” Mitchell said. “The great defender who stands in their way is, and always has been, the Horsemen’s Association and hopefully the New Mexico Legislative Assembly.”

Under New Mexico law, any gaming operator licensee who is a racetrack must pay 20% of their net catch for purses to be distributed according to rules adopted by the state’s racing commission. . An amount not to exceed 20% of the interest earned on the balance of any fund consisting of purse money may be expended for distribution administration costs.

Since 2009, more than $9 million has been taken from the purse accounts of New Mexico’s five racetracks for insurance premiums. In late 2020, the NMHA went to court to stop the illegal practice and recover some or all of the money from the lost bag.

Judge Lopez’s order said the mere fact that the practice of using purse money for insurance premiums for jockeys and practice riders had been in effect for years without objection did not make it legal under state law.

“(The) reality is that the practice is being challenged now; the parties have presented no authority to support the proposition that a party somehow waives excess regulation by the mere passage of time,” Judge Lopez wrote.

Calling it “form over substance,” he dismissed the commission’s claim that 20% of their net goes first to “gaming accounts” which technically aren’t “gaming account” funds. stock market” until insurance premium funding is extracted. Judge Lopez further determined that the practice “cannot reasonably be characterized as a ‘cost of administering distributions,'” as the commission argued.

“It is not for the Commission or the Court to decide on and implement a policy which would essentially permit the skimming of racing revenue for the admittedly beneficial purpose of protecting jockeys and riders who might suffer injuries at course of the exercise of the inherently dangerous profession of horse racing,” Judge Lopez wrote.

Judge Lopez suspended his order until at least March 18, the last day of the 2023 legislative session, “to allow the parties to consider legislative intervention, if appropriate.”

Mitchell said it was important for riders to fight the illegal diversion of purse money for track operating expenses “because it sets a dangerous precedent.”

“We know it would be for insurance first, and the next thing would be to pay HISA,” he said of the controversial Horseracing Safety & Integrity Act which creates an unfunded bureaucracy to oversee aspects nationwide horse racing. “…The legislator never wanted this to happen. It was to save horse racing – and it was to save horse racing. It worked beautifully. The riders had no choice; they had to fight.

Judge Lopez’s order came three days before Judge Erin B. O’Connell ruled on the bench in favor of the riders that the racing commission had disregarded her earlier order. This August 2021 ruling prohibited the commission from blocking horse owners’ voluntary contributions to the NMHA from the money their horses earned in racing. The commission has yet to comply with Justice O’Connell’s direction.

“I guess the racing commission doesn’t take the court seriously, even though they ordered (as yet unspecified) penalties,” Mitchell said. “So we’re going to be in court again because the racing commission, the gaming control committee, and the various casinos keep thinking they can just ignore the court…. In New Mexico, contempt is a powerful tool by the courts.The racing commission and the gaming control board both have serious problems, financially and ethically, to continue to do so.

The NMHA represents more than 4,000 Thoroughbred and Quarter Horse owners and trainers throughout New Mexico. The organization also has an pending ethics complaint with the New Mexico State Ethics Commission against the New Mexico Racing Commission and Gaming Control Board, accusing these agencies of conspiracy to on purpose to undermine the representative of the riders.

A federal lawsuit filed by the NMHA in June 2021 in United States District Court against the commission is also pending, accusing the regulator of stripping racehorse owners and trainers of their civil rights. as well as other related violations.

More background:

New Mexico’s labor-intensive horse racing industry was on the verge of being wiped out with the closure of La Mesa Park, San Juan Downs, and Santa Fe Downs in the early 1990s.

In response, the state legislature legalized electronic slot machines at racetracks by stipulating that 20% of their net revenue would go to purses to bolster horse racing and protect the industry’s thousands of jobs. The legislation proved extremely successful, with SunRay in Farmington and Zia Park in Hobbs, NM opening in 1999 to give the state five racetracks. The others are Ruidoso Downs, Sunland Park and the Downs in Albuquerque.

Slot machines amount to more than $30 million a year paid out to racehorse owners competing at New Mexico racetracks. The NMHA – at its own expense – has operated the purse account ever since, with regular audits showing not even a penny has ever been lost or found out of place.

The NMHA was funded by voluntary contributions from its member horse owners who earn money: 1% of what their horse earns goes towards the administrative costs of the organization, plus a $5 per start fee. intended to help members with their medical expenses and a $2 per departure fee for the legislative and advocacy efforts of riders.

The NMHA filed suit in Bernalillo County Second Judicial District Court in December 2020 to end the commission’s years-long practice of taking money to pay for racetrack liability insurance on racetracks. practice jockeys and riders. Transferring purse money to pay for track operating expenses has cost riders more than $9 million to date.

In retaliation, the New Mexico Racing Commission in May 2021 voted to defund the NMHA by cutting off its revenue streams, falsely claiming that revenue from purse money was wrongly going to the organization. riders. (Once purse money is earned by an owner’s horse after a race is formalized, those funds become the property of that individual to be used as they see fit.)

The New Mexico Gaming Control Board supported the commission, even after its own hearing officer ruled in favor of the Cavaliers on this issue. Racing commission chairman Sam Bregman also sits on the gaming control committee.

“There is no doubt that the reason for the action taken against the New Mexico Equestrians Association is to destroy or seriously weaken the Equestrians so that races can be shortened, purse money can be used for racetrack expenses and a greater burden can be shifted to racehorse owners and trainers,” Mitchell said. “As long as the riders are fighting, the purse money cannot be misused and good racing will continue. Get rid of the jumpers and no one will stand in your way. Get rid of horsemen and you get rid of horse racing as it should be. It’s simple and clear.


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