Concern mounts as end nears for Canterbury Park's deal with Mdewakanton Sioux

The photo showed up in Scott Rake's Facebook feed last month, a digital relic of a day 10 years in the past. He and Jeff Hilger, a fellow racehorse owner and breeder, were celebrating a landmark event for their industry: the approval of an agreement that would nearly double purses at Canterbury Park, providing about $70 million in additional funds over the next decade.

That day opened a new era for the Shakopee track. But last week, with the deal's finish line in sight, Rake recalled it with more wistfulness than glee.

"It was the right thing to do at the time," Rake said. "It breathed some life into the track. But now, we're back to uncertainty."

The 2012 agreement between Canterbury Park and the Shakopee Mdewakanton Sioux Community (SMSC) is set to expire Dec. 31. Though negotiations to extend it are continuing, its potential end has become the Clydesdale in the room for Minnesota's horse racing and breeding industry — impossible to ignore, uncomfortable to discuss and powerful enough to inflict some pain.

The agreement transformed Canterbury from a struggling track with declining purses into a nationally recognized venue. During this summer's 65-day season, the track expects to pay $15 million in total purses, with $7.28 million coming from the SMSC deal. The SMSC money has fueled a 134% increase in purses since 2011, improving the quality of racing at Canterbury and inspiring a brief baby boom on the state's thoroughbred farms.

Neither the track nor the tribe is talking about the negotiations, providing no indication of what each side is seeking. With the expiration date looming, breeders already are pulling back, further reducing an already short supply of racehorses.

Only 105 thoroughbred foals have been registered as Minnesota-breds this year. That number is the lowest since at least 2000, and a drop of nearly 60% from 2014.

"From a breeding standpoint, the damage has already been done," said Joe Scurto, president of the Minnesota Thoroughbred Racing Alliance, an advocacy group for the state's racing industry. "You can see what's happened to the foal crop."

Scurto is optimistic that Canterbury can maintain high-quality racing, "but purse money is a big driver of the sport," he said. "And if there's less of it, we could be looking at fewer racing dates and fewer horses coming to Minnesota."

Representatives of the Shakopee Mdewakanton Sioux Community declined to be interviewed. In a statement, its business council said SMSC "has enjoyed our relationship with Canterbury Park over the past decade," adding that the council is engaged in "active conversations about the future'' of the agreement.

Canterbury Park chairman and CEO Randy Sampson said a resolution must be reached by this fall, since plans for the track's 2023 racing season will be submitted to the Minnesota Racing Commission in November.

"At this point, it's difficult to predict what the outcome is going to be," Sampson said. "Both parties have an interest in moving forward. We continue to have very positive discussions."

If the agreement ends, Canterbury could pursue other gambling options to generate purse money, such as sports betting. Those efforts have been on hold for the past 10 years. The SMSC contract prohibits Canterbury and its horsemen's associations from promoting or lobbying for expanded gaming, sidelining them from last spring's legislative debate on legalizing sports betting.

A breach of the contract could force Canterbury to repay all the SMSC money — including $68.5 million in purses and $11.8 million in marketing funds — and potentially more in damages.

Despite the unpredictability, Sampson emphasized Canterbury is not wavering on its long-term commitment to live racing. Scott Rake, who bred Canterbury champions Sky and Sea and Bourbon County, plans to stay involved, but only as a horse owner. He has quit the breeding business, a decision based "nearly 100 percent" on the questions surrounding Canterbury's purses.

"I don't see a scenario where horse racing in the state of Minnesota could continue if there wasn't some sort of alternative revenue pathway," Rake said. "But our hands are tied in terms of even considering [additional gaming] until the end of the agreement. There's a tremendous sense of uncertainty."

'Transformational' agreement

Several of Canterbury's horse owners, breeders and trainers declined to comment on the situation. Concern about breaching the contract, and the sensitivity around the negotiations, has made many of them reluctant to discuss it.

It was a different story in 2012. For years, track officials lobbied for state approval to add slot machines or other games, mimicking racetracks that had reinvented themselves as "racinos" to pump up purses. The Minnesota Indian Gaming Association successfully fought all those proposals.

At the urging of then-Gov. Mark Dayton, representatives from the two sides decided to end those annual skirmishes and cooperate. The partnership revitalized Minnesota's racing and breeding industries.

Before the agreement, Canterbury's purses were in a five-year downturn, falling to $6.4 million in 2011. They shot up to $12.5 million in the second year of the deal. Richer purses attracted more stables and higher-quality horses, sending wagering to new heights.

Last year's handle reached a Canterbury Park-record $90.9 million, more than four times the amount wagered in 2011. This season already has produced the largest single-day handle in Canterbury Park history, when $4.7 million was bet on June 22.

"That day would not have been possible without [the SMSC agreement]," Sampson said. "It's allowed us to keep field sizes better than other tracks. The marketing dollars helped us build an audience for racing. We've been able to bring in new trainers and new jockeys. There's no question it's been transformational."

The higher purses also encouraged Minnesota breeders to improve the quantity and quality of their operations. In 2012, the state's thoroughbred foal crop plummeted to 118, fewer than half the number produced just four years earlier. The SMSC money guaranteed significantly higher purses for a decade, and by 2014 the foal number shot up to 251.

The count has fallen sharply since then, as the end of the agreement approached with no word on an extension. Sampson said that is a concern. The trend isn't limited to Minnesota— national foal crops have been in steep decline since 2006 — but Minnesota-breds are particularly vital to Canterbury's horse population.

At this point, Canterbury is maintaining high-quality racing. Andrew Offerman, senior vice president of racing operations, said the track always has been able to fill stakes races for young Minnesota-bred horses, even in lean times. He expects that to continue, adding that current state-breds are "the best we've ever had."

But Rake said several high-end, Minnesota-bred yearlings — including one of his own — have sold recently to out-of-state owners. Depending on what happens with Canterbury's purses, they might never run on their home turf.

"Many of those horses have left the state, and they're not coming back," Rake said. "That's the true impact. It was assumed if a horse was born in Minnesota, it was probably going to race at Canterbury. That's not necessarily the case now."

New way forward?

If the SMSC agreement does not continue, there are several ways Canterbury could adapt. It could shorten its season, which would limit the impact on daily purses. Current state law requires Canterbury to run at least 50 days of live racing per year, with recent seasons running between 65-70 days.

The track's card club contributes a percentage of revenue to the purse fund, which accounts for about 25% of purses. Horsemen could ask for a larger cut of card club revenue, though that would not significantly increase purses.

Canterbury also would be free to pursue additional gaming if the agreement expires. The contract bars the track from promoting or lobbying for expanded gaming in Minnesota, and it prohibits Canterbury from participating in any expansion of gambling enacted into law. Another clause requires Canterbury to cooperate with the tribe in opposing the legalization of gaming not currently allowed at Canterbury, "to the extent that SMSC reasonably requests."

The state Senate sought to include Minnesota's two racetracks — Canterbury and Running Aces harness track in Columbus — in the sports wagering legislation debated last spring. The tribes opposed that idea, and the session ended without a resolution.

If Canterbury and SMSC agree to an extension, it would have to be approved by the horsemen's groups and the Minnesota Racing Commission. With the track now on solid ground, it's uncertain whether a deal with the same strict prohibitions would be greenlighted.

Scurto, of the Minnesota Thoroughbred Racing Alliance, expects Canterbury to consider a wide range of possibilities for funding future purses.

"They've been creative from Day 1," he said. "The people who participate [in racing] trust that Canterbury is committed. They'll find a way. They always have. And the industry will support those efforts."

No matter what happens with the agreement, Sampson said Canterbury is determined to build on the foundation the deal has laid. The track has announced plans for a multimillion-dollar renovation of the stable area, including new barns and dormitories, set to begin this fall.

"In these 10 years of the agreement, there's been incredible progress," Sampson said. "We're continuing to invest in horse racing for the long term."

Rake wants to help Canterbury get there, even if he isn't sure how.

"The deal did everything it was supposed to do," he said. "The racing at Canterbury has never been better. But these are challenging times for the entire industry. We're going to have to figure out a way forward."