NM Horsemen File Ethics Complaint Against Regulators; Ask Court to Hold Commission, Gaming Board in Contempt

The New Mexico Horsemen’s Association has filed an ethics complaint against the agencies that regulate racing in the state as part of the ongoing dispute over racetracks unlawfully diverting purse money to go toward track expenses and the racing commission’s retaliatory effort to defund the horsemen’s organization.

Additionally, the NMHA has asked a judge to hold the New Mexico Racing Commission and the New Mexico Gaming Control Board in contempt for not following an earlier court order that would resume horse owners’ contributions to the horsemen’s organization.

Gary Mitchell, the general counsel for the NMHA, called it an effort to silence the state’s traditional, and largest, advocate for horsemen, representing more than 4,000 Thoroughbred
owners and trainers.

“If you start doing away with the advocates that appear before the various state agencies and you exact this kind of retribution, it sets a dangerous precedent,” he said.

The complaint was filed with the New Mexico State Ethics Commission this past Thursday.

The background:

New Mexico legalized electronic slot machines at racetracks in the early 1990s with the stipulation that 20 percent of the net revenue would go toward purses to bolster horse racing and protect the industry’s thousands of jobs. The amount comes to more than $30 million a year paid out to racehorse owners competing at the state’s tracks. The NMHA — at its own expense — has administered the purse account ever since, with regular audits showing not even a penny has ever been lost or found out of place.

The NMHA has been funded by voluntary contributions from its member horse owners who earn purse money: 1 percent of what their horse earns goes toward the organization’s administrative costs, along with a $5 per-start fee earmarked to help members with medical
expenses and a $2 per-start fee for the horsemen’s legislative and advocacy efforts.

The NMHA filed suit in the Second Judicial District Court in Bernalillo County in December 2020 to stop the commission’s years-long practice of taking horsemen’s purse money to pay the racetracks’ liability insurance on jockeys and exercise riders, in clear violation of state law. The transfer of purse money to pay track operating expenses has cost horsemen to date more than $8 million.

In retribution, the New Mexico Racing Commission in May 2021 voted to defund the NMHA by cutting off its revenue stream, falsely asserting that purse money was improperly going to the horsemen’s organization. (Once purse money is earned by an owner’s horse after a race is made official, those funds become that individual’s property, in other words, “earned income”, to use however he or she desires, including voluntary contributions to the NMHA.)

The New Mexico Gaming Control Board backed the commission, even after its own hearing officer ruled in favor of the horsemen on this matter. Racing commission chair Sam Bregman also serves on the gaming control board.

In Aug. 2021, District Court Judge Erin B. O’Connell also ruled in favor of the horsemen and stayed the commission’s action, meaning horsemen should have been getting those contributions. Mitchell said the commission has not complied with that ruling.

“We have not received any of those contributions,” he said. “We’re now asking the judge who issued that stay to hold the racing commission in contempt.”

The NMHA is asking that the monies lost during that time be refunded, totaling approximately $300,000. The ethics complaint accuses the New Mexico Racing Commission and the New Mexico Gaming Control Board of conspiring for the express purpose of undermining the horsemen’s representative.

“This was just a power move by the racing commission to show us that they’re the regulatory agency and you better not take them on,” Mitchell said. “And if you take them on, you’re going to die. ‘If you come in here and don’t come in on your knees and bow down to us and do exactly what we say, the punishment for you is going to be your destruction.’”

Mitchell believes this case has broader implications for state government in New Mexico.

“What we have here are two state agencies that are refusing to obey a court order and refusing to follow the recommendation of its own hearing officer,” he said. “You can’t have state agencies that ignore the courts just so they can diminish those they don’t care for.

“This is so un-American, those guys shouldn’t be saying the Pledge of Allegiance at the beginning of their meetings.”

The horsemen also filed a federal lawsuit late last June in U.S. District Court against the commission, charging the regulatory body with depriving racehorse owners and trainers of their civil rights as well as other related violations.

The involved parties agreed in November to a “time out” to try to find an amicable solution. Following the horsemen’s good-faith effort to negotiate and with no settlement achieved by Feb. 1, the NMHA believes the racing commission was simply attempting to interfere with court proceedings. The NMHA has requested that the court return the case to the federal docket and move forward toward issuing a ruling.

NMHA President Roy Manfredi says the horsemen are left with few options.

“The horsemen feel that since the racing commission is failing to negotiate, the only thing we can do is litigate,” he said. “The chairman of the racing commission runs everything. He runs the gaming and the racing commission. It’s a clear conflict that he sits on both boards.

“But beyond that, (the chairman) insists that the money the horsemen were getting was purse funds (from gaming). This is not true. Once a horse runs and I earn a purse, that becomes my money. The horsemen are taxed on that money. We get a 1099 from the racetrack for those funds. After the race, it is no longer gaming funds.”