State audit of the Oregon Racing Commission finds lax oversight of industry

State auditors found the Oregon Racing Commission in disarray, with delays in filling openings for commissioners, weak oversight and limited transparency of money allocated to horse racing industry groups. 

The Oregon Secretary of State’s office on Wednesday released an audit of the Oregon Racing Commission, an obscure agency that regulates $6.4 billion annually in bets on races in Oregon and across the country. The commission regulates the use of horse race meets, public horse training tracks and off-track betting businesses that take pari-mutuel racing wagers at locations outside racetracks. In pari-mutuel wagers, all bets are pooled and divided among those with winning tickets. The commission regulated about 2,400 active licenses as of August 2022.

The scrutiny of the commission comes amid a decline in live animal racing in Oregon. As a result, much of the state’s regulation is focused on bets that are placed electronically on races outside the state’s borders. Auditors made the following findings:

• The five-member racing commission failed to have a full commission for almost three years. Earlier this year, it obtained five commissioners to oversee the agency’s policy.
• The racing commission allocates about $1.5 million to horse industry groups and race meet organizers. But there is no standard for what details the requests need to have and little oversight. “There has been no standardized or consistent reporting and review of how the money was actually used,” auditors wrote.
• Commission meeting minutes that show decisions do not always have clear information about funding allocations, “raising questions about those funds,” auditors wrote. Commission members received packets, but that information was not posted online.
• Auditors found the racing commission had “limited documentation” to show its oversight of historical horse race machines, which allow people to place bets on past horse races. There are currently no historical horse race machines in Oregon, though that could change in the future.
• Auditors found “ambiguous” state gambling laws that pose a risk to the economic interests of tribal nations. For example, the racing commission doesn’t prevent licensees from advertising as “casinos.”

The audit came after six tribal governments sent the Secretary of State’s office a letter requesting an audit in 2021, spurred by an application for a 225-terminal complex at Grants Pass Downs horse racing complex, the Flying Lark. Tribal leaders were concerned about whether the commission was equipped to regulate the project. The Department of Justice concluded the proposal would violate the constitution’s prohibition on casinos and lotteries and the racing commission reluctantly denied the application, while calling the opinion “erroneous.” 

In a statement, Oregon Secretary of State LaVonne Griffin-Valade said: “Everyone benefits when our laws are clear and fair. This audit points out important areas of ambiguity that the Racing Commission, legislators and the governor’s office can address to ensure we have clarity, a fully staffed oversight commission and appropriate stakeholder input in our gambling statutes and enforcement.”

Audit recommendations

Auditors made the following recommendations: 

• Add requirements to evaluate proposals to ensure there is no conflict between the Oregon constitution and state law.
• Put better rules and policies in place for allocating the reviewing funding allocations to horse industry groups.
• Improve commission meeting minutes so they are clearer and more transparent. 
• Keep better documentation of reviews of license holders.

Connie Woods Winn, executive director of the Oregon Racing Commission, agreed with the recommendations in a response to the Secretary of State’s office.

The agency, Woods Winn wrote, “is in the midst of making bold changes to become a premier agency that is trusted and respected by all.”

That includes new hires, steps to put new rules and policies in place and better track documentation, the letter said.

Greyhound racing, which started in 1933 in Multnomah County, diminished in popularity in the 1990s and a Portland-area racetrack shuttered in 2004. Oregon lawmakers made greyhound racetracks illegal in Oregon in 2022, though bets can still be placed on out-of-state races.

Horse races have also declined since 2018. Portland Meadows, a commercial horse racetrack since 1946, ended live racing in 2019. In 2018, Oregon had 490 live horse racing, a figure which dropped to 129 races in 2022. Most are at summer fairs and horse meets in rural areas of the state.