Hot to Trot

In SEC filings, Churchill Downs describes how it’s winning big in Oregon.

WHAT’S THE PROBLEM?

Oregon lawmakers enjoyed a bounteous harvest of tax dollars in the session that concluded in late June, the result of a stronger-than-expected economy that will return more than $5 billion to taxpayers next year, thanks to the state’s unique “kicker” law. But lawmakers stiffed cultural organizations, large and small. How bad is it? On Aug. 15, Artists Repertory Theatre, Portland’s oldest professional theater company (founded in 1982) abruptly suspended its 2023-24 season, citing the failure of House Bill 2459, which “resulted in $250,000 not being awarded to us as part of the proposed recovery funding for the arts and cultural sector.”

HOW DID WE GET HERE?

In 2001, when Republicans controlled both chambers of the Legislature, lawmakers led by state Rep. Ben Westlund (R-Tumalo) and Sen. Lee Beyer (D-Springfield) established the Oregon Cultural Trust in recognition that “a state with a vibrant arts and cultural life attracts and retains educated people and progressive businesses.” They established three funding streams: tax credits, license plate sales and, most promising, the sale of 400 acres of surplus Department of Corrections land in East Salem.

“ We wanted to set up an endowment with the land sales,” Beyer says. “I told Westlund it wasn’t going to work—I didn’t think the executive branch or the Legislature would ever let go of anything.”

Records show the state has sold numerous parcels of land for development to blue-chip companies, including FedEx, Home Depot and Amazon totaling $33 million, but the Cultural Trust didn’t get a penny from those sales until the $3.3 million it’s due to get this year. Andrea Chiapella, a spokeswoman for the Department of Administrative Services, says the cost of preparing land for sale—building infrastructure, mitigating wetlands, etc.—consumed earlier revenues.

Christine Drazan served as chief of staff to Speaker of the House Mark Simmons (R-Elgin) in 2001 and ran the Cultural Advocacy Coalition from 2011 to 2018. “Oregonians all know about the Bottle Bill,” Drazan says. “The Oregon Cultural Trust was supposed to be an equivalent addition to our cultural life and celebrate everything about Oregon that’s unique. The Legislature made a promise about selling the land for an endowment.”

WHAT HAPPENED THIS SESSION?

State Rep. Rob Nosse (D-Portland), the chair of Salem’s cultural caucus, took a two-pronged approach in 2023 to help a sector that supporters say brings tourists to Oregon and uplifts the state’s residents. Nosse asked his colleagues to allocate $200 million in Oregon Lottery bonds to build an endowment for the Oregon Cultural Trust—fulfilling the promise lawmakers made in 2001—and asked for $50 million in “recovery funding” as well as $12 million in end-of-session capital construction bills. Nosse didn’t expect to get all $262 million, but he got only $5.6 million in recovery funds for venues and $4 million in capital funding.

WHY DOES IT MATTER?

In testimony, arts leaders extolled the benefits to state and local

On a per capita basis, we rank 36th in the nation in state spending on the arts. “Oregon spends 48 cents per capita on the arts, whereas Minnesota, the national leader, spends $7.34,” testified Dana Whitelaw, executive director of the High Desert Museum in Bend.

Their pleas fell on deaf ears

WHAT’S NEXT?

Nosse says he and his colleagues in the cultural caucus will sharpen their pitch in next year’s short session—and, at a minimum, ask again for the balance of the requested $12 million in capital funding. Lawmakers funded that level of work in prior sessions, and Nosse says without a walkout time crunch it can happen again. “I’m hopeful,” he says. NIGEL JAQUISS.

Anybody who glanced at the Oregon secretary of state’s audit of the Oregon Racing Commission released Aug. 9 would find the same conclusion that WW reached in a cover story earlier this year (“Track Addicts,” May 17, 2023). The commission provides “limited oversight and transparency” and generates in state revenue only a fraction of 1 percent of the billions of dollars in bets it handles.

Not included in the audit: two facts gleaned from the U.S. Securities and Exchange Commission filings of Churchill Downs Inc., the largest internet betting company active in Oregon (it handled about

$2.5 billion in bets in 2022), that show what suckers Oregonians are. Churchill Downs, based in Louisville, Ky., runs the Kentucky Derby—but has found a sure thing in the online betting facilitated by Oregon state officials who ask for nearly nothing in return.

The business, which the company conducts in Oregon via its TwinSpires subsidiary, provides a far higher return on the company’s assets than its other businesses: horse racing and casinos. Internet betting provided about a 40% return on assets , four times the return on horse racing and nearly twice the return on casinos.

Of its three business segments, TwinSpires pays a far lower percentage of its revenues in “taxes and purses”—about 6% —than do Churchill Downs’ horse racing and casino businesses, which pay out an average of 30%.

“ TwinSpires is one of the largest and most profitable legal online horse racing wagering platforms in the U.S.,” the company boasted in its 2022 annual report. State Rep. David Gomberg (D-Otis), a leading critic of the Racing Commission, says the current setup is doubly troubling: “We’re incentivizing gambling, and Oregonians get next to nothing for it.” NIGEL JAQUISS.