An audit of the North Dakota Racing Commission, the state agency overseeing horse racing, has found four issues of concern.
Overspending of Promotion Fund
The Racing Commission has a Promotion Fund. The purpose of that fund is to promote racing and develop racetracks in the state. State law only allows the Commission to spend up to 25% of the fund balance per year for operating expenses. The Commission spent much more than this on operating expenses, up to 201% more than allowed during the four-year audit period.
Grant Criteria Not Met
There are grants that are awarded through the Promotion Fund. The purpose of the grant program is to benefit horse racing in the state. The Commission awarded 43 grants totaling $1.8 million during the audit period. Our team sampled and reviewed 13 of those grants. Out of the 13, the audit team found that three grants totaling $25,500 were awarded, but no grant applications were submitted. Additionally, itemized reports showing how money was used for $7,500 worth of grants was not available. Itemized expense reports are important because they show that taxpayer dollars are being used in the way the grant is intended.
Requirements Not Met for Breeder Fund Awards
There is a Breeder Fund that provides money for North Dakota bred horses that race. 306 awards totaling $1.1 million were given during the audit period. Out of the 12 awards our team reviewed, our team found that two of those awards totaling $1,957 went to horse owners who did not provide records of ownership transfer, which is a requirement of receiving money from this fund.
$63,675 of Services Not Procured Correctly
When making large purchases, state agencies are required to follow state procurement requirements. This makes sure that agencies are receiving the best available price for services and using taxpayer money effectively. It also makes sure that the full scope of work and compensation are agreed upon by both parties. The Commission procured $590,300 worth of goods and services during the audit period. Of that total, $63,675 did not follow procurement requirements.
The audit period was from July 1, 2021, to June 30, 2025. To download the full audit report, click here.