Recently, the Indiana Horse Racing Commission unanimously voted to remove its executive director, Joe Gorajec, who had held the position since the commission’s inception. Thomas Weatherwax, the commission’s chairman, told the Indianapolis Business Journal that Gorajec was fired because he was too focused on enforcing regulations and he was not focused enough on marketing and promoting horse racing.
In other words, Gorajec was fired for doing his job. He has a reputation for standing firm on regulatory issues, and that is a good thing. In the last two years, under his leadership, almost 700 rulings on misconduct were issued. The commission also issued thousands of licenses, as required by law.
In firing Gorajec for focusing too much on regulating the industry, the commission made an unethical decision. As a lifelong Hoosier who loves Indiana, I find myself, once again, disappointed and angered by the lack of ethics exhibited by too many public officials in our state. We can do better.
The 65-page statute authorizing horse race betting makes very clear the purpose of the law and the commission. It reads: “The purpose of this article is to permit pari-mutuel wagering on horse races in Indiana and to ensure that pari-mutuel wagering on horse races in Indiana will be conducted with the highest of standards and the greatest level of integrity.” By law, the commission is charged with regulating to the highest standard. Its mission statement is clear: “Ensuring that pari-mutuel wagering on horse races in Indiana will be conducted with the highest of standards and the greatest level of integrity.”
Indiana is home to two horse racing tracks, Hoosier Park at Anderson and Indiana Downs at Shelbyville. According to the latest annual report posted on the Indiana Horse Racing Commission’s website, the handle, or total amount of money wagered on pari-mutuel races, has dropped from a high of $190 million in 2005 to $95 million in 2013. This same report showed the cost of regulating the industry at less than 2 percent of the handle, and the total state revenue received from the races at only $3,427,763.
It is understandable why the commission is concerned about Indiana’s shrinking horse racing industry and reduced tax revenue. And it is understandable why members would want to increase promotion and marketing of the industry. But, promoting and regulating are two different functions that at times can be at complete odds with one another. In promoting the industry, the state should charge that responsibility to someone other than the director responsible for regulation and oversight.
Any ethicist worth his or her salt will tell you good promoters do not make good regulators. Giving the promotion responsibility to the regulator is a bad idea. It encourages the regulator to look the other way when there is a conflict between expanding betting and ensuring it is compliant with the law. I had the privilege of serving as the board chair and CEO of the Farm Credit Administration, an independent, arm’s-length financial regulator. I led the agency to strengthen its ethics policies which, in the long run, helps to strengthen the businesses it regulates.
When the chairman of the Horse Racing Commission says we need more promotion and less regulation, it sounds very much like he wants to weaken the oversight of the horse racing industry. That would be bad news for the health of the horses, the safety of the drivers and jockeys, and the overall integrity of the industry. It also sounds like he wants to make the commission a “captured” or “pocket” regulator, where the industry controls the regulator. None of these changes is in the long-run interest of the industry or our state.
Jill Long Thompson is a former congresswoman who represented Fort Wayne and northeastern Indiana. She teaches Ethics for the Kelly School of Business and the School of Public and Environmental Affairs at Indiana University. The opinions expressed do not necessarily reflect the views or policies of IU.