Bruce Johnson, executive director of the North Dakota Racing Commission, speaks during an interim legislative committee meeting on April 1, 2026. (Photo by Michael Achterling/North Dakota Monitor)
BISMARCK, N.D. (North Dakota Monitor) – The North Dakota Racing Commission awarded grants to businesses that never formally applied and improperly used promotion funds to cover operating expenses, according to a new report by the State Auditor’s Office.
The North Dakota Racing Commission regulates and supports horse racing and betting in the state, including by awarding grants.
The audit report, made public Wednesday, identified multiple potential violations of state law, said State Auditor Josh Gallion.
Bruce Johnson, who has been the commission’s executive director since 2023, said he agrees there are areas where the agency needs improvement
“To me, it’s just a typical audit that does point out some things that we should look at,” he said.
The audit spanned July 1, 2021 to June 30, 2025.
Over that time period, the State Auditor’s Office found multiple instances where the commission did not have records documenting how its grants were awarded or how the money was spent.
In a sample of 13 grants from the commission’s Promotion Fund, three were awarded without the awardees having submitted applications, according to the report. The grants totaled $25,500.
The audit report indicates two of the grants had previously been given to racetracks without requiring the racetracks to apply.
Johnson said he believes the awardees did submit applications, but that the commission could not find them at the time of the audit.
The audit also states the commission did not have itemized reports detailing how $7,500 in grant money was used.
Two grants from the commission’s Breeders Fund, which supports North Dakota-bred race horses, were awarded for the 2021 racing season to owners who did not provide the statutorily required proof of ownership records. Those grants totaled $1,957, according to the audit report.
The Auditor’s Office found that the Racing Commission initially withheld the awards due to the lack of documentation, but later decided to award the money anyway.
“I’m positive that the people in charge at the time made the right decision in their mind,” Johnson said.
A major finding of the audit had to do with how the commission spent money from a fund intended to market horse racing, improve and upgrade race tracks and potentially create new tracks in North Dakota.
The Promotion Fund is made up of money from wagers and other sources of revenue created by horse racing.
Under state law, the Racing Commission can use up to 25% of the fund’s balance each year to support its operating expenses.
In the 2025 budget year, the commission spent about triple the allowed amount of Promotion Fund money on operating expenses allowed by state law, the State Auditor’s Office found. The amount overspent over the span of the four-year audit period totaled more than $327,000 the report said.
Johnson said this figure may be skewed. While state law doesn’t say exactly how the 25% limit must be calculated, the State Auditor’s Office chose to calculate it using the fund’s balance at the end of each budget year.
Johnson said this is when the fund’s balance tends to be at its lowest.
Had the Auditor’s Office calculated the limit differently, the operations costs charged to the Promotion Fund may have not exceeded the 25% threshold, he said.
Gallion said his agency consulted with the North Dakota Attorney General’s Office to ensure its approach to calculating the limit was a reasonable interpretation of state law.
“These are best practices that we use elsewhere when we’re looking at limitations,” Gallion said.
According to the report, this practice allowed the commission to “circumvent” the general fund spending authorized by the Legislature.
“That’s a significant issue,” Gallion said.
The audit report notes that the amount of operating expenses covered by the Promotion Fund increased each year since 2021. The fund’s balance decreased from $415,171 on July 1, 2021 to $255,119 on June 30, 2025.
The Racing Commission in the report stated it is taking action to ensure it does not exceed the 25% cap in the future, including by adopting a standard procedure for calculating it. It also said it will start tracking Promotion Fund spending in real time.
Additionally, the report states that the Racing Commission failed to comply with state procurement requirements for $63,675 worth of purchased goods and services.
The commission in a formal response included in the report stated its staff will complete procurement training to correct this issue.
The commission said it is reviewing and updating its internal procedures to avoid repeating other issues identified in the audit.
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