(1) Bicycle racing on the highways is prohibited except as authorized in this section.
(2) Bicycle racing on a highway shall not be unlawful when a racing event has been approved by the department or local law enforcement authorities on any highway under their respective jurisdictions. Approval of bicycle highway racing events shall be granted only under conditions which assure reasonable safety for all race participants, spectators and other highway users, and which prevent unreasonable interference with traffic flow which would seriously inconvenience other highway users.
(3) By agreement with the approving authority, participants in an approved bicycle highway racing event may be exempt from compliance with any traffic laws otherwise applicable, provided that traffic control is adequate to assure the safety of all highway users.