OTB touted as solution to racing ills Jacobs, De Francis cite track losses

March 22, 1991|By Mark Hyman and C. Fraser Smith

Owners of Pimlico and Laurel race courses, who lost $849,058 operating Maryland's two major thoroughbred racetracks last year, yesterday prescribed a familiar and, in some quarters, controversial remedy to the state's racing slump -- off-track betting.

"I see off-track betting providing significant assistance for the racing industry as a whole, including the tracks," said Martin Jacobs, a part-owner of the tracks.

"It's critically important to our industry," said Joseph A. De Francis, who operates Laurel and Pimlico.

"I like to draw an analogy to baseball and the Orioles: Off-track betting won't generate a tremendous amount of short-term income for racetracks. But it will generate increased handle, which in turn will increase purses, which will allow us to attract more and better athletes, in our case, horses . . . That will result in growth for our business."

OTB legislation has been scratched in Annapolis for the past three years. But the movement may have gained the attention of the General Assembly again this week after the racing industry reported broad losses in 1990.

The racetrack owners' remarks came after The Evening Sun, referring to audited financial reports filed with the Maryland Racing Commission, reported yesterday that Pimlico Race Course lost $483,972 last year. Losses at Laurel Race Course were $365,086.

Maryland's two harness tracks, Rosecroft in Fort Washington and Delmarva Downs in Berlin, are in bankruptcy proceedings, and are being run by a court-appointed trustee after the financial collapse of their former owner, real-estate developer Mark Vogel. According to figures in the report, Rosecroft earned $159,336 and Delmarva Downs lost $56,886 last year.

However, the accounting firm that audited the harness track's finances cautioned in its report that certain financial figures and potential liabilities stemming from pending lawsuits had not been adequately accounted for by track ownership. Therefore, the firm said, the figures might not be reliable.

Maryland's remaining track, Timonium, recorded a loss of $20,072 last year. It is owned and operated by the Maryland State Fair and Agricultural Society.

Despite losses at both tracks, the news from Laurel and Pimlico was not all dismal last year. Laurel, racing 16 fewer dates than in 1989 (129 to 145), increased attendance to 1,646,607 from 1,490,965 customers in 1989. Over the same period, money wagered decreased to $201,802,265 from $232,336,871.

Pimlico had modest boosts in attendance (1,235,691 from 1,091,837) and wagering ($234,071,757 from $193,533,273), but still lost money after earning $35,949 the previous year.

De Francis, who is president of both Pimlico Racing Association and Laurel Racing Association, which owns the tracks, cited increased operating expenses for the downturn at Pimlico, but declined to be more specific, saying of the reasons for the losses: "These are long and complicated questions. If there were easy answers, we would have done something, and we'd be in black ink instead of red."

Jacobs, however, who serves as executive vice president and treasurer of both tracks, said the financial reversals were, in part, the result of a new labor contract. The contract, which was negotiated last year, covers about 1,000 unionized employees at Laurel and Pimlico, including parking workers, program sellers and jockey valets. It included a 5 percent pay increase, costing the track an additional $750,000 to $1 million last year, said Jacobs, who called increased labor costs "a significant element" in the tracks' losses in 1990.

Legislation to allow off-track betting hasn't proceeded far in the General Assembly. In 1989, Gov. William Donald Schaefer appeared eager to move ahead with OTB. He appointed a study panel that recommended establishment of four betting parlors -- to head off potentially damaging competition from new tracks in Virginia and a new OTB system in Pennsylvania.

Racing interests fear larger purses in bordering states -- fattened by OTB wagering in Pennsylvania -- could induce Maryland horses and trainers to leave. If OTB were available in Maryland, they argued, the purses here could keep pace.

But the General Assembly -- reacting to concerns about the further of extension of gambling in Maryland -- decided not to act. The matter was shelved. And, since then, the administration xTC has been waiting for the legislature to take the lead.

Still, some in Annapolis see a bright future for OTB.

"The things which have caused trouble," said Delegate Paul E. Weisengoff, D-Baltimore, a member of the Ways and Means Committee, "will be settled by next year. I think it'll pass next year."

Perhaps the legislature's most ardent racing advocate, Weisengoff said he does not think the tracks are in serious financial trouble -- certainly none that OTB couldn't help cure.

"I think if they're in trouble, the only reason is they don't have the purses they need. The way you build the handle is by attracting people who can't get to the track," he said. The competition, he said, already has attracted some Maryland horses already.

Dennis C. McCoy, a lobbyist who represents Maryland breeders, called OTB "the only way an industry vital to Maryland can extend its interest base. The industry's just going to have to adjust to changes in the way we live.

"People who would like to put down a bet occasionally but can't get to the tracks might spend a few hours in a betting parlor, he suggested.

"It's like branch banking," he said.

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