Casinos put track owner in quandary De Francis opposes such gambling in Md., but hedges his bets

'This is all-out war'

Addition of slots may be matter of survival for courses

October 29, 1995|By Frank Langfitt and Thomas W. Waldron | Frank Langfitt and Thomas W. Waldron,SUN STAFF

As the fight over legalizing casinos heads into the Maryland General Assembly this winter, thoroughbred race track owner Joseph A. De Francis is emerging as the man in the middle.

Hundreds of slot machines and video lottery terminals will open this year at race courses in Delaware, threatening to lure fans and horses away from his tracks, Laurel and Pimlico.

But if Mr. De Francis asks the legislature for slots to compete with Delaware, he may pave the way for casinos elsewhere in Maryland -- creating further competition for his struggling racing business.

At stake, he says, is the future of Maryland's horse racing industry, as much a part of the state's identity as the blue crab and the Orioles. He likens his dilemma to a choice between "bleeding to death slowly and a bullet in the head."

While this may sound melodramatic, recent history suggests Mr. De Francis has cause for concern. As casino gambling has swept across the nation in the past seven years, horse racing has suffered severely. Time after time, the simple, rapid wagering of casino gambling has drawn patrons away from the more complicated, slower-paced betting of the track.

"If casinos come to Maryland without them getting some part of it at the tracks, I think maybe they can survive for two years," said Bill Bork, who, as executive director of Detroit Race Course, saw betting at the track drop by 30 percent after a Canadian casino opened about 10 miles away.

Mr. De Francis consistently has opposed casino gambling, but is keeping his options open. He said at least 10 casino companies have contacted him regarding joint ventures.

So far, Mr. De Francis' position has been that if Maryland legalizes casinos, they should be only at the racetracks or off-track betting parlors. But some lawmakers and lobbyists say that is unlikely to happen. They predict Mr. De Francis will have to choose between running a casino in competition with others in Maryland or doing without slot machines.

These are difficult days for the state's horse racing business. Since 1987, track attendance has fallen by 18 percent. After years of decline, wagering finally rebounded last year as a result of off-track betting, intertrack wagering and simulcasting.

Some casino proponents have urged the state to legalize gambling halls and let them fight it out with the racetracks. In a favorable report on casinos this month, a panel of former presidents of the Maryland Chamber of Commerce wrote that "the state has no obligation to save a dying industry."

Mr. De Francis' response: "This is all-out war."

Casinos have yet to force a thoroughbred track out of business in the United States, but a handful of tracks have had to close temporarily and several have seen profits plummet.

When a casino opens near a horse track, the race course can expect to lose as much as 39 percent of its handle (the amount of money wagered), said Richard Thalheimer, who studies the racing industry at the University of Louisville.

"The only way you can compete with a casino is with another casino," said Mr. Bork, now president of Penn National race course outside Harrisburg, Pa. "It's as simple as that."

Nationally, a half-dozen tracks have responded to casino competition by adding similar types of gambling, usually slot machines.

Prairie Meadows, outside Des Moines, was Iowa's first track when it opened in 1989. The race course drew less than expected and was crippled when an Indian-run casino opened about 45 minutes away.

The solution was to install 1,100 slot machines. The once-bankrupt race course has become a huge money-maker. Profits are so large that Prairie Meadows expects to pay off its entire $85 million debt by next year.

As directed by the Iowa Legislature, the race course pumped roughly $1 million from the slot machines into purses this year, nearly doubling the purse total. The higher purses, in turn, attracted better horses. Just as important, the handle for its races this year was about the same as last year, an encouraging sign to track officials who feared a significant drop-off because of the slots.

Eyes on Kentucky

Many in the industry are watching Kentucky, the heartland of thoroughbred racing. Some tracks there are expected to ask the legislature next year for permission to offer some casino gambling to compete with the riverboats soon to begin cruising the Ohio River on Kentucky's border.

"The question is how big a hit we're going to take and what we're going to do about it," said Robert G. Lawrence, head of the equine industry program at the University of Louisville.

Delaware Park, a thoroughbred track just outside of Wilmington, plans to introduce 715 slot machines this year. Steve Kallens, the track's director of marketing, estimates that the slots will bring in at least $70,000 a day.

Mr. De Francis says he expects to lose 10 percent of his fans at Pimlico to Delaware Park, which is a 1 1/4 -hour drive away. He and others in the Maryland racing world are even more concerned about horses.

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