A major casino operator hoping gambling is expanded in Maryland is negotiating a deal that would give it control of two strategically located harness tracks -- and a head start on competitors -- should the state ever legalize slot machines at racetracks.
If the deal is approved, Bally Entertainment Inc. would buy the money-losing Ocean Downs near Ocean City, and probably would shut down live racing and run it as a training center. It would also have the option of purchasing a controlling share of Rosecroft Raceway in Prince George's County if electronic wagering materializes.
In exchange, Bally, a Chicago-based company with casino operations across the country, would provide an immediate infusion of cash and ease the terms of loans it made to the owners of Rosecroft, who say they are facing insolvency.
"At the rate we are going and with the cash we have, we could be out of cash by the end of the year," said Charles Lockhart, executive director of the Cloverleaf Standardbred Owners Association, which owns Rosecroft and Ocean Downs.
State Sen. Christopher J. McCabe, a leading foe of gambling, saw the Bally move as "ominous."
"I think it's clear that Ocean City is perceived by the gambling interests to be a very lucrative area," the Howard County Republican said.
However, McCabe added that the Ocean City area would be a tough market to crack for gambling companies because of fierce local opposition. Legislation that failed last year would have precluded slots in Worcester County, where Ocean City and Ocean Downs are located, even as it legalized the machines elsewhere.
An Annapolis lobbyist who is familiar with gambling-related issues dismissed the significance of the latest move, saying Bally had already achieved a foothold in Maryland when it originally made its deal with Cloverleaf.
Cloverleaf, made up of owners and trainers of harness horses in Maryland and Delaware, bought the tracks in 1995 because the former owners said they were shutting them down.
Bally helped Cloverleaf with a $10.6 million loan. In exchange, Bally got a piece of the action in the event Maryland legalized slot machines at racetracks by gaining the right to buy half of the tracks.
Many gambling proponents say if Maryland expands gambling, it will do so first at the racetracks, as a way to strengthen that declining industry.
Under an agreement that will be voted on by Cloverleaf representatives Tuesday, Bally would pay Cloverleaf $1 million for Ocean Downs and effectively slice $1 million to $2 million off Cloverleaf's annual costs by taking Ocean Downs off its books and renegotiating the loan.
Bally would also have the right to buy 65 percent of Rosecroft if slot machines are legalized, effectively giving it control of two tracks, one near the ocean resorts and another just south of Washington.
Bally currently operates the tracks under a management agreement.
The horsemen -- who don't think Bally has managed the tracks well, Lockhart said -- will take back operation of Rosecroft.
In the fiscal year ending July 1, Ocean Downs and Rosecroft lost $1.2 million, Lockhart said. Most of the losses have come from Ocean Downs; Rosecroft is close to breaking even.
Lockhart said he supports the agreement, but wasn't sure how the horsemen's representatives will vote Tuesday.
There was considerable disagreement about the proposal at a membership meeting Monday, and the two sides have adjusted it since.
Bally is not sure what it will do with Ocean Downs if the agreement is accepted, but operating it as a track does not seem likely, said Bernard Murphy, vice president of corporate affairs for Bally.
Under the agreement, for the next two years, Bally would maintain Ocean Downs as a training center and possibly for simulcast racing. The horsemen would have to approve the resumption of live racing, as it would become a potential competitor to Rosecroft. Bally could eventually sell or develop the property without a track.
"Clearly, we got involved originally because of the potential for gaming. But what we are doing now is not with the thought of gaming coming. It's a workout. We want them to keep paying their loan," Murphy said.
Gov. Parris N. Glendening has vowed to veto any expansion of gambling while he holds office. The racing industry still hopes to persuade him, or his successor, to do otherwise.
Two competitors of the tracks, Dover Downs and Harrington in Delaware, have added electronic wagering machines in the past year, increasing purses and luring bettors and horsemen from the Maryland tracks.
Harness tracks are especially susceptible to such competition because the horses are stabled on farms, most of them on the Eastern Shore. The owners can easily truck the animals to any number of tracks on race day. Thoroughbreds tend to run at the tracks where they are stabled.
However, the harness industry was in decline long before Delaware got slots. Rosecroft and Ocean Downs, formerly Delmarva Downs, have lost money for years. Ocean Downs, with a few hundred part-time employees, has been especially troubled and was shut down last season.
Pub Date: 10/25/96