Sale heats up debate over legalizing slots

New owners say racing is main concern, but they would welcome machines

July 16, 2002|By Greg Garland and David Nitkin | Greg Garland and David Nitkin,SUN STAFF

The political debate over whether to legalize slots at the state's racetracks intensified yesterday after word that the ownership of Maryland's Pimlico Race Course and Laurel Park had changed.

Michael Morrill, a spokesman for Lt. Gov. Kathleen Kennedy Townsend, a Democrat who opposes legalizing slots, said Magna Entertainment Inc. brings the kind of resources that can improve Maryland's racing industry - without relying on slots.

Magna is acquiring a 51 percent stake in the Maryland Jockey Club, the umbrella organization for the two racetracks.

"The lieutenant governor believes that the long-term future of the horse racing industry in Maryland should not be tied to slots, that there are other solutions," Morrill said yesterday. "We believe that this deal makes it more feasible to find those other solutions."

Rep. Robert L. Ehrlich Jr., Townsend's Republican opponent in the governor's race, said he still favors slots at thoroughbred tracks. He estimated that slots could generate from $200 million to $400 million a year for the state while also helping Maryland's horse racing industry compete with neighboring states that allow slots.

"I think there's a lot of momentum" to legalize slots, Ehrlich said.

Magna officials said they view horse racing - not slot machines - as their primary business. But they made it clear they would welcome slots.

"We think there is a bright future for racing," said Magna President Jim McAlpine. But if slot machines are determined to be essential to the success of Laurel and Pimlico, Magna will seek them, he said.

"We're going to aggressively do whatever is necessary to make the business a success," McAlpine said.

The Rev. Thomas A. Grey, who heads the Rockford, Ill.-based National Coalition Against Gambling Expansion, said he believes Magna Chairman Frank Stronach is betting that slots eventually will be approved for Maryland.

"He didn't just wake up one day and say, `My mission in life is to save Pimlico and Laurel,'" Grey said.

Magna is among a group of racetrack owners in Pennsylvania that have lobbied - unsuccessfully - for slots at that state's tracks, said Dianne Berlin of Pennsylvanians Against Gambling Expansion.

She said Stronach also is a proponent of Internet gambling and account wagering, in which people can bet on horse races without going to the tracks.

Senate President Thomas V. Mike Miller, who favors slots at the tracks, said Magna obviously considered the prospect that slots might be legalized in Maryland.

"These people are not going to buy into a race track to make it a loss leader for the country," Miller said. "They have to have some vision to make the tracks profitable."

House Speaker Casper R. Taylor Jr., who also favors slots, voiced mixed feelings about the sale of the tracks and the potential effect of new ownership on Maryland's racing industry.

"If Magna is serious about revitalizing and reinvesting and rehabilitating the venues of Pimlico and Laurel, then we all should embrace this announcement with open arms," Taylor said. "If, on the other hand, the meaning of this announcement is somehow tied to slot machines, then we are missing the fundamental problem - which is the inability of Maryland racing to expand its market."

Sen. Barbara A. Hoffman, a Baltimore Democrat and chairman of the Budget and Taxation Committee, said she would not be surprised if Magna is interested in slots.

"I'm not sure that this industry will survive competitively in Maryland without slots," said Hoffman, whose district includes Pimlico. "All these states around us are providing purse money through slots."

"It has to be part of their thinking," she said. "But nobody can promise it to them."

To acquire the tracks, Magna agreed to forgo some of the potential revenue of slot machines. A separate development company will be established, made up of the De Francis family and the current stockholders of the company: a New York investment firm, Luecadia; jockey club general counsel Martin Jacobs; and a group of investors headed by Lou Guida.

If slot machines are legalized at the track, some of the windfall would go to these stockholders as well as to Magna.

Sun staff writers Jon Morgan and Howard Libit contributed to this article.

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