Slots squeeze by in house

Officials see bill far from finish line

Racing Industry

General Assembly

February 26, 2005|By Tom Keyser | Tom Keyser,SUN STAFF

The euphoria with which the racing industry was expected to greet a slots victory in Annapolis was nonexistent yesterday after the House of Delegates for the first time passed a bill authorizing slot machines in Maryland.

Racing officials seemed almost shellshocked by the nail-biting narrow margin of victory, the pitfalls that remain before the bill would become law, and a last-minute amendment that inflamed a long-simmering dispute between the thoroughbred and standardbred factions. Also, they seemed almost numb from the process of Maryland lawmaking.

"It's a brutal process down there," said John Franzone, a member of the Maryland Racing Commission. "There's so much competition among the different factions for this revenue. It's such a volatile topic. I don't know where it's going."

Although raising money to help racing was the original motive for considering slot machines, racing became less and less a priority as the debate raged on. Some legislators saw racetrack owners as rich and greedy, unwilling to help themselves before asking for a slots handout.

The House bill would authorize 9,500 slot machines at four locations, and, based on limits placed on locations, only one could be a racetrack. Laurel Park would be eligible to apply for the license designated for Anne Arundel County, but it would not be assured of gaining it.

The slots bill passed earlier by the Senate would place 15,500 slot machines at four tracks and three other locations to be determined. The tracks would likely be Laurel Park, Pimlico, Rosecroft Raceway (the harness track in Prince George's County) and a still-to-be-built track in Allegany County.

"We've got two versions of a slots bill, and they need to be reconciled," said Alan Foreman, attorney for the Maryland Thoroughbred Horsemen's Association, which represents thoroughbred owners and trainers. "It's such a hot-button issue. ... Any number of issues could mean its downfall. There's no way for anybody to feel one way or the other right now. There's a long way to go yet."

Cautious response

Jim Gagliano, an executive with Magna Entertainment Corp., the parent company of Pimlico and Laurel Park, was cautious in his response: "We're very grateful for the progress that has been made. We're hopeful a bill will be provided to the governor this session."

Under the Senate bill, 36 percent of slots proceeds would be retained by the operator of slots casinos at the four tracks. Under the House bill, 30 percent would go to the operator, and 3 percent would go into a fund to be divided by all Maryland racetracks for capital improvements. The bill provides for the fund for only the first five years that slots are operational.

Because the House and Senate passed different versions of a slots bill, a committee of House and Senate leaders must broker a compromise bill. That bill would then have to be approved by both chambers.

Because House Speaker Michael E. Busch insists that the House bill not be changed, racing leaders fear that if any slots bill becomes law, it will be the one less beneficial to racing. Or, they fear, the joint committee could fail to produce a compromise bill, dooming the slots initiative for a third straight year.

Percentages altered

The House bill would provide up to $100 million per year to purses and bred funds (programs that promote the breeding of horses in Maryland). But, it would divide that money by designating 70 percent for thoroughbred racing and 30 percent for harness racing.

Because of a last-minute intensive lobbying effort by the harness industry, those percentages were changed by the House Ways and Means Committee from 90 percent for thoroughbreds and 10 percent for standardbreds. Standardbred is the breed of horse that competes at harness tracks.

That inflamed a deep-seated conflict between the two sides on how to share revenues. The harness side argues that 30 percent of the betting at the state's major tracks takes place at Rosecroft. The thoroughbred side counters that, regardless of where it is bet, 90 percent of horse wagering in the state is on thoroughbred racing. That's possible because Rosecroft, despite being a harness track, accepts betting on thoroughbred races televised from other tracks.

"You're back to the same problem that's haunted the industry for years: how to divide revenues," said Foreman, the thoroughbred horsemen's attorney. "It's going to create another battle. It puts us again in the position of having to fight to get a larger share."

Rosecroft would likely get slots under the Senate bill. It would not get slots under the House bill, but it could receive about $20 million for purses. This year, racing under a reduced schedule on 106 nights and awarding $40,000 in purses per night, Rosecroft will award $4.24 million in purses.

Foreman described that as "a windfall" for Rosecroft. Tom Chuckas Jr., president and chief executive officer of Rosecroft, declined to address the purse issue. "This has been a long process, and the process has gone through many steps," he said. "There're still many more to go. It's not over by any means."

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