Slots bill is seen as no guarantee for Pimlico

Critics dismiss track supporters' assertion as bargaining tactic

General Assembly -- Special Session

November 02, 2007|By Bradley Olson | Bradley Olson,SUN REPORTER

For decades, the notion of opening Maryland to slot machine gambling has been billed as the salvation of the state's historic - yet flagging - horse racing industry.

But the compromise bill before the General Assembly, while providing lucrative benefits for the sport and the tracks, is not nearly as rich as previous proposals. Supporters of Baltimore's Pimlico Race Course wonder whether the measure will be enough to guarantee the track's future - an assertion critics dismiss as a bargaining tactic.

While the legislation - which will be debated by House and Senate committees in a hearing today - provides an annual subsidy of as much as $140 million a year for race purses, breeders and track improvements, it also calls for a slots parlor in Baltimore, but not at Pimlico.

Laurel Park, which, like Pimlico, is run by the Maryland Jockey Club, is eligible for a license. But Toronto-based Magna Entertainment, which bought the Jockey Club five years ago, agreed then to share some of the proceeds of future slots revenue with previous owners based on a sliding scale.

According to two analysts' estimates, Magna might retain only $10 million to $20 million after operating expenses and paying out past owners, an amount that some believe won't be enough to keep the tracks afloat.

"If somebody cannot run their racetrack profitably, then there's not going to be any racetracks in the future," said Tim Capps, a former Jockey Club official who is now executive-in-residence at the University of Louisville's Equine Industry Program. "If they can't do what tracks in West Virginia, Pennsylvania and Delaware can do, Maryland will wake up one day with a lot of purse money and nowhere to race."

Others bristle at the notion that a $140 million state subsidy to the industry isn't enough, and they criticize Magna and its supporters for continually threatening to move the Preakness from Pimlico every time slots legislation is debated.

"I suppose that when corporate interests smell a subsidy, there's every incentive to whine that it's not enough, so I expect that they will whine right up until the ink is dry on the deal," said Del. Steve Schuh, an Anne Arundel Republican.

Gov. Martin O'Malley's slots plan calls for the state to buy or lease machines through Maryland's lottery agency. The plan identifies five sites for slots licenses, with a limit of 15,000 machines. The sites are in Laurel and Baltimore City, as well as the counties of Allegany, Cecil and Worcester.

According to O'Malley's plan, gross revenue from the slot machines would be distributed according to a formula. The operator of a slots parlor would keep 30 percent, while 2.5 percent of the total, up to $40 million a year, would go toward refurbishing the tracks.

Half would be set aside for public education. Six percent - up to $100 million a year - would go toward funds for the benefit of horse breeders and the purses paid to the owners of winning horses. Local governments where slots are located would get 5.5 percent, the lottery agency would keep 5 percent to cover administration costs, and 1 percent would go to a minority- and women-owned business investment account.

One expert estimated that Laurel's slots alone would generate $542 million a year, leaving the operator with $162 million.

The track would benefit from its location in the densely populated and wealthy Maryland and Virginia suburbs of Washington.

Senate President Thomas V. Mike Miller, a slots proponent who has aggressively promoted allowing them at racetracks to help the racing industry, said the legislation was designed not to be "a windfall for any one individual or any group of individuals," but to "maximize the benefit to the state of Maryland."

But in structuring a proposal that doesn't enrich track owners, administration officials might have produced a plan that won't generate enough money to save Pimlico, said Miller, a Democrat who represents parts of Prince George's and Calvert counties.

"Laurel's going to remain in existence," he said. "But with this bill, I believe Pimlico and Bowie [Training Center in Prince George's] get closed, and the Preakness goes."

O'Malley's bill states that licensees must also maintain the same number of live racing dates authorized in 2004 and that the tracks' operator would lose the purse subsidy and track improvement funds, should the Preakness be moved out of Maryland.

That would go against one of the main rationales for legalizing slot machine gambling in Maryland, one mentioned prominently by O'Malley on the campaign trail as he pushed for "limited slots" at racetracks, and more recently when he began unveiling his tax and slots proposals in September.

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