Their own worst enemy

Our view: The Jockey Club is fighting slots at Arundel Mills in the belief that it is saving racing, but just taking the subsidies from the mall casino is the better bet

March 21, 2010

For years, Maryland's horse racing industry sounded dire warnings that it would soon collapse unless the state promptly legalized slot machine gambling. Slots in other states propped up their horse racing industries through subsidized purses and incentives for breeders, and Maryland's horsemen insisted that we had to follow suit. So we did. Voters approved slot machines with a hefty portion of the proceeds going to the horse industry, and in Anne Arundel County, where the state's largest slots parlor was to be located, the county council granted zoning approval for a casino the state's slots licensing commission predicted could be among the most lucrative in the country.

But now the prospect of a slots parlor at Arundel Mills Mall is tangled up by opposition from what may be the Maryland horse racing industry's greatest enemy: itself.

The Maryland Jockey club is funding a petition drive on the November ballot to reverse the legislation authorizing zoning for slots at Arundel Mills, and the county's election commission says it has enough signatures. If that ruling holds up against litigation by the developer of the proposed Arundel Mills casino, the Cordish Cos., the Jockey Club will also likely bankroll the referendum campaign this fall. What does it hope to get for its efforts? Here's the best-case scenario:

The campaign for the referendum succeeds, and voters in Anne Arundel County, who overwhelmingly voted to support slots in 2008, knowing that a casino would be built in their jurisdiction, decide to nullify zoning that allows slots at Arundel Mills. In so doing, the voters also knock out zoning that allows for slots at Laurel Park. Then, the Jockey Club hopes that the state slots licensing commission decides to reopen bidding for the Arundel license. This time, Arundel Mills opponents hope, a valid bid can be entered for slots at Laurel, notwithstanding the fact that the track's owner, Magna Entertainment Corp., is still in bankruptcy and is in the midst of trying to auction off both it and Pimlico.

The licensing commission, under this scenario, would decide to give the license to Laurel, and the county council, which by then would have several new members who have never considered the issue before, would swiftly approve new zoning allowing slots at Laurel, reinstating at least part of the law that voters had just overturned.

Talk about a trifecta. And even if all that happened, it would delay the implementation of slots in Anne Arundel County by a minimum of a year, and probably more.

But if that meant slots would actually go at the track, it would be worth it for the horse industry, right? Maybe not. Under the state's slots legislation, the horse racing industry gets up to $100 million a year in slots proceeds to supplement purses and to provide incentives for Maryland breeders, whether the slots are at racetracks or not. And the tracks get up to $40 million a year for capital improvements for eight years, regardless of where the slots go. The state's slots commission estimated that the Arundel Mills site alone would account for $47.5 million a year for the horse racing industry.

Thomas Chuckas, the president of the Maryland Jockey Club, says that wouldn't be enough to save Maryland's racing industry. He says slots must be at the tracks because the additional revenue for Laurel would enable a much greater face lift for the facility and help it attract a new generation of horse racing enthusiasts. Getting a piece of the $40 million in capital funding requires the tracks to come up with matching funds, which the industry says it won't have without slots. Having a wider variety of activities at the track -- including slots -- would be necessary to prevent a rapid death of a storied Maryland tradition, Mr. Chuckas says.

The problem is, it hasn't worked out that way in neighboring states. The live handle in West Virginia and Delaware -- that is, the amount of money bet by patrons of those tracks on the live races there -- is down in both states by nearly 50 percent since 2001 despite their well established slots programs. Revenues from out of state generated by simulcasting the races from their tracks have done better, but that has nothing to do with whether the slots parlors are attached to the grandstand or hundreds of miles away. It has to do with the quality of races, which is the result of the purse subsidies the slots provide.

Slots at the racetracks in our neighboring states haven't revitalized the industry; they've put it on life support.

Still, the racing industry insists that the referendum is do-or-die. If it fails, and with it the effort to bring slots to Laurel, the people now bidding for that racetrack would suddenly find the idea of continued racing there much less attractive, they say, predicting that the track would be razed in favor of strip malls and sprawl, racing would be limited to a few days a year at Pimlico, and the industry would fade away.

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