Don't give up on slots at the track

November 15, 2010|By Stephen J.K. Walters

"Do you have to be really old to like this sport?"

That insensitive but insightful question was posed by one of my Sports Economics students on a field trip to Laurel Park last fall, as we eyed a sparse but well-aged group of horse racing fans. I mumbled a defensive answer, something about the twenty-somethings who fill the Pimlico infield on Preakness day. But I knew I was reaching; that crowd isn't really there to see the ponies. And in any case, you can't sustain an industry on a single day of partying.

By the end of the visit, my kids had assembled a long list of reasons that racing is in trouble. First and foremost, they were bummed that the whole enterprise revolved around gambling — that the magnificence of the horses and the athleticism and courage of the jockeys wasn't front and center.

A visit to the paddock to watch the competitors saddle up required a long walk from the grandstand. Once a race was underway, much of the action took place hundreds of yards away, visible only through binoculars or on a vintage video board.

Then there was the excruciatingly slow pace of the goings-on. Two minutes of suspense and a half-hour of hanging around waiting for the next race. Seeing the full slate required a commitment of four-plus hours. To a generation that stops talking in mid-sentence if their smart phones signal an incoming text, that's an eternity.

As to the gambling itself, that just seemed intimidating. When I tried to explain how to decode the racing form, eyes glazed over immediately. Handicapping seemed as much fun as calculus. And the industry keeps complicating things, inventing ever more sophisticated bets and obscure jargon in a vain attempt to enlarge the betting pool.

Mainly, though, the kids were worried about all the wrinkled, gray-haired regulars: those cagey veterans surely had a knowledge edge, like nerds who had studied for a test for … well, decades in this case. Would you trade stocks if everybody on Wall Street had inside information?

Finally, there were the facilities. In an era when amenity levels of stadiums are at an all-time high, Maryland's tracks are well behind the times — crumbling and disreputable-looking. Not fun, not cool, not pretty.

That's nothing a few hundred million dollars worth of capital expenditures couldn't cure, but there's the rub: what sane person would take that kind of risk on a business that's already bankrupt and facing the demographic challenges, competitive pressures and political obstacles that bedevil racing? Only a person who likes longshots.

But there are two ways such a bet might pay off. One involves the Cordish Companies, whose hand has been enormously strengthened by the recent election, which (one hopes) settled that any slot parlor in Anne Arundel County will be built and run by Cordish.

The question is where. If built at Arundel Mills, it will be lucrative enough, given the huge population of potential gamblers within range. But at Laurel it would be a far greater success. The track's access to rail transit is just part of the equation: more important are the synergies that come from mingling audiences for slots and racing.

At separate locales they are competitors, substitute forms of entertainment. Both would be financially weaker, and racing would likely die.

Together, however, they are complements, each reinforcing the appeal of the other. And that would enable greater cost control, as the fixed costs of restaurants and other amenities are spread over more patrons. Given Cordish's talents in real estate development, they could even include a horse-themed residential village in future plans for Laurel, adding further stability and energy to the site.

So Laurel is now worth far more to Cordish than to its current owner; that's the basis for a mutually advantageous deal. But even if that doesn't happen, there's still some hope for change in Baltimore, where the slots license remains in limbo.

A partnership between the Maryland Stadium Authority, city redevelopment agencies, and a capitalist with vision — tech entrepreneur Halsey Minor has reportedly expressed interest — would have the political juice to move the slots license to Old Hilltop and bring forth a facility that is fun, cool and pretty. And, again, marrying racing and slots would bring forth synergies that strengthen both.

Combined with some savvy updates to the product itself, Maryland racing might actually be brought back from the brink. And who knows — maybe some of my students would become regulars before they retire.

Stephen J.K. Walters is a professor of economics at Loyola University Maryland. His e-mail is swalters@loyola.edu.

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