Preakness at risk

Our view: The horse racing industry has been predicting its own demise for years

this time, it seems intent on proving its point

November 30, 2010

The Maryland Racing Commission sided with the state's horsemen on Monday in rejecting a plan to drastically cut back on racing days at Pimlico and Laurel Park, but it was no victory for the state's breeders, trainers and jockeys. The 47-racing-day schedule proposed by Maryland Jockey Club owners MI Developments and Penn National Gaming may have signaled the slow death of Maryland horse racing, but all the horsemen got instead was the promise of a quick death. As it stands right now, there will be no thoroughbred horse racing in Maryland next year, not even the Preakness. And once that tradition is broken, there would be no way to resurrect it.

Maryland's political leaders, from the governor on down, will not sit by and let that happen. The legislature has given the state the power to seize the tracks and the Preakness, if necessary, to keep the second leg of the Triple Crown in Maryland. While actually pulling the trigger on that provision might be so costly and difficult as to make it prohibitive, the law at least signals a seriousness of intent. The risk of losing the Preakness — a perennial threat but one that this time appears a little too probable for comfort — should be enough for the General Assembly to take up the cause.

Still, the way forward is far from clear.

MID and Penn National could come back to the racing commission with a revised plan at its next meeting on Dec. 21, but absent some change to the economics of an industry that's losing $4 million to $7 million a year on racing at Laurel, it's not likely that they would come up with something better.

The talk of creating a second site for slot machine gambling in Anne Arundel County at Laurel Park is a nonstarter. Getting a slots bill through the House of Delegates the first time was extraordinarily difficult, and the summary dismissal of a Senate plan to allow poker at Rosecroft Raceway this year suggests that chamber is not eager to change the parameters of the state's gambling law before it is even fully implemented. Even if the legislature did approve such a plan, it would have to go to voters in 2012, when its fate would be uncertain, and the process of soliciting bids for such a license, reviewing and approving one, and then constructing a slots parlor at Laurel could take years more. Finally, it wouldn't be fair to those who followed the rules in the first round of slots bidding and made investments based on the parameters the state set up.

More practical is the idea of changing the way racing subsidies are divided. Right now, 7 percent of slots revenue goes to enhancing racing purses, up to $100 million a year, and 2.5 percent goes toward a matching fund for capital improvements at racetracks, up to $40 million a year. That part of the slots program is a matter of statute, not something that would require a public referendum to change. If the industry now says that allocation of money is not the right one to preserve horse racing, then the state should change it.

The tricky part is getting agreement among the track owners, horsemen and others with a stake in the question on how exactly to do that. Monday's meeting made clear that the horsemen do not see eye-to-eye with the tracks' owners. And the disagreement between Penn National and MID owner Frank Stronach about whether to cut back on racing days suggests that their interests aren't aligned either.

It's fair to wonder how long Penn National — which has advocated for the cut in racing days and wanted to close Laurel altogether — will maintain its interest in being a part of the Maryland Jockey Club. It acquired a 49 percent stake in the operation (and veto power over major decisions of its board) while the jockey club was fighting to stop the Cordish Cos. plan for slots at Arundel Mills, in hopes of eventually expanding gambling at Laurel. Now that Arundel voters have overwhelmingly approved zoning for Cordish's casino, the equation has changed. Unless Penn National tries to use its Maryland foothold to somehow gum up the works on Cordish's permitting (and thus delay the onset of a major competitor to his highly profitable operation at Charles Town, W.Va.), it's hard to see much opportunity here.

If Penn National extricates itself from the partnership, it would leave Mr. Stronach, an avid racing fan and proponent of something akin to the current 146-day racing schedule, in charge. But that's no panacea either; after all, it was under his leadership that the jockey club bungled its bid for a slots license in the first place.

Untangling that knot isn't going to be easy, and there's not much time to do it. Gov. Martin O'Malley, who met recently with Penn National and MID officials, needs to take the lead on negotiating a new split for the slots profits that can stabilize the industry in time for the General Assembly to act on it immediately after lawmakers convene in January. Logistically speaking, the fate of the Preakness can't be hanging in the balance as the 90-day legislative session drags on through the spring.

Maryland's track owners and horsemen have been prophesying doom in their industry for years, but this time they seem determined to prove themselves right. One would hope that they would realize on their own the need to compromise to prevent the total collapse of Maryland racing, but the state can't take that chance.

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