Gov. Martin O'Malley is developing a plan to share millions of dollars in slot machine revenue every year if Maryland's private horse racing tracks can convince state officials that they need the money to stay profitable.
In legislative briefings this week, O'Malley's aides said the proposal would essentially standardize the emergency deal the governor struck at the end of the year, when the Maryland Jockey Club, which owns Laurel Park in Anne Arundel County and Pimlico Race Course in Baltimore, said it did not have enough money to stage a full, 146-day racing calendar this year.
The state allowed the Jockey Club, operated by MI Developments and Penn National Gaming, to use $3.6 million in slots revenue to keep the tracks open. Before the deal, the money had been intended for track improvements.
Joseph Bryce, O'Malley's top legislative aide, said the administration is crafting bills that would give track owners continuing access to slots money for operations. The arrangement, Bryce said, would last "a couple of years."
Sen. David Brinkley, a Frederick County Republican, praised the governor's intentions but called the proposal "a Band-Aid on an arterial wound." The administration and lawmakers have wrestled for years with how to save the struggling horse racing industry — and the jobs and land preservation that it brings to Maryland.
Under current law, 2.5 percent of slots money goes into a fund that tracks are supposed to use for improvements. The fund is split 80-20 between the Jockey Club and the two harness tracks, Ocean Downs on the Eastern Shore and Rosecroft in Prince George's County.
A bankruptcy court judge has approved an auction of Rosecroft on Friday. Orioles owner Peter G. Angelos has bid $9 million in cash, plus $5 million if officials and voters agree to allow slots at the racetrack by the end of 2012.
The O'Malley legislation will enable track owners to use that money for operations if they can show the state that they need it, as they did this year. Owners would be required to share financial documents with the state; Bryce said the state Department of Labor Licensing and Regulation would be charged with reviewing the books.
The legislation also will contain provisions for monthly communication between the owners and the labor secretary and require auditing when necessary, Bryce said.
The Jockey Club could receive about as much money as it did this year, Bryce said. The harness tracks could not draw more than $1.2 million for operations per year. But Bryce said the governor wants the state to lend Rosecroft's new owners several million dollars right away to restart live racing.
With just two of the five casinos open — and both of them only recently — the slots-funded track improvement account had very little money to shift to Jockey Club operations this year.
O'Malley secured a loan from the Maryland Economic Development Corp. to help fund the bailout. The governor is seeking legislative approval to repay the agency from the track improvement fund.
Some senators said they were skeptical that any amount of state aid can save horse racing. Others question the wisdom of subsidizing the Jockey Club, given its long and costly battle against the state's largest slots project, at Arundel Mills mall.
"It's not a perfect confluence of events," Bryce said. "But they own the stadiums, and no one can race without them."