Penn National to pay $10.25 million for Rosecroft Raceway

Casino operator plans to lobby for slots at the PG County track

January 28, 2011|By Hanah Cho, The Baltimore Sun

Casino operator Penn National Gaming emerged Friday as the new owner of bankrupt Rosecroft Raceway and made clear its intentions to push for slot machines at the Prince George's County track and to restart racing there.

Penn National agreed to pay $10.25 million in cash for the harness track in an auction, outbidding Baltimore lawyer and Orioles owner Peter G. Angelos and one other unidentified bidder, said Michael J. Lichtenstein, the attorney representing the bankruptcy trustee, who oversaw the private sale. The purchase needs to be approved by a bankruptcy court.

The sale extends Penn National's reach in Maryland — and its aspirations to expand gambling here.

The Wyomissing, Pa.-based company opened the state's first slots casino last year in Cecil County and also bought a stake in the thoroughbred tracks at Laurel Park and Pimlico Race Course. It has launched a lobbying effort to get slots at Laurel, and it intends to do the same now at Rosecroft.

While state lawmakers are considering changes to the state's gambling program, including allowing slots at more sites in addition to five previously designated locations, as well as legalizing table games, obstacles remain. Those changes would require a voter referendum amending the Maryland Constitution. And House Speaker Michael E. Busch said recently that any gambling expansion likely wouldn't happen until next year, if at all.

Moreover, questions remain about Penn National's ability to obtain a license to operate a slots parlor at Rosecroft and Laurel Park. State law does not allow a company to hold more than one slots license, and no more than one casino can be located in the four designated counties and Baltimore City.

Penn National's ownership is the latest twist in Rosecroft's decades-long struggle to stay afloat. Penn National had agreed to purchase the track in 2007, only to drop its bid when the facility was not designated as a slots site in a referendum a year later.

Penn National spokesman Eric Schippers said the company's "long-range plan, as it remains for Laurel Park, will be to seek slot machines at Rosecroft, which will help to revitalize Maryland racing and generate important new revenues for the state."

The company will work with the General Assembly to "see if the license limitation is something that can be done by statute or requires it going back to the voters," Schippers added.

In the meantime, Penn National said it plans to work with standardbred horse owners and the Maryland Racing Commission to develop a plan to resume live racing at Rosecroft. Any live racing schedule requires the racing commission's approval.

The track, which suspended racing to save money, had been operating as an off-track betting site for two years before closing in July.

"We're pleased to have a strong racing and gaming partner in Penn National Gaming," said Kelley Rogers, president of Rosecroft's previous owner, Cloverleaf Enterprises Inc. "Rosecroft has had a long, difficult journey, but we made it."

Gov. Martin O'Malley, who is proposing legislation to help both thoroughbred and harness racing, said a return to live racing under new ownership would save 200 jobs at the track.

"It is our hope that new ownership will bring relief to members of the community who share concerns about the vacant facility and its impact on surrounding neighborhoods," O'Malley said in a statement. "I look forward to working together with the new owner to bring much needed harmony to the racing industry so we can move Maryland racing forward."

At the end of last year, O'Malley struck a deal to give the Maryland Jockey Club, which runs Laurel Park and Pimlico in Baltimore, $3.6 million in money generated by the state's slots program so the tracks could continue to hold races this year. The money had been earmarked for track improvements but instead will help finance track operations.

O'Malley, a Democrat, wants to continue providing financial assistance to the ailing thoroughbred industry if the track owners need the money to remain open. His proposed legislation also includes help for the harness industry. The governor wants the state to lend Rosecroft's new owners several million dollars right away to restart live racing.

As part of its bid, Penn National agreed to pay an additional $3 million if the General Assembly approves a bond issue that would help the company finance the track's operations, Lichtenstein said.

David Cordish, whose namesake development company broke ground on a slots casino in Anne Arundel County this week, cast doubt on Penn National's quest for more slots locations and predicted that the company would seek another taxpayer-funded bailout. The Cordish Cos. casino next to Arundel Mills mall would be in direct competition with any slots parlors at Laurel Park or Rosecroft.

"There will never be gaming at Rosecroft, and Penn will be back to the governor and taxpayers for more subsidy," Cordish said in an e-mail.

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