Penn National might give up stake in some Maryland tracks

Casino operator may be focusing on Rosecroft instead

February 25, 2011|By Andrea K. Walker, The Baltimore Sun

Casino operator Penn National Gaming Inc. is considering selling its stake in the Maryland Jockey Club and urging its partners to drop a legal challenge to the bidding process that awarded a slot machine license for Anne Arundel County to a competitor.

The moves by Penn National might signal the company is shifting its focus to Rosecroft Raceway, the Prince George's County harness-racing track it is buying for $11 million. Penn had set its sights on slots at Laurel Park, which is operated by the Jockey Club, and company officials have indicated that they also plan to push for the legalization of slots at Rosecroft.

Penn opened the state's first casino in Perryville in September. The Hollywood Casino Perryville generated $7.7 million in slots revenue in January after reporting a loss from operations of $1.1 million for last year, including pre-opening expenses.

Rosecroft has suffered financially and stopped live racing to save money. The facility had been operating as an off-track betting site for two years before closing in July. Penn sees slots as a way to bring revenue to the ailing tracks.

"In terms of Rosecroft, we are eager to finalize our acquisition of that asset and to sit down with the harness horsemen to map out a plan going forward that would hopefully result in live racing resuming sometime this year," Penn spokesman Eric Schippers said in an e-mail.

A potential sale of Penn's stake in the Jockey Club, which also runs Pimlico Race Course, comes as the General Assembly considers legislation to prevent one slots license holder from "interfering" with another. The legislation was introduced by two senators irked by Penn National and the Jockey Club trying to prevent the Cordish Cos. from building a slots parlor at Arundel Mills mall.

Cordish won the single Anne Arundel County slots license in 2009. The Jockey Club was disqualified by the state because it didn't submit the required fees. The club challenged that decision.

Schippers said Penn has reached out to its partners at the Jockey Club to ask them to drop an appeal about the bidding process with the Maryland State Board of Contract Appeals. Penn National has a 49 percent stake in the Jockey Club.

"While we continue to believe in the merits of the case, we discussed potentially dropping the suit as a goodwill gesture and a sign of good faith that our only interest has been, and will continue to be, finding a long-term solution to help save Maryland racing," Schippers said.

The Maryland Jockey Club indicated it might support abandoning the suit.

"There are merits to the case but dropping the suit is a good faith gesture since our primary goal is a long-term solution for Maryland racing," Jockey Club President Tom Chuckas said in an e-mail.

David Cordish of the Cordish Cos. said the suit had little to stand on. Cordish has been embroiled in legal battles over slots at Arundel Mills but is resuming work on the facility after opponents withdrew a legal challenge this week. Opponents have been helped by Penn National funding.

"The suit has zero chance," Cordish said in an e-mail. "They did not put up the money that was required by the application. You have to pay to play."

Chuckas declined to comment on Penn National's possible interest in selling its stake in the Jockey Club, first reported by The Daily Record.

Penn National's Schippers said the Jockey Club, or MJC, would operate better under one owner.

"We are currently exploring that possibility, and believe MJC's interests may be better served by a single entity ownership structure given the complexities and dynamics of any 50/50 partnership, Schippers said. "But it's still too speculative at this point to offer any further comment."

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