Maryland off-track betting parlors struggle

Cracked Claw OTB could close without help

February 27, 2011|By Hanah Cho, The Baltimore Sun

URBANA — — A mostly gray-haired crowd of gamblers scans dozens of TV sets and places bets on horse races broadcast from tracks around the country at the Cracked Claw restaurant in this Frederick County community.

One longtime patron, Chris Kovin, said he comes because he prefers to hoist a beer and socialize while watching the races, rather than placing online bets from home. But, he acknowledges, the Cracked Claw "has definitely seen better days."

The state's four remaining off-track betting facilities are struggling along with the declining horse-racing industry, itself hobbled over the years by the sport's waning popularity and by competition for gambling dollars from nearby slot-machine parlors and casinos.

But while Maryland racetracks are hoping a bailout and the state's new slots program will revive the industry and tradition, the OTB facilities are fearing closure. Owners of the Cracked Claw, the state's first and largest OTB parlor, say they face the real possibility of closing their doors within the year.

"We're hanging by our fingernails," said John "Pappy" Poole, who owns the restaurant with his wife, B.J.

OTB wagering has plummeted over the past 15 years. Bettors at the facilities wagered $41.4 million in 2009, according to the most recent figures from the Maryland Racing Commission. That's down from more than $80 million in 1995.

Approved in 1992, Maryland OTBs were promoted as a boon for a racing industry that was losing bettors. Racing boosters sold the idea to lawmakers, saying the facilities would bring racing to people who lived far from the state's four major thoroughbred and harness tracks, and also would renew interest in the sport and increase wagers.

Besides the Cracked Claw, other OTBs include the Riverboat, which sits over Maryland waters in the Potomac River near Colonial Beach, Va., and the North East Racing & Sports Club in Cecil County, owned and operated by the Maryland Jockey Club. The fourth is the Cambridge Turf Club on the Eastern Shore, owned by William Rickman, who also operates the Ocean Downs harness track and casino.

For restaurant operators like the Cracked Claw and Riverboat, the addition of off-track betting brought more customers and another source of revenue.

It worked for a while.

But then came slots parlors and, more recently, casinos with table games including blackjack and poker in neighboring states such as West Virginia and Delaware. And online betting, which is legal in Maryland, also grew in popularity.

Some facilities have closed over the years. The Shoals, an OTB in Cambridge, closed in 1999 when the owner sold the property.

While state lawmakers consider legislation to direct $3.6 million to help fund operations of the financially strapped Maryland Jockey Club, which operates Laurel Park and Pimlico Race Course in Baltimore, the Cracked Claw's owners would like some help, too. The Jockey Club is the OTB's partner.

The Cracked Claw is trying to persuade the Jockey Club to give the restaurant a bigger slice of the bets made at the OTB — without success. Wagering at all four OTB facilities made up about 14 percent of $303 million in statewide bets on thoroughbred and harness races two years ago.

Cracked Claw's owners said their deal with the Jockey Club that allows the restaurant to keep 4.25 percent of bets — a percentage that has remained unchanged since 1993 — is no longer fair. Most of that money is eaten up by expenses, which have continued to rise, said Jeff Thorpe, the Cracked Claw's general manager.

For instance, the Cracked Claw pays the salaries and benefits of the OTB tellers, who are employees of the Jockey Club. Those labor costs have risen 20 percent in the past three years, while expenses for utilities and supplies also have climbed, Thorpe said.

Meanwhile, strong dining and beverage sales haven't been enough to offset the poor off-track betting business. While half of Maryland's off-track wagering in 2009 — $21 million — took place at the Cracked Claw, betting has been falling precipitously. As a result, the Cracked Claw lost almost $200,000 last year, Poole said.

"He's not a greedy man," said Angel Nusbaum about her father, John Poole. She's a Cracked Claw manager. "We need help."

Peggy Flanagan, owner of the Riverboat, also would like to get a bigger share of the bets but understands that the Jockey Club has been struggling and last year threatened to significantly curtail the horse-racing season because of mounting losses. "We've talked to them, but there isn't anything they could do," she said.

At the Riverboat OTB site, which is also a restaurant, the recession has not only curtailed wagering but also overall sales, which have fallen more than 30 percent since 2008, Flanagan said.

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