Horse tracks seek even bigger trophy from taxpayers

March 20, 2011|By Jay Hancock

The Maryland Jockey Club wants state slots revenue to help pay its operating costs.

You can understand why. The Jockey Club's operating costs have soared because of its extraordinary efforts to undermine and delay state slots revenue.

If this makes sense to you, legislators, go ahead and give the owner of Pimlico Race Course and Laurel Park what it wants. If it doesn't, don't worry. Nothing else in Maryland's slots policy makes sense either.

Having blown its best opportunity for a slots license, the Jockey Club scrambled and whined for a second chance, spending huge amounts to try to get voters to reject a rival slots casino at Arundel Mills mall. It lost, but the campaign delayed the casino opening and cost the state.

Now the club is causing trouble again. Under Maryland law it gets slots proceeds worth millions for racing purses and millions more for buildings and other capital improvements. Fatter purses and spruced-up tracks are supposed to return the industry to profitability.

But that's not enough. The Jockey Club says it can't wait until the remedy approved by Maryland voters — the remedy it worked to delay — plays out. It wants the General Assembly to shift large chunks of the "racetrack renewal," capital-improvement money into its operating account.

Instead of paying for new stables, grandstands and the like, the money would drop directly to the Jockey Club's bottom line.

This is a good idea, the Jockey Club says, because it has been losing money. It has the paperwork to prove it. Sort of.

Although it never filed the required 2008 and 2009 audited financial statements with the Maryland Racing Commission, in recent weeks — just in time for lobbying season — the club submitted unaudited accounts. They show plunging betting revenue and losses of about $26 million for the two years, mostly at Laurel.

What are the consequences when tracks fail to honor the law's requirement for timely, audited financial information?

"We've never had this situation in the last 25 years," says a puzzled J. Michael Hopkins, the commission's executive director.

The Jockey Club's explanation is that the 2009 bankruptcy filing of its then-parent, Magna Entertainment, prevented it from submitting the paperwork. When the tracks were transferred to MI Developments after the filing, the new owner didn't have access to the books, says club President Tom Chuckas.

In any case, the statements show millions of dollars in slots-related lobbying, legal and "predevelopment" costs. These have nothing to do with horse racing and exaggerate the red ink.

The 2010 statements, when they appear, will probably show even larger outlays for attacking the Cordish Cos.' slots casino at Arundel Mills last year. Cordish won a slots license fair and square. The casino will produce badly needed revenue for Maryland, not to mention racing stakes money. But the Jockey Club and partner Penn National Gaming spent tons of dough to try to get it outlawed.

Under the bill being considered in Annapolis, the state would basically reimburse the club for working against the interests of the state. And for working against its own industry.

Slots are already the biggest corporate welfare program in Maryland history. The most public money Maryland ever gave to private companies before was $10 million or so for a steel mill or an auto plant. Slots, on the other hand, could easily funnel scores of millions a year, every year, to the less important racetrack industry.

To this gilded lily the General Assembly bill would apply several layers of platinum. It's every CEO's dream: a government slush fund to finance day-to-day business.

Which for the Jockey Club, by the way, is not racing horses. The club has made very clear that its business is lobbying for a slots license. Maryland taxpayers shouldn't have to pay for that.

Even without the lobbying and legal expenses, Chuckas says, the Jockey Club bleeds millions a year.

"We're no longer in a position to continue to lose money," he says.

But the state has a plan to fix that, if only the Jockey Club would let it work. Bigger purses, paint jobs and a recovering economy may bring back horses and bettors. Let's at least test that proposition before making the Maryland treasury part of the racetracks' accounts payable department.

The Jockey Club's financial statements show that it makes about $100,000 a year selling horse manure to farmers. It seems to think it'll get a better price from the legislature.

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