Lawmakers approve slots subsidies for Md. racetracks

Senate adds conditions on fund eligibility

April 13, 2011|By Hanah Cho, The Baltimore Sun

Maryland's racing industry boosters praised the passage of legislation that would redirect millions in slots revenue to financially struggling tracks for the next several years, but they acknowledged Tuesday the hard task ahead of ensuring the sport's future.

The bill — which Gov. Martin O'Malley is expected to sign — would divert up to $6 million annually in slots revenue allocated for racetrack improvements to help support the day-to-day operations of the Maryland Jockey Club in 2012 and 2013. In exchange, the Jockey Club must maintain at least 146 days of live racing a year. The Jockey Club operates Laurel Park and Baltimore's Pimlico Race Course, the host of the Preakness Stakes.

The ailing harness racing industry would receive similar help, with operators of Ocean Downs racetrack near Ocean City and Rosecroft Raceway each eligible for up to $1.2 million. Each harness track would have to support at least 40 days of live racing annually.

"We're going to have year-round [thoroughbred] racing through 2013," said Alan Foreman, an attorney for the Maryland Thoroughbred Horsemen's Association. "From our perspective, stability was the most important thing."

Even with the temporary infusion, some racing officials remain convinced that allowing slots at racetracks is the best option to help revitalize the industry. While lawmakers considered legislation to add table games and gambling venues, the General Assembly did not act during the session that ended Monday on any measure to significantly alter the state's slots program. Legislative leaders and O'Malley had indicated that any action on gambling bills would likely take place during next year's session.

"The long-term solution is to locate a gaming operation at a thoroughbred racetrack," John Franzone, a longtime member of the Maryland Racing Commission, said Tuesday.

Foreman said the legislation provides time for the industry to devise a plan for the long-term viability of Maryland racing — with and without slots at a thoroughbred track. The bill also requires that the thoroughbred racing industry submit by Dec. 1 a business plan that would maintain year-round racing and sustain the sport without slots at a racetrack.

Less than four months ago, Maryland thoroughbred racing, which dates to Colonial times, was on the verge of collapse when efforts by the Jockey Club to significantly reduce the number of live racing days at Laurel Park and Pimlico were twice rejected by state racing officials — with support from owners, breeders and others.

The debacle renewed friction between owners and breeders and the Jockey Club's corporate owners, particularly Penn National Gaming. Shareholders of Canadian real estate firm MI Developments, the Jockey Club's majority owner, recently approved a proposal that would transfer its racing assets to its chairman and chief executive, Frank Stronach. Stronach would take the racing operations, including the Jockey Club, private under the deal, which is expected to close in late June.

O'Malley broke that impasse by negotiating a last-minute agreement that allowed the Jockey Club to continue year-round racing in 2011. Under that deal, the horsemen and breeders associations agreed to contribute $1.7 million while the state is providing $3.6 million from slot revenue.

The legislation that passed late Monday essentially extended those slots subsidies, while Senate and House lawmakers placed some additional oversight and conditions on the funding.

The Jockey Club's eligibility for the funds also depends on the thoroughbred industry's striking a deal with Rosecroft regarding the broadcast of thoroughbred races.

Rosecroft has been mired in a bitter fight with the thoroughbred industry — namely the Jockey Club, the Maryland Thoroughbred Horsemen's Association and the Maryland Horse Breeders Association — over an agreement that required the track to pay $5.9 million a year to receive simulcast signals for thoroughbred racing.

Rosecroft stopped paying in 2009, saying the deal was no longer feasible for the money-losing operation. The Prince George's County track, which lost its right to broadcast thoroughbred races, filed for bankruptcy protection that year. A lawsuit related to the dispute is close to being settled, said Foreman, of the thoroughbred horsemen's association.

The situation became more complicated when Penn National bought the bankrupt track in March for $11 million. The casino operator said it hopes to resume live racing in the fall and will continue lobbying for slots at Rosecroft, where the machines have not been authorized.

Foreman said there were concerns over Penn's being "on both sides of the fence" in negotiating a new simulcast agreement.

To address the conflict of interest, the bill calls for Penn National to recuse itself from negotiating on behalf of the Jockey Club on the Rosecroft deal or sell its stake in the Jockey Club, which Penn said it is still considering.

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