PNGI: No Plans to Exit Maryland Venture
Penn National Gaming Inc. said Nov. 30 its joint venture with MI Developments in Maryland will continue, and that it planned to work on an “expedited basis” to devise a 2011 live racing schedule in the state.
The Maryland Racing Commission Nov. 29 rejected an application by the Maryland Jockey Club for 17 days of racing at Laurel Park and 30 at Pimlico Race Course in 2011. In recent years, about 140 days of racing have been held at the two tracks.
Earlier this year, MID and PNGI entered into a joint venture by which PNGI would obtain a 49% interest in the MJC, which owns Laurel, Pimlico, and the Bowie Training Center. MID, which acquired the assets of bankrupt Magna Entertainment Corp., would retain 51%.
The MRC, by denying the 2011 application for dates, apparently rejected the partnership. That leaves Maryland without any live Thoroughbred racing next year, and probably no full-card simulcasts.
“Having already been found suitable by the (racing) commission, we were confused by the vote taken,” Eric Schippers, PNGI senior vice president of public affairs and government relations, said Nov. 30. “In any case, the joint venture continues to own all the racetrack assets. The important thing is that by rejecting the joint venture’s proposal, the commission’s actions may result in the discontinuance of all live racing in 2011 at Laurel Park and Pimlico Race Course.
“PNGI has already closed on its investment in the joint venture. The action that the MRC took was rejecting the 2011 business plan for the operations of the MJC and the race dates for 2011 that are a condition each year for the renewal of the racing license. PNGI has no intention of exiting the joint venture, and will be working with our partners to explore all options for the operations of racing in Maryland.”
The MJC in October devised a contingency plan for 2011 based on the result of a Nov. 2 referendum on slot machines in Anne Arundel County. Voters approved of the zoning for a slots parlor near the Arundel Mills Mall, thus keeping Laurel from getting them under existing law.
Cordish Cos. of Baltimore already had been granted a slots license from the state for the Arundel Mills mall project, so the plan will move forward. The MJC lost out on slots at Laurel when it failed to submit the license fee with its application.
Up to $100 million a year, split 80% for Thoroughbred racing and 20% for Standardbred racing, will come from revenue at five slots parlors in Maryland. Only one, operated by PNGI in northeastern Maryland, is open; it generated about $1 million for purses and several hundred thousand dollars for capital improvements at tracks in a little more than a month.
According to published reports in Maryland, some lawmakers are questioning giving purses and breed development 7% of slots revenue and tracks 2.5% given what they see is a lack of interest in live racing.
Schippers said the guarantee of 47 live racing dates in January and the spring was meant to buy time so all parties could devise a schedule for the rest of the year. The MRC, supported by horsemen and breeders, balked.
“The MJC proposed that it work together with representatives of both the Maryland horsemen and the state of Maryland on an expedited basis to explore the basis for additional racing dates in 2011, provided such operations provide a return on the considerable investment the owners have made in the racing industry in Maryland,” Schippers said. “PNGI and MID hope to maintain an open and constructive dialogue with the racing commission in the coming days and weeks, with a hope to find a constructive resolution for the benefit of all parties.”
MID vice president Mike Rogers said company chairman Frank Stronach would be back from Europe in early December and is prepared to “sit down to discuss a long-term plan” for Maryland racing. Stronach earlier had indicated Laurel and Pimlico would apply for 140 days for 2011 while all parties hammered out an agreement.
During the Nov. 29 MRC meeting, Wayne Wright, executive director of the Maryland Thoroughbred Horsemen’s Association, said the request for 47 days was unacceptable.
“We have worked hard—the Maryland THA and our committees—not only recently but for the last 15 years,” Wright said. “We’ve made tremendous sacrifices—a reduction of days—to maintain and try to operate in a survival mode. To go and approve a plan is basically a dagger to our hearts, and it pretty much puts our people in a situation where they cannot stay here.
“You need those 140 days so we can regroup, sit down with whoever happens to own the racetracks, and work out a program where we can at least maintain those 140 days and go to (lawmakers) and find some sort of solution.”
Alan Foreman, counsel for the Maryland THA, said a schedule needs to be in place in advance of Dec. 21, when the next MRC meeting is scheduled.
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