Maryland Racing Preparing for the Future

Governor has mandated a business model for industry that does not include VLTs.

As the Maryland Jockey Club hosts its biggest day of racing this year—the 137th Preakness Stakes (gr. I)--the state’s horse industry is bracing for changes on the horizon that could redefine how racing is conducted.

Since last November, representatives of the various Maryland horse industry stakeholders have been conducting meetings to figure out a future business model that does not include alternative gaming at the tracks. Unsuccessful in previous attempts to get VLTs or casino-type gaming, the tracks have been mandated by Gov. Martin O’Malley to develop plans for the future that will provide for the long-term growth of the racing and breeding industries.

Instant Racing, a form of electronic gaming based on results of previously run races that has been implemented in Arkansas and Kentucky, has been deemed illegal in Maryland so that is not an option.

Tom Chuckas Jr., president and chief operating officer of the MJC, which operates Pimlico Race Course and Laurel Park, said it is apparent that changes are needed. Because the meetings are still ongoing, it is unknown whether the recommendations will include fewer live racing dates, a contentious issue in the past.

“Everything is on the table and I would not want to say there will be fewer race dates right now but we have to rebuild the foundation,” Chuckas said May 18, on the eve of the Preakness. “The foundation is broken and we have to develop something on a model that is solid and works for everybody. Obviously we have done certain things for about 30 years and it’s time to change some of that.

“The real difficulty here is financial viability for the racetrack and racing opportunities for the horsemen. I think we are going to get to a point where it works. Right now we have to do it based on racing. The chances that Pimlico Race Course or Laurel Park will get VLTs or table games are very, very slim.”

Alan Foreman, general counsel for the Maryland Thoroughbred Horsemen's Association, said that while all aspects of Maryland horse racing are being scrutinized as part of the process, if horsemen and MJC representatives are able to reach agreement on the key areas, the others will fall into place.

“Collectively we have to develop a plan for Maryland racing that preserves year-round racing in this state, protects the breeding industry, encourages people to want to buy horses in Maryland and race them in Maryland,” said Foreman. “We want a racetrack operator who wants to preserve this industry and enhance our product and position us for the future.

“I think if we can make progress on the major issues—racing days, stabling, and capital improvements--the rest of the plan will come together,” Foreman said.

Foreman said that despite recent battles with MJC over racing dates, there is general unanimity among the parties that the future relies upon a cohesive business plan.

“When you put aside all the acrimony from the difficult couple of years we had where we didn’t know if we were going to have racing or not, there is a collective desire to do what’s right for Maryland racing, considering its rich tradition and what it does for the economy of this state,” he said.

“It is a collaborative effort,” Chuckas said. “They have certain ideas they are putting on the table and we have certain ideas we are putting on the table, trying to get a blend and a match to make it work.”

The meetings are being facilitated by the Maryland Racing Commission and involve scrutiny of various business models, Foreman said.

“We have been having financial experts do the financial models to evaluate the different ideas we are exchanging,” he said.

O’Malley’s mandate for the horse industry to come up with a plan for the future stems in part from the industry receiving funds from VLTs and casinos operational at other locations in the state.

The legislation that was approved allows for capital improvement funds derived from video lottery terminal casinos in Maryland to be used for racetrack operations.

“We don’t have a choice,” Foreman said. “If we are going to be the beneficiaries of revenues from slots we have been told we had better come up with a plan to justify that money.”

Chuckas said Maryland racing is already seeing some benefits from the VLT and casino subsidies. Purses for the current meet that ends one day after the Preakness have averaged about $210,000 per day, up from $165,000 about 1 ½ years ago.

The tentative goal is to have the business model completed by July 1, Chuckas said.

“We have found over the years that if you don’t have a hard deadline, then nothing happens,” Chuckas said. “We have got to get from a conceptual standpoint to an implementation standpoint and we have to do it soon. The state wants a business model from us they can a look at, approve, and show that we are serious and proactive.”