VLT Licensing Debacle Revisited in Maryland

Maryland lawmakers were told March 16 horse racing needs legislative assistance.

The Maryland horse industry continued to make its case for assistance March 16, urging the Senate Budget and Taxation Committee to pass legislation that would shift some revenue from video lottery terminals to support racetrack operations.

The hearing was similar to one held the day before by the House Ways and Means Committee. Lawmakers posed different questions, including one no one seems able to answer: Why didn’t bankrupt Magna Entertainment Corp. pay its VLT licensing fee for Laurel Park—the law basically awarded the track a license—by the deadline in early 2009?

“If you had a check that day, we wouldn’t be here having this discussion,” said Democratic Sen. Nathaniel McFadden, vice chair of the budget committee. “The due date of deliverance comes, there’s no check, and all hell breaks loose.”

McFadden said the legislature spent six years working on VLT legislation that finally passed, and intended to have Laurel as one of five locations for gaming. MEC's action eventually led to a near shutdown of live racing in 2011.

“That one, I can’t answer,” Maryland Jockey Club president Tom Chuckas told McFadden. “At the time, the corporation made that decision in Toronto, (where MEC was based).”

MEC later became MI Developments, though Frank Stronach remained in control. Now, Stronach is attempting to privatize MID's racing's holdings, including the MJC. Chuckas told lawmakers Stronach is committed to Maryland racing and believes it can succeed.

"I hate to speak for the man; he has a lot of different ideas," Chuckas said of Stronach. "He has told me he's in it for the long haul."

McFadden later questioned why the MJC, after failing to meet the licensing deadline, spent millions of dollars trying to overturn the licensing of Cordish Cos. to build a VLT facility near the Arundel Mills Mall not far from Laurel. County voters upheld the zoning for the mall project, and the MJC has since dropped lawsuits related to it.

“It was risk capital,” Chuckas said of the effort to get Laurel back in the running for gaming.

“Well, you shot yourself in the foot twice,” McFadden said.

Alan Foreman, chief counsel for the Maryland Thoroughbred Horsemen’s Association, again indicated the chances of Laurel being included in any gaming expansion under consideration are remote. That doesn’t mean, however, the MJC wouldn’t be involved on some level given the fact the General Assembly intended for at least one Thoroughbred track to have VLTs.

“All I ask is that you keep us in mind when it comes to viable locations or revenue distributions,” Chuckas told the committee. “It’s a life blood for us.”

Maryland breeders and other horse industry representatives offered their support for the legislation, which is being pushed by Democratic Gov. Martin O’Malley as part of a deal to maintain 146 live Thoroughbred racing days each year.

“The important part to me is it brings stability,” said Jim Steele, manager of Shamrock Farm, which breeds Thoroughbreds and Standardbreds. “If this bill doesn’t pass, it’s over. The instability will kill us.”

The Maryland Horse Breeders Association partnered with the Maryland THA to assist Laurel and Pimlico Race Course with operational costs. The MHBA contributed 11% of the $1.7 million that horsemen will give up from purse and breed development accounts as a show of good faith.

“It’s critical for breeding interests to have a market for their product,” MHBA lobbyist Dennis McCoy said. “The breeders were willing to belly up to the bar.”

Under the VLT law, racing gets almost 10% of the revenue—7% to purses and breed development and 2.5% for capital improvements. Much of the 2.5% in the Racetrack Facility Renewal Account would shift to racetracks for operations under the O’Malley legislation.