Laurel Park could be home to some 4,000 slot machines if legislation is approved by the voters.

Laurel Park could be home to some 4,000 slot machines if legislation is approved by the voters.

Jimmy McCue

Optimism But Concern in Maryland

A slots vote by Maryland legislators was only the first step in a lengthy process.

Maryland racing interests are optimistic over passage of legislation to authorize a statewide referendum on slot machines in November 2008, but they indicated there remains a need for financial relief before the slots measure even comes up for a vote.

The Maryland legislature authorized a referendum Nov. 18 on a constitutional amendment on slots, and also voted for a budget package that raises taxes in the state by $1.3 billion effective Jan. 1, 2008. With money obviously in short supply, racing industry officials are bracing for more belt-tightening next year.

This year, racing interests agreed to cut Thoroughbred racing dates and stakes because a state subsidy had dried up. Now, they’re hoping for another subsidy, or perhaps a “cash advance” on slots, to maintain purses and racing dates in 2008. And there’s always the question of whether the slots referendum will pass a year from now.

“We’re looking at one year before the referendum, and probably a two-year process to get the slots operating if the referendum passes,” said Alan Foreman, chief executive officer of the Thoroughbred Horsemen’s Association, which has a Maryland affiliate. “It’s conceivable we could get a subsidy for one year, but I don’t know where that money is going to come from. We’re already using sleight of hand, so to speak.”

Maryland Jockey Club chief executive officer Lou Raffetto Jr. said there is a “purse issue” for 2008 and probably 2009. To save purse money, Laurel Park will race a 60-day winter meet--15 fewer days than usual--beginning Jan. 1, 2008, under an agreement with horsemen.

“Even if (the slots referendum) passes, we’re still faced with purse cuts in the short term,” Raffetto said. “It’s something we’ll take up during the regular (legislative) session in 2008.”

The Maryland Senate and House of Delegates approved the slots referendum in the final days of a special session. On Nov. 18, The House passed a bill containing the details of implementing slot-machine gambling. The Senate later passed that bill by a slim margin.

The bill defines how 15,000 machines would be distributed in five locations. It proposes putting 4,750 machines in Anne Arundel County, presumably at Laurel; 2,500 in Cecil County near the Delaware border; 2,500 in Worcester County, presumably at Ocean Downs harness track; 3,750 in Baltimore; and 1,500 in Rocky Gap State Park near Cumberland in western Maryland.

Pimlico Race Course and Rosecroft Raceway, a harness track near Washington, D.C., would not get slots, but they would share in any revenue generated from slots for purses.

Ocean Downs is owned by developer William Rickman Jr., who owns Delaware Park, where video lottery terminals have lured Maryland gamblers for more than 10 years. A Cecil County slots casino would impact Delaware Park.

Rosecroft is owned by Penn National Gaming Inc., which owns Charles Town Races & Slots, a West Virginia racino that also attracts Maryland patrons. Efforts to locate a slots casino closer to Charles Town failed to win support in the Maryland legislature during the slots negotiations.

Owners of slots licenses in Maryland would get 33% of the revenue, 3% above the initial proposal. Nearly half of the slots revenue (48.5%) would go toward education. The amount for education would rise to 51% after 2.5% set aside for racing-industry capital improvements expires after eight years, officials said.

Purses at racetracks would get 7% of the revenue with a cap on $100 million per year.

Foreman said there are many variables, such as which facilities would actually open and how much revenue they would generate. Still, he said there is the potential for about $80 million in purse revenue with all machines in operation.

“As far as dollars and cents, it depends on which facilities are operating,” Foreman said. “Is it going to be a Gulfstream Park situation or a Delaware Park situation?”

Gulfstream Park in South Florida has struggled with its on-track slots operation, with a daily win-per-machine of about $70. Delaware Park, on the other hand, has had much stronger play at its gaming machines.

Though all Maryland tracks wouldn’t have slots, they all would share in purse revenue under a pari-mutuel formula that awards Thoroughbred racing 80% and Standardbred racing 20%. Raffetto said the Thoroughbred breed development program would get 11% of the total awarded to Thoroughbred purses, leaving regular purses with 89%.

“It’s the first step,” Raffetto said of authorization of a slots vote. “We’re trying to be positive. It’s the first time in a long while I’m optimistic about the future of Maryland racing and the Preakness Stakes (gr. I). At least this gives us a fighting chance to maintain Maryland’s racing history and heritage.”

“It was the only way to break the logjam,” Foreman said of the slots stalemate that has lingered in the legislature for years. “It’s not an understatement to say the fate and future of Maryland racing and the fate of the Preakness will rest with the voters next November.”

There have been inferences over the years the Preakness, second leg of the Triple Crown, would be in jeopardy and probably moved out of the state should Maryland racing get no relief.

“Everybody has a different view of how it will play out,” Foreman said. “The anti-slots organizations are very well organized, and there are differing views on what the casino industry will do. But I think the message of the horse industry is going to be very simple: It rises or falls on a nay or yea vote.

“It’s unrealistic for the Maryland racing industry to be able to survive in its current form if the referendum fails.”

The once year-round circuit in Maryland is down to about 180 days this year, and in the absence of state assistance, there could be about 140 racing days in 2008 in an attempt to conserve purse money. Also, officials wonder how long owner Magna Entertainment Corp. will be willing to keep three facilities--Laurel, Pimlico, and the Bowie Training Center--open year-round for training.