Maryland’s once-healthy thoroughbred industry began its descent to minor-league status in the mid-1990s. When slot machines were legalized in neighboring states, horses and stables exited Maryland to compete for larger purses. Amid the decline, Laurel Park and Pimlico suffered from bad management. Moreover, the tracks’ owners and their horsemen were constantly at war with each other, and they could never agree on any plan to revive the industry.
In view of this dismal history, people who care about horse racing can scarcely believe what has just happened. Maryland racing has not only been saved, but it is about to enter an era of growth and unprecedented prosperity. Dec. 14, 2012 will be remembered as the day that changed everything.
On that day, representatives of the Maryland Jockey Club and the state’s horsemen signed a 10-year agreement that establishes a new economic structure for the sport. They resolved the crucial issue (and other peripheral ones) that had divided them for the past two years.
When Maryland belatedly legalized slot machines and earmarked a portion of the revenue for horse racing, the Stronach Group, the tracks’ parent company, inexplicably failed to make a bid to get slots at Laurel Park. The slot franchise in Anne Arundel County instead went to the Maryland Live casino. Yet a percentage of money from slots — wherever they are located — goes into racetrack purses, and the revenue from Maryland Live would give horsemen a windfall. But the Maryland Jockey Club was losing millions of dollars a year and had no incentive to operate more than a minimal racing schedule.
The track and the horsemen negotiated (often acrimoniously) for two years before they agreed on a logical plan. The horsemen ceded some of their slot revenue to management. If horsemen want to race more than 100 days per year, which they almost certainly will, they will pay a fee to the track for each additional day. Thus the Maryland Jockey Club gets the chance to make a reasonable profit. (The two sides also resolved other long-simmering issues; the MJC will close the costly Bowie training center and will build additional stalls at Laurel.)
Tom Chuckas, CEO of the tracks, says the importance of the 10-year deal is that it allows everybody in the industry to plan confidently for the future. Purses at the tracks, already bolstered by revenue from Maryland Live, now average around $245,000 a day. When new casinos in downtown Baltimore and Prince George’s County go into operation, that figure could approach $400,000 a day, putting Laurel and Pimlico in company with the nation’s elite tracks. Chuckas said, “Breeders can look ahead and breed Maryland horses. Owners can buy horses. And the Maryland Jockey Club can make plans for capital improvements. Now it’s easier to make an investment of substance.”
Understandably, trainers, owners, breeders and the tracks’ management are elated by their prospects. Yet the history of slot-machine subsidies in other states provides grounds for some skepticism.