Racetrack Envisions A Future With Slots

By Ovetta Wiggins
Washington Post Staff Writer
Monday, October 29, 2007

Louis J. Raffetto Jr. walks around the enormous Laurel Park racetrack grandstand, looking at the aging facility with the eye of an interior designer.

If he had his druthers, the old teller windows, where the paint is chipping, would be gutted and replaced with slot machines. The Carriage Room, with its worn carpet and scant furnishings, would be updated and filled with slot machines. And much of the empty space, where gamblers should be standing, would accommodate more slot machines.

"Some could go here . . . some could go over there," said the racetrack executive, pointing to a space across from the cigar bar. "It's the 'what ifs' that I hope we have to deal with."

As state lawmakers prepare to debate the divisive issue of slots in Maryland at the special session that begins today, Laurel Park, in Anne Arundel County, is considered one of the most likely locations for slot machines to be placed if they become legal. Democratic Gov. Martin O'Malley's slots proposal includes the Laurel area as one possible venue for the machines if voters approve them in a referendum next year.

Residents, lawmakers and some gamblers are wondering what changes would be made at the racetrack if slots are approved, how Laurel's new owner, Magna Entertainment, would run a slots parlor and what the impact would be on neighboring communities.

Some are worried.

"When casinos come in, other businesses suffer," said Anne Arundel County Executive John R. Leopold (R), who voted against legalized gambling when he was a member of the General Assembly. "The focus of the state economy should be based on the biotech, health-care and information technology industries. Those are the areas that offer the greatest opportunity."

But Raffetto, who has been hooked on racing since he accompanied his father as a child to the Monmouth Park Racetrack in New Jersey, says he is fighting to save an industry with a rich history in Maryland.

He was unwilling to say during a recent interview what he thinks the odds are for a slots bill to come out of the General Assembly during the special session. But he is preparing, just in case things work out.

Temporary slot machines could be operating at Laurel Park within nine months of a law being passed, Raffetto said.

The slots parlor would be placed in the grandstand, which was built in the early 1900s, while a new grandstand is constructed across the racetrack. Architectural designs have retail shops surrounding the new grandstand and clubhouse.

Relocating the grandstand would involve moving about 1,000 stalls, Raffetto said, costing about $12,000 a stall. The entire demolition and construction project, which could be completed in 18 months, is estimated to cost more than $200 million, he said.

Building the new facility would depend on "what the slots bill looks like, the revenue that the racetrack receives," Raffetto said. The legislation that was considered in 2005 said racetracks would receive between 36 and 30 percent of the proceeds.

"We couldn't spend almost a quarter of a million if the revenue is not there," Raffetto said.

Magna Entertainment purchased controlling interest in the track in 2002 with rights to buy the remaining shares from longtime owners Joseph and Karin De Francis for $20 million in November.

Despite the sale, the DeFrancises would benefit financially if slots are legalized in Maryland. According to documents filed with the Securities and Exchange Commission, the DeFrancises, the Maryland Jockey Club and a minority-owner group formed Maryland Ventures to manage gaming facilities. Under the deal, Maryland Ventures would get 65 percent of the profits during the first five years, 50 percent the next five years and 40 percent in the following 10 years.

During a recent interview, Frank Stronach, Magna's chairman, was unwilling to provide details on how he plans to change things at Laurel. Stronach said he just wants to make racing "healthy" in Maryland again.

Magna's tracks have a mixed financial record, and some critics within the racing industry are skeptical that the company could run a successful slot-machine operation. It is unclear whether Magna would operate the slots parlor at Laurel or find a partner.

"They have no experience in the slots area," said Michael Graninger, vice president and general manager of Meadows Racetrack and Casino in Pittsburgh, which was previously owned by Magna.

Graninger said Magna has had a disappointing run at Gulfstream Park in South Florida, where slots are not bringing in the revenue owners had projected.

"I haven't been down there, but I hear they are in the wrong spot," Graninger said. "I'd expect they would lease out the spot or get a management company to do it for them."

Raffetto said Gulfstream has suffered because it competes with a Hard Rock casino and conditions were placed on the track's gambling license, including rules against smoking and serving alcohol in the slots parlor.

But Magna's experience has not been bleak at all of its tracks.

Scott Wells, general manger of Remington Park in Oklahoma City, said there has been a dramatic change at his track since Magna took over and added slots. In 2005, before slots were added, attendance at the track was 211,000. In 2006, it was 1.3 million.

Wells said that Magna's $64 million investment "turned around a racetrack that was going to have to close."

He said Oklahoma racetracks were in the same position as Maryland tracks, competing against those in neighboring states that permitted slot machines.

"Our racing product was getting worse and worse, but we've reversed the trend," Wells said. The average daily purse distribution in 2004 was $55,00. These days, it's $200,000. Before the casino, racing attendance had dropped to 1,800 a day; now it's about 3,400.

Raffetto said the plans at Laurel involve integrating slots with racing, allowing the track to take the good and the bad experiences of Remington and Gulfstream, respectively.

"This is all assuming there is a fair slots bill," he said.