Racetracks Might Not Push Slots
Owners Question Need To Support Md. Vote

By John Wagner
Washington Post Staff Writer
Monday, March 24, 2008

As both sides gird for a November referendum on slot machines in Maryland, some of the biggest potential beneficiaries of expanded gambling -- racetrack owners -- are hedging their bets on whether they will take part in the campaign.

Slots proponents have argued for years that revenue from the machines is needed to prop up Maryland's ailing horse-racing industry, and two existing tracks would be among the sites eligible to receive slots licenses, if voters approve the ballot measure.

But representatives of both tracks -- which collectively have spent millions of dollars on lobbying and campaign contributions in recent years -- said in interviews that they have not decided whether, or to what extent, to get involved in what some say could be a $15 million campaign.

Potomac developer William Rickman, who owns the Ocean Downs track on the Eastern Shore, questioned the need to be active in the effort, citing polls that have shown that majorities of Marylanders favor the legalization of slots.

"It's going to take a lot of bad press to turn public opinion around," Rickman said, adding that his participation in the campaign could be awkward because his track would later have to bid for a slots license from the state.

A spokesman for Magna Entertainment, a Canadian company that owns Laurel Park in Anne Arundel County, also cited the bidding process as a potential impediment to its involvement.

Under legislation passed last fall, Anne Arundel would be home to one of five slots locations determined by a commission whose members have yet to be appointed. Venues within two miles of Route 295 would be allowed to bid, meaning Laurel would be eligible but not guaranteed a license.

"Are there concerns that Laurel is not the guaranteed site? Obviously," said Scott Borgemenke, Magna's executive vice president for racing. Borgemenke said Magna would like to see more support from the surrounding community for putting slots at Laurel Park.

And he suggested the company, which is struggling financially, would try to gauge the referendum's prospects before deciding how engaged to become in a campaign that he does not expect to start in earnest before the Preakness Stakes in May. That storied race takes place at Pimlico Race Course in Baltimore, another Magna-owned track.

"It's awfully early to decide whether this has a chance or not," Borgemenke said.

The equivocation of the track owners has alarmed some in the racing industry, who argue that passage of the referendum is essential for Maryland to compete with surrounding states, where slots proceeds already supplement racing purses.

"This is going to be a very expensive campaign," said Gerard Evans, a lobbyist for the Maryland Thoroughbred Horsemen's Association. "Without the full financial participation of all the stakeholders, we simply won't have the money to do the job."

Since 2003, when the slots debate heated up in Annapolis, Ocean Downs has spent more than $1 million on lobbying, and Rickman, his family and their businesses have been heavy campaign contributors. In two days in January 2007, as Gov. Martin O'Malley was preparing to take office, companies affiliated with Rickman and his family gave $48,000 to the governor's campaign account and a joint account with his running mate.

Magna, meanwhile, spent more than $1 million on lobbying in just 2003 and 2004.

O'Malley (D) last year pushed the idea of a public vote on slots to break an impasse over whether the legislature should legalize the machines. Besides Anne Arundel and Worcester County, where Ocean Downs is located, the state would grant slots licenses to facilities in Baltimore and Allegany and Cecil counties, if the referendum passes.

"Given the millions of dollars involved, I do not believe for a minute that [the track owners] won't get involved before this is over," said Scott Arceneaux, a senior adviser to Marylanders United to Stop Slots, a new ballot-issue committee.

Aaron Meisner, chairman of Stop Slots Maryland, said slots opponents expect to be greatly outspent. But he said his side is optimistic that support for slots will erode in the closing months of the campaign, as has happened in several other statewide referendums on gambling in recent years, including those in Colorado, Nebraska and Ohio.

A Washington Post poll last October showed that about seven in 10 Maryland residents favored legalizing slot-machine gambling. Another poll in January showed softer support when voters were asked about the referendum. Fifty-four percent said they would vote to allow slots, while 38 percent said they would vote against it.

The pollster, Gonzales Research and Marketing Strategies, noted that in other states, support typically peaks early, while opposition grows during the campaign.

Although neither side in Maryland has sought to actively engage the public yet, the campaign's early stages are underway. Both sides are organizing ballot-issue committees to raise money. Both sides have lined up political consultants. And after an early round of skirmishing, the Maryland State Teachers Association, the state's largest educators lobby, voted last week to support the referendum.

O'Malley is counting on slots revenue to balance the state budget in coming years, and slots supporters argue that public schools have a lot at stake. By 2013, legislative analysts project, 15,000 slot machines would generate more than $1.3 billion a year after payouts to players. Under legislation approved by the General Assembly last fall, $660 million of that would go to a new education trust fund.

Under the projections, the five slots venues would keep about $450 million a year. Another $95 million would be earmarked to enhance racing purses at Maryland tracks, including those that do not receive slots licenses, and $34 million would be provided as grants for "facility renewal" at tracks.

Frederick W. Puddester, a former state budget secretary whom O'Malley tapped to lead the pro-slots campaign, said he was not overly concerned about the early hesitance of the track owners.

"We're just starting in the process," Puddester said.

Puddester said his organization would appeal to "anyone who supports education" for financial help. He would not say how much slots supporters hope to raise for the campaign, but several advocates for the ballot measure predicted they would need at least $15 million to get their message out.

Maryland Racing Commission Chairman John B. Franzone, among those who cited the $15 million figure, said he has urged Magna officials, including the company's chairman, Frank Stronach, to help. "If Magna does not get behind the referendum, and it fails, he'll be like Jesse James around here," Franzone said. "He'll be a wanted man."

Franzone said that he does not believe a slots license is likely to be awarded to an Anne Arundel site other than Laurel Park but that he has heard those arguments from the company. "They feel they're being used as patsies, that they'll put up the money [for the campaign] and someone else will come in and get the license," Franzone said.

A bill passed in the fall calls for O'Malley to appoint three of seven members of a commission that will select sites. The presiding officers of the legislature would appoint the other four members.

The bill gives the commission little flexibility on the Worcester site, calling for a venue located within one mile of an intersection where Ocean Downs is located. Although Rickman stands to benefit if slots come to Ocean Downs, the state's plan has a potential downside for him, too.

Rickman also owns Delaware Park, a racetrack and slots facility off Interstate 95 not far past the Maryland state line. The Maryland bill would authorize a slots site off Interstate 95 in Cecil County, on the Maryland side of the line. Lawmakers included the site to appeal to Marylanders who now travel to Delaware to play slots. At the Delaware site, Rickman gets 47 percent of the slots revenue, compared with the 33 percent he would get at Ocean Downs.

Rickman said he would like to see slots legalized in Maryland to help racing. But asked whether it would ultimately benefit his financial interests, he said: "I don't know that answer to that."