Maryland Racing Industry Hopes to Get Boost From Passage of Slots

By John Scheinman
Special to The Washington Post
Thursday, November 6, 2008

Mike Pons, business manager at Country Life Farm, watched election returns at his home in Bel Air on Tuesday night. When it became clear the referendum on legalizing slot machines in Maryland easily would pass, he said to himself, "That's the longest 14-year race we have ever run."

"It was way overdue," said W. Fred Groves, an owner-trainer from Bowie, watching races yesterday at Laurel Park. "They should have had slots five or six years ago. They let Maryland fall behind West Virginia, Pennsylvania and Delaware. I was at the point where I was going to move to another state. I've only got one horse, but I've got money to buy three more."

For those involved in Maryland racing and breeding, the referendum -- which passed with support of 59 percent of voters in the state -- was considered the final hope to salvage industries that have been devastated in recent years by competition in neighboring states, competition that once ranked below Maryland but had grown strong through their own legalizations of slot machines.

"What it does is it puts Maryland racing on a level playing field with our surrounding states and competition -- West Virginia, Pennsylvania and Delaware," said Richard Hoffberger, president of the Maryland Thoroughbred Horsemen's Association. "And by the time the machines come online, it will mean the people that participate in the horse racing industry in Maryland will be able to run for purses that are competitive with the other states. The people in Maryland will be able to stay in Maryland."

With the passage of the referendum, Maryland voters approved 15,000 slot machines at five sites around the state. Seven percent of the entire gross revenue up to $100 million a year from the machines will be directed to race purses and breeding fund programs. The money will be divided 80 percent for thoroughbred interests and 20 percent for standardbreds. Another 2.5 percent of revenue from slots will be designated for the refurbishing of state racetracks for a period of eight years, provided track owners contribute matching funds.

"It's a validation of everything we've done in the past and everything we can do in the future," said Pons, whose family breeding farm, one of the biggest in the state, has been in operation since 1933. "If [state government] didn't believe that, we wouldn't have been included in the bill. But it's going to be two years before the coin starts to drop."

The racing and breeding industry should not expect to see revenue from slots until the middle of 2010 at the earliest, said Tom Chuckas, president of Laurel Park and Pimlico Race Course.

Chuckas said Magna Entertainment, the struggling Ontario, Canada-based racing company that owns the thoroughbred tracks, will bid to be awarded a site license for Laurel. Magna has been carrying $230 million in debt this year and receiving continuing extensions on its bridge loans from MI Developments, a real estate company. Both are publicly traded companies in the portfolio of Magna International, the auto parts giant.

Asked if Magna, which has lost $306.3 million the past three years, might partner with an existing casino operator on a bid, Chuckas said, "We are reviewing all potential options."

Chuckas stressed that slots should not alone be considered the salvation of the state racing industry, which has slashed many important open stakes races and experienced sharp declines in wagering in the past year because of withering competition.

"If you think slots are the answer, you're kidding yourself on the horse racing side," Chuckas said. "They're part of the equation. There are things we need to do much better. We need to improve our guest services program, market more efficiently and attract a younger demographic.

"I think we take a look at the presidential election and how [Barack] Obama used the Internet to attract younger people and get them engaged. Young people are all about technology."

Chuckas and Hoffberger said the passage of the slots referendum did not guarantee that stakes races cut in the past years would be restored in 2009. They also could not say whether Pimlico would reopen for full-time stabling and training. The Baltimore track was shuttered in August until the spring racing meet to save money.

"We have reduced as much as we can to stay alive," Hoffberger said. "If your question is what's the next step, the answer is what we elected to do was write a program to get us through December 31, 2008."

Reaction to the passage of slots was largely positive yesterday at Laurel Park, although not everyone supported the referendum.

"It means better horses," said Emidio Santill, 56, of Laurel, a regular horseplayer. "Better horses are easier to handicap and, of course, more people would come. I'd like better racing, and there's no way Maryland can compete without slots."

Thomas Murray, who described himself as a 70-plus retiree from Baltimore, said: "I'm a gambler, but gambling should never be up for a referendum. I don't approve of slots. It's going to hurt people who can't afford it. They're going to get hooked on gambling."

Murray said he goes to the racetrack four days a week. "What are slots going to do for the [horseplayer]? Not a damn thing. It's going to the horsemen and the breeders."

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