By John Scheinman
Special to The Washington Post
Saturday, November 22, 2008; E08
Out of money and unable to stage live racing, the owners of dying harness racing track Rosecroft Raceway decided this fall they could not afford to wait until their promised share of slot machine revenue began to come in.
While the Maryland horse industry geared up in October to push through a state constitutional referendum that legalized slot machines and delivers up to $100 million a year for race purses and breeding fund accounts, the owners of the Fort Washington track quietly looked in another direction. They met with executives from Oaklawn Park in Arkansas and RaceTech LLC, a St. Louis company, about a different kind of gaming device called Instant Racing.
On Thursday, Louis Cella, a vice president of Oaklawn Park, made a lengthy PowerPoint presentation before the Maryland Racing Commission on behalf of Rosecroft, detailing how Instant Racing saved live racing at his family's 104-year-old track in Hot Springs despite intense competition from gaming in neighboring states.
"Give us 12 months, and if we're not bringing people back [to Rosecroft] and growing purses, throw us out," Cella told the commission.
When the referendum to legalize slots in Maryland was crafted, political pressure kept Prince George's County out of the running to become home to one of the five site licenses around the state. Rosecroft officials looked at the advent of Instant Racing at Oaklawn and saw they didn't need to be licensed for slots because the machines run through an existing pari-mutuel system that handles horse racing bets.
Created by Oaklawn Park and Amtote, a pari-mutuel systems company in Hunt Valley, Md., Instant Racing allows players to bet on previously run thoroughbred races from a video archive on terminals that look like slot machines.
Players choose which horse to bet on, but information about the races -- the horse's names, the jockeys -- has been stripped.
"Our first question was whether this fit the pari-mutuel wagering laws," said Kelly Rogers, president of Cloverleaf Enterprises, the horsemen-owned parent company of Rosecroft. "This isn't expanded gaming. We're just asking to do what's already on the books."
The legality of Instant Racing in Maryland has yet to be determined. The racing commission is preparing a formal request to the office of the Maryland attorney general for an opinion.
Because Instant Racing uses replays of old races run at tracks around the country, there is a question as to whether it constitutes pari-mutuel wagering or lottery, which is random chance, said Senior Assistant Attorney General Bruce Spizler, who advises the commission.
"This is really a two-step process," Spizler said. "The first is, is this legal; is it encompassed within the statutory provisions of Maryland law. If the answer is yes, it becomes a policy consideration. Should the commission say yes to this? Would it cannibalize the live [racing] product?"
Spizler said the racing commission has broad regulatory powers to permit Rosecroft to install Instant Racing if the state finds it constitutes pari-mutuel wagering.
"We as a state keep asking live venues to come up with more creative ways to sustain themselves," commission member Jacqui Nigh said. "Since [Rosecroft is] not eligible for [slots] in Prince George's County, they are looking to other states to see what they can do. They would be negligent if they didn't."
Instant Racing revived fading business at Oaklawn Park, according to Bobby Geiger, the track's director of gaming and wagering. The expansion of gaming in neighboring Shreveport, La., Mississippi and Oklahoma in the mid-1990s put intense pressure on Oaklawn, which had never faced competition.
The track developed Instant Racing and introduced it in 2000. Last year, $62.8 million was bet at Oaklawn on live races; another $62.6 million was bet on races simulcast from out of state. Oaklawn's 357 Instant Racing machines, however, took in $225 million. "When I say Instant Racing saved Oaklawn, I was not exaggerating," Geiger said.