Slots vote could be death knell for Laurel, most of Maryland racing

With the approval of a slot machine complex at the Arundel Mills shopping mall, Laurel Park could be reduced to a simulcast facility.
With the approval of a slot machine complex at the Arundel Mills shopping mall, Laurel Park could be reduced to a simulcast facility. (Preston Keres/the Washington Post)
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By Andrew Beyer
Wednesday, December 23, 2009

For more than a decade, people in the Maryland horse racing industry have dreamed that their sport could be revived by the legalization of slot machines. Those hopes were crushed Monday night.

When the Anne Arundel County Council approved a slot machine complex at the Arundel Mills shopping mall, its vote signified that Laurel Park won't get slots. The council's decision will surely be followed by legal challenges and endless political wrangling, but if the decision stands, its consequences seem clear:

Laurel will not survive as a venue for live horse racing. Year-round racing -- or anything close to it -- will be finished in the state. The sport will be reduced to a relatively short season at Pimlico, which will survive only because of the profitability of the Preakness.

This was hardly the outcome that the state expected when it crafted a slot-machine referendum that voters approved in November 2008. The language authorized slots at an Anne Arundel County site that everyone assumed would be Laurel Park. It directed that a percentage of revenue from slot machines would be earmarked for purse money as well as awards for breeders. With salvation in its grasp, the Magna Entertainment Corp. -- owner of Laurel and Pimlico -- made a disastrous decision. When bids for slot licenses were due last February, Magna declined to put up the required $28.5 million payment that was supposed to accompany its proposal.

The Baltimore-based Cordish Companies did pay the money as it submitted its longshot bid for slot development at Arundel Mills. When the state slots commission disqualified Magna, Cordish got the slot franchise, subject to the County Council's approval which -- after a tortuous political process -- came Monday night.

Laurel desperately needed slots because its horse racing business is no longer viable. The quality of the racing product has declined in the face of competition from states with slot-fueled purses. The physical facilities have deteriorated badly, giving fans little reason to go to the track when they can watch and bet races from home. At a track built to accommodate thousands of customers, weekday attendance can sometimes be counted in the hundreds. Some optimists think that the industry will get a significant boost wherever slots are located, because of the money that will flow into purses.

"If you believe in the projections of money that would go to purses, we'd be in the top tier of racing states," said John Franzone, chairman of the Maryland racing commission.

Moreover, a percentage of slot revenue will be available for improvement of racing facilities if the track owner puts up matching funds. But from the standpoint of any rational businessman, owning Laurel wouldn't make much economic sense.

Higher purses and better racing aren't going to revive the sport as a spectator attraction. (Philadelphia Park and Charles Town have large purses because of slot money, and their on-track betting totals are pathetic.) And even with matching funds available for refurbishing the facilities for racing, it's unlikely that an owner would spend his money to do so.

Joe De Francis, former owner and president of Laurel and Pimlico, offered this calculation: "There's no way you're going to invest $10 million in renovating the grandstand at Laurel so that your income goes up by a few hundred thousand dollars."

The calculations of would-be owners will be put to a practical test next month when bidders make offers to buy the Maryland tracks as part of the Magna bankruptcy proceeding. Some will gamble on the premise that the Arundel Mills project will be stopped and that Laurel Park will get slots after all. But will anyone want to invest in racetracks without slots? If not, the infusion of slot revenue into purse money might be academic.

"What we could have is very good purse money but no place to run the races," said Alan Foreman, counsel of the Maryland Thoroughbred Horsemen's Association.

From the standpoint of most owners, the most sensible use of the Maryland tracks would be to sell most of the Laurel property for real-estate development, maintain a year-round simulcast facility there and operate a springtime race meeting at Pimlico for six weeks or so. Slot money and simulcast revenue could produce sky-high purses and a high-quality product similar to Keeneland's. The Preakness would assure the operation's continued profitability.

Leaders of the Maryland industry shudder at the prospect of such a diminished racing season, so they will keep fighting to stop the Arundel Mills project and to get slots at Laurel. Tom Chuckas, president of the Maryland Jockey Club, owner of Laurel and Pimlico, said the industry will work with a citizen's group seeking to force a county-wide referendum on slots at Arundel Mills. Magna is also fighting the decision by the state slots commission to disqualify its original bid. Yet it is hard to imagine that any actions will restore the health of Maryland racing.

If slots had been legalized when the sport was still relatively strong, Maryland might have become one of the strongest racing circuits in the U.S. But the game has declined so drastically and alienated so many of its core fans that it will not return to glory. Slot money may subsidize owners, trainers and breeders, but their horses are still going to be running in front of near-empty grandstands. The vision of Maryland racing with a short, high-quality meeting at Pimlico, a healthy Preakness and a decent simulcast facility in Laurel is as much as any realist can hope for.

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