It is raining at Pimlico, and the city's gray skyline is a blur in the distance. From the announcer's booth high above the racetrack, the three-eighths pole near the far turn is barely visible through the mist.

This could be a problem. But track announcer Dave Rodman carefully uses colored felt markers to note jockey silks beside the horses on his racing program. Plus he's got his huge binoculars.

Restless and pacing the plywood platform on which he works, Rodman, 40, has been calling races for 18 years--the last eight at Pimlico--and he may be the keenest, most faithful observer at the legendary racing venue. And lately, he says, the future of Maryland horse racing seems as murky as the view of the three-eighths pole in the rain. "Racing, gosh," he says. "I don't know what the future is. . . . It's a much-changed world."

Last week, the majority owner of Pimlico and Laurel Park, Maryland's main thoroughbred racetracks, unveiled a $60 million, privately funded plan to renovate them and reinvigorate the state's racing industry, which has stagnated even as the sport's popularity and revenues have increased nationwide.

Joseph A. De Francis, president of the Maryland Jockey Club, which operates both tracks, announced plans to--among other things--upgrade grandstands, improve landscaping and food service, and tear down Pimlico's venerable but outdated low-rise wooden barns.

The plans also call for adding three off-track betting sites and renovating existing ones, and for boosting marketing, promotion and customer service. The Jockey Club already is promoting a program called "Pony Pals" to bring children to the tracks.

The initiative was part of an effort to broaden horse racing's appeal and to meet Gov. Parris N. Glendening's demand that the industry modernize in return for the annual $10 million the state provides to boost gambling purses.

The governor said he was pleased, and De Francis said the upgrades would help Maryland racing compete better with other sports and with racing sites in other states.

Horse racing is a complex and insular sport that several observers said is probably on the verge of transition as promoters seek to pull in new fans and push more races into living rooms via cable TV. But the track, a bastion of men, cigars and wagers, often remains a place where the indoor air remains stale, most food is pedestrian, and signs in certain areas still bar "children under 12."

It is a place where nonsmokers get the segregated sections, highly focused men wave programs at banks of television sets, and handicappers, each with a separate "system," use a unique lexicon. It is a place where the notion of more children brought some regulars up short.

"I don't think children should be at a racetrack," Salvatore "Sam" Testa, 73, a retired Baltimore steelworker and longtime racegoer, said last week between races. "All they do is run around. They don't know what's going on. . . . They're not in here to bet horses or anything; they're in here to play."

Thoroughbred horse racing in Maryland, one of the most storied pastimes in the land, began shortly after the first colonists arrived. The Jockey Club, founded in 1743, is one of the oldest sporting organizations in the country. George Washington attended Maryland races. Congress adjourned to attend. President Andrew Jackson sent horses from the White House to race.

Pimlico, in a working-class neighborhood of northwest Baltimore, is the nation's second-oldest horse racing track, after Saratoga in New York state. Pimlico's annual Preakness--named for a steed later shot to death by an English duke--is the second event in racing's Triple Crown. And the Preakness trophy, the $1 million, 139-year-old silver Woodlawn Vase, is the most valuable in professional sport.

Even Laurel, in Anne Arundel County, a relative newcomer, traces its lineage to 1911. At one point in the 1940s, there were 10 tracks across the state.

But competition, consolidation and changing tastes whittled the number of major sites to Pimlico and Laurel; Timonium in Baltimore County and the state-owned Fair Hill in Cecil County have but a handful of racing days a year. Combined attendance at Laurel and Pimlico was 1.7 million last year, the same as the year before.

Yet racing still employs roughly 16,000 workers statewide, and supporters argue that while racing is "a mile wide and an inch deep," it constitutes one of the state's biggest industries and is worthy of government support.

"There are literally dozens of little cottage industries that are associated with, first, the breeding, and then the growing and the care and the feeding and then the training of a thoroughbred race horse," De Francis said in an interview at Laurel last week.

"It starts with the breeding farm," he said. "You have to have a whole variety of employees. . . . You need farm managers and you need stable hands and you need guys to drive the tractors and you need accountants and you need lawyers and you need a whole range of things, and that's just to have a horse conceived."

Over the years, the industry in Maryland has stagnated, according to a recent state government commission.

"That doesn't mean that it's losing money or losing ground, but the problem is that a lot of progress has been made in other jurisdictions," said Stuart S. Janney III, the head of a New York investment firm and a Maryland horse owner, who chaired the committee.

Racing in Maryland has now slipped into the second tier of the racing hierarchy, behind the top tier of tracks in Kentucky, New York, California and Florida, the commission found.

It has been hurt by competition from the state lottery and from other sports, the commission found. And it has been hurt by Delaware, where revenues from track slot machines boost the prize purses and lure horses away from Maryland, where slot machines are illegal.

"Is there a danger of [Maryland racing] going completely away?" Janney said. "Probably not in the foreseeable future. But there is a very real danger that it will be diminished very substantially because others are making much greater progress."

But some people are not so worried.

For one thing, "everybody's not going to Delaware Park," said Maury Wolff, an Alexandria-based racing economist. "There are some Maryland people going up there, sure. The purses are attractive. It makes it very attractive for horsemen to race at Delaware, and they do. But the huge outflow of Maryland horsemen? If you look, it hasn't really happened."

But Wolff agreed that racing is on the verge of change. He and others believe the change will be brought by specialized television stations that are starting to broadcast regular racing cards into homes across the country.

Wolff said he expects intense competition among tracks to get on the air, "and for those that have inferior products, there's going to be less demand. . . . The second tier is going to be squeezed out very quickly."

But Tim Capps, executive vice president of the Maryland Horse Breeders Association, which represents 1,000 breeders, argued that Maryland racing has never been properly promoted, and that TV might help: "It puts you on people's radar screens."

Meanwhile, as the rain fell at Pimlico, announcer Rodman, wearing a microphone headset, prepared for the fifth race. "Racing has changed so much in 10 years," he said as he marked his program, "and it's still changing.

"Excuse me just a second." He pushed a button on a computer keyboard that played a recorded version of the trumpet fanfare signaling the imminent start of the race. Then he flipped his mike switch: "Two minutes to post," he announced, his voice echoing over the famous track and the neigborhood beyond.

"One minute.

"They're nearing the gate.

"And they're off.

"Krystal Celerity, Bold Bluffer showing speed on the inside, Brisa's up between horses, and Megan's Chance, four-way, now three-way scramble for the lead . . . "

CAPTION: Fans reach out to pet horses ridden by workers called pony girls between races at Baltimore's Pimlico track. Horse racing attracted 1.7 million people to Maryland's two leading tracks, Pimlico and Laurel Park, in each of the last two years.

CAPTION: Baltimore racing fan Mario Santos, in cap, yells for the horse that's carrying his wager in the ninth race.

CAPTION: Announcer Dave Rodman looks over the track as he gets ready to call a race at Pimlico. Rodman calls racing "a much-changed world." Below, pony boys and girls check their racing sheets and discuss the race before escorting their horses to the starting gate.