Gov. Robert L. Ehrlich Jr. and his staff have said they turned a deaf ear to Maryland's racing industry when they crafted a plan to legalize slot machines a month ago, explaining that they pointedly refused to allow horse breeders or track owners to influence the legislative proposal.
Now, with Ehrlich's slots bill in tatters, the governor and his top aides are negotiating directly with track owners to help shape a new gambling plan that would determine who would get the estimated $1.3 billion in annual profits that slots are projected to earn. The administration fears that unless it strikes a deal that wins ringing endorsement from racing interests, the entire initiative may be doomed to defeat in the legislature.
Not surprisingly, track owners and other horse racing interests are angling for a much fatter share of the slots jackpot than they would have received under Ehrlich's original proposal. And the governor has indicated that he will be sympathetic to their desires, saying, "If the numbers don't work for all the stakeholders, the whole thing falls down."
Ehrlich's staff is working feverishly to revise the governor's slots plan. Aides who met yesterday with track owners and other horse racing groups said they did not expect to finalize details of the proposal until Monday.
The clock is ticking: The General Assembly must pass a balanced budget by March 31. Ehrlich is counting on slots to fill a $395 million hole in next year's budget.
Slot machine foes and fans said they are worried that track owners are in a position to dictate the terms of any gambling deal. They said Ehrlich is depending on slots to fix the state's fiscal problems and has staked his political reputation on the issue.
"My concern is that our entire destiny is in the hands of a third party, the racing industry," said Sen. Edward J. Kasemeyer (D-Howard), who generally supports legalized slots. "That's reality. That's the position we're in. If they don't want to play the game, there's no game.
"It puts our integrity in a tenuous position," he continued. "I want slots, but I'm not interested in caving in to the racing industry to get it."
Sen. Brian E. Frosh (D-Montgomery), a slots opponent, said Ehrlich was catering to special interests at the expense of taxpayers and questioned why the governor was insistent on confining slots to tracks. Ehrlich has pitched slots as a way to save Maryland's ailing horse racing industry by drawing bigger crowds to the tracks and generating more money for purses.
"I'm not sure why we're picking slots as a way to prop up a business, but if we are, why are we propping up losers?" Frosh said. "I think it's outrageous for a proposal to go to the tracks [for their approval]. This is a good deal. If they don't want it, let's give it to someone who does."
If Ehrlich does overhaul his gambling proposal, giving a larger share of the revenue to the tracks would mean less for the state, which plans to reserve its share for public education. The governor's aides admit that would be a tough sell politically but are forging ahead regardless.
"Obviously, one of the criticisms we're going to hear is that this bill will line the pockets of a few individual businesses," Donald J. Hogan Jr., one of the governor's legislative lobbyists, told a meeting of racing industry leaders this week in Annapolis.
Ehrlich told lawmakers at a hearing Wednesday that his administration was negotiating directly with the racing industry, adding, "All stakeholders have been invited to play here."
Who, exactly, has the governor's ear is unclear. His administration has declined to provide records that would detail the extent of its contacts with racing interests.
But racing industry leaders said the governor and his staff are talking mostly with two groups: the Maryland Jockey Club, which owns the Pimlico and Laurel Park thoroughbred tracks, and the Maryland Horse Breeders Association.
"They're not talking to us," said Wayne Wright, executive director of the Maryland Thoroughbred Horsemen's Association, which represents horse owners and trainers. "It appears it's more about satisfying the Maryland Jockey Club than saving the industry."
Joseph A. De Francis, a part owner of the Jockey Club, did not return phone calls seeking comment. Other track owners defended the negotiations, saying they were not looking to take advantage of the state.
"I believe that pure economics are driving the deal," said Jeffrey Smith, chief executive of Centaur Inc., which has a contract to buy Rosecroft Raceway, a harness track in Prince George's County. "We're just looking for a situation with a fair and balanced approach."
Track owners are hoping to cinch a deal with terms similar to a proposal they floated in January. That plan called for tracks to receive about 45 percent of the profits from slots, compared with the 25 percent share they would have gotten under Ehrlich's original plan.
They are also hoping to eliminate or reduce the $350 million in licensing fees that Ehrlich wanted them to pay. The governor suggested this week that he might be willing to negotiate that point as well.
"We've got to make sure it's workable, otherwise they won't go for it," said Chip DiPaula Jr., Ehrlich's budget secretary, who is heading the effort to craft a new slots bill. "But I'm in this for Maryland. The governor is in this for Maryland, and it's very important that we maximize our revenues for education."
Critics noted that Ehrlich and his biggest allies in the General Assembly have received generous donations from racing and gambling interests.
Ehrlich's gubernatorial campaign received more than $120,000 in contributions from such groups. Senate President Thomas V. Mike Miller Jr. (D-Prince George's) has also been a favorite beneficiary of the racing industry. Last fall, a subsidiary of the Maryland Jockey Club gave $200,000 to a national political action committee headed by Miller.
"It's a flat-out quid pro quo," said James Browning, executive director of Maryland Common Cause. "If the lobbying campaign is any indication of where we're going on slots, then we're all headed down a moral sewer."
Meanwhile, lawmakers said representatives of Las Vegas casino magnate Steve Wynn told them he is planning a trip to Annapolis to make a personal pitch to build full-blown gambling palaces in Maryland. Harrah's Entertainment Inc., a major casino and riverboat firm, has hired a local lobbyist. Horseshoe Gaming Holding Corp., which owns casinos in Mississippi, Louisiana and Indiana, has been interviewing local lobbyists as well.