Racetrack owners warned Maryland lawmakers yesterday not to cut the tracks' share of the annual $1.5 billion jackpot that could result if slot machines are legalized, suggesting they might refuse to agree to a gambling deal and leave the state in a financial lurch.
Representatives of the Maryland Jockey Club, which owns the Laurel Park and Pimlico thoroughbred racetracks, told a Senate committee that they might actually lose money if slots are approved under terms proposed last week by Gov. Robert L. Ehrlich Jr. (R). Even under an "optimal" scenario in whichthe demand for slots would be unusually heavy, the racetracks would earn $21 million a year in profits at most after paying taxes and other expenses, they predicted.
"The rubber band has been stretched really, really far here," Joseph A. De Francis, part owner of the Jockey Club, said when asked whether track owners could make do with a lesser share of slots revenue. "I don't know how much farther it can be stretched."
Said Ed Hannah, an executive for the Jockey Club's parent company: "We are stretched right to the limit."
The owners of Rosecroft Raceway in Oxon Hill also told lawmakers that they would barely break even under Ehrlich's plan. They handed out reports projecting that they would collect $230 million a year in gross revenues from slots but earn $8 million a year in profits after paying all taxes, debts and expenses.
Senators responded with tough language, ripping Jockey Club officials for making untenable demands and creating what some described as a public-relations disaster that is making it difficult to sell slots to their constituents.
"We're losing the public-relations war on this one," said Sen. Ulysses Currie (D-Prince George's), chairman of the Senate Budget Committee. "We can't go back home and wave these numbers and impress the voters."
The exchange came as racetrack owners tried to persuade the Senate to adopt a slots plan drafted by Ehrlich that would give them 44 percent of the proceeds, or an estimated $665 million a year. Under the governor's proposal, public schools would receive slightly less, about 42 percent, with the remainder going to local governments, racing purses and other causes.
Ehrlich wants to charge the state's three biggest racetracks $120 million in upfront licensing fees, which would give them the right to operate 10,500 slots for two decades. A fourth track on the drawing board in Western Maryland would get 1,000 machines.
For the most part, the General Assembly has greeted Ehrlich's bill with jeers.Yesterday, the House of Delegates passed a bill that would create a study commission on slots. Although the measure would not preclude the General Assembly from legalizing slots this year, House leaders have strongly opposed Ehrlich's gambling plan.
Senate leaders, though, said they hoped to pass a slots bill soon, perhaps next week. But they intend to throw out Ehrlich's plan and start from scratch with an alternative that would give more money to schools, localities and racing purses.
Yesterday, the Senate Budget Committee essentially opened high-stakes negotiations with the track owners in a public forum, asking them point-blank how much smaller a share they could stomach without walking away from the deal.
The response from the racetracks: not much, if any.
Sen. Gloria Lawlah (D-Prince George's) said the response from her constituents to Ehrlich's proposed slots deal was overwhelmingly negative, saying that her "head was bloody" after the public learned that tracks would receive a bigger piece of the slots pie than public schools. She asked De Francis if he would agree to a deal that would give the tracks 38 percent of the revenue, instead of 44 percent.
De Francis said no.
"It won't be possible for us to finance the project if we get less," he said. "Everybody wants more to go to education. Everybody wants more to go to [local governments]. We in the racing industry want more to go to purses. But honestly, I don't know where it's going to come from."
Other senators ripped De Francis and the Jockey Club for making other public demands, including provisions that would allow their slot palaces to serve alcohol until 4 a.m. and enable them to bypass local zoning and planning regulations in building.
"Did I get blistered?" said Sen. Nathaniel McFadden (D-Baltimore), describing how his constituents reacted to such proposals.
McFadden, who supports expanded gambling, told De Francis that he needed to do a better job of pitching slots to the public, especially in predominantly black neighborhoods near Pimlico.
"Joe, Joe, Joe," he said. "Find yourself a black p.r. firm, a good one. You have to help us with this because we're getting murdered in the newspapers."