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Both breeds losers in Maryland fight
WASHINGTON - Competition between Thoroughbred and harness tracks has existed in Maryland for decades and it used to be fairly amiable. Each sport had its own niche and audience.
Now the relationship between the two breeds has turned poisonous, paralyzing the development of offtrack betting, exasperating regulators and legislators. While industry insiders have debated the points of contention endlessly, most fans don't know or care much about the 80-20 revenue-sharing deal or the so-called 6:15 rule. Here is the background:
In a bygone era, Thoroughbred tracks operated in the afternoon, harness tracks at night. To ensure that neither encroached on the other, Maryland mandated that no Thoroughbred races could be run after 6:15 p.m. The harness tracks "owned" the hours after that time.
When the era of full-card simulcasting arrived, the simple clarity of the 6:15 rule turned into a source of chaos. Laurel Park and Rosecroft Raceway both started to operate day and night, offering a mix of simulcasts in addition to live programs. To respect the 6:15 rule, each track operated the other's facility for a portion of the day - with dismal results. Thoroughbred fans at Laurel felt they were treated like second-class citizens as soon as the Rosecroft crew arrived at 6:15.
From the tracks' standpoint, the 6:15 rule had an effect even worse than angering their customers. It stymied the development of offtrack betting parlors that could have spurred the growth of the industry. How could the Thoroughbred tracks build OTB parlors when their potentially lucrative nighttime hours belonged to Rosecroft?
In December 1999, the tracks came to an agreement designed to end this bickering. Of the revenues from racing in the state, roughly 80 percent went to Thoroughbreds and 20 percent to Standardbreds. So the sides agreed to pool their revenues and split them 80-20 under an agreement that would last until 2004. In OTB facilities that they developed jointly, the 80-20 relationship would be perpetual.
But the harmony between the breeds was short-lived. "Thirty days after the papers were signed," said Tom Chuckas, Rosecroft's chief executive, "it started falling apart."
Besides the track owners, another faction is involved in racing issues: the horsemen. The Maryland Thoroughbred Horsemen's Association is wary of any relationship with the Standardbred industry, and it opposed giving the rival breed a perpetual 20 percent share of OTB revenues. Under federal law, horsemen have the power to block simulcasting and offtrack betting within 35 miles of a racetrack. So plans for joint ventures never got out of the starting gate. Rosecroft's enthusiasm for revenue sharing quickly cooled when its own revenues increased last year and the Thoroughbred tracks' didn't.
Both the Thoroughbred horsemen and Rosecroft management now advocate the end of the 80-20 deal and the 6:15 rule. Recently, they have found an important ally: the Maryland Racing Commission.
The commissioners have long been exasperated by the stagnation in the Thoroughbred industry. Although Joe De Francis, president of the Maryland Jockey Club, has frequently put forth grand plans for racetrack renovations and development of a phone-betting system, little has come of them.
"They make these huge commitments, and then there's nothing," lamented commissioner John Franzone. "What you've got here is a history of unfulfilled promises."
Desperate for a way to spur some change in the industry, the commission voted unanimously, at its December meeting, to recommend that the legislature repeal the 6:15 rule. This would allow Rosecroft to offer Thoroughbred simulcasts in the afternoon without dealing with the Maryland Jockey Club. The rationale is this: If the Maryland Jockey Club isn't going to improve the sport unilaterally, then perhaps free-market competition will spur progress.
The harness interests concur. "My view," said Chuckas, "is that competition is good, and it's the only way this industry is going to improve. We can develop OTB's. They can develop OTB's."
But, De Francis insisted, "All this does is to create a competition for customers between Laurel and Rosecroft. We're already fighting offshore gambling and slot machines in Delaware and West Virginia. What kind of sense does this make?"
For the Thoroughbreds, in particular, it makes none. "Implementing the 'free market' proposal would cost the Thoroughbred industry $7 million a year," De Francis declared.
Although free-market competition sounds as unassailable as apple pie, people in the Thoroughbred business can argue that it amounts to a hijacking of their own product.
Thoroughbred racing, despite all of its problems, is still a major industry in Maryland, while the harness sport is practically moribund. Seventy percent of Rosecroft's revenue now comes from wagers on Thoroughbred simulcasts - most of them placed before 6:15 p.m. Understandably, Rosecroft would like to operate freely as an afternoon Thoroughbred simulcast theater, and Chuckas sees no reason that it shouldn't. He points out that the Maryland Jockey Club doesn't own the simulcasts from tracks such as Churchill Downs and Santa Anita.
De Francis knows the concept of a free market in his industry is a pipe dream. The Maryland Jockey Club has the responsibility of operating two big, money-eating racetracks and their stable areas, plus the training center at Bowie. Because of the demands of horsemen and regulators, it can't reduce its live racing dates or shut down a stabling facility to cut costs. Revenue from betting on Thoroughbred simulcasts supports this high-overhead operation. Is racing really going to be helped by transferring revenue from the Thoroughbred tracks to a harness industry that can't stand on its own feet?
It is a measure of the commission's desperation to change the status quo that this is considered a possible solution to the ills of Maryland racing. In fact, the most logical solution would be a cooperative venture by Thoroughbred and harness interests to develop OTB's in prime locations and expand the betting marketplace. That plan already has failed. Leaders of the industry are justifiably bewildered as they wonder what to do next.
(c) 2001 The Washington Post Company