11/06/2002 1:00AM

Election Day mixed bag for gaming


Magna Entertainment Corp.'s aspirations for slot machines in Maryland got a big boost on Tuesday when Robert Ehrlich, a Republican who supports slots, was elected governor of the state, defeating Kathleen Townsend Kennedy, who opposed legalizing the machines.

Ehrlich has said he supports slots at tracks as a way of at least partially plugging a projected $1.7 billion budget deficit over the next two years. Any measure would have to pass in the Maryland legislature, which has shot down efforts in the past to legalize the machines, partly because the former governor, Parris Glendening, opposed the bills.

Magna Entertainment Corp. reached an agreement to buy majority interests in two Maryland tracks, Pimlico and Laurel, earlier this year. The complicated deal included setting up a separate company that would manage any slots operations. Magna's share in that company is unclear.

Ehrlich's victory was the most surprising result on Election Day, which produced mixed results for racing and gaming.

In Arizona, voters overwhelmingly shot down a proposal to legalize slot machines at horse and greyhound tracks. The voters, however, narrowly approved a measure that allows casino gaming on Native American reservations to continue.

The situation was much different in Iowa, where a resolution asked voters whether casino gambling at riverboats and racetracks should be allowed to continue. Voters approved the measure by a large margin, to the relief of Prairie Meadows in Altoona, where thousands of slot machines have allowed the once-moribund track to remain in business and provided hundreds of millions of dollars in county payments.

In Pennsylvania, Ed Rendell, a Democrat, was elected governor, in a race that appeared to have presented a no-lose option to slots supporters. Rendell's opponent, the Republican Mike Fisher, also supported slots at racetracks. As in Maryland, any measure legalizing slots at tracks would have to be passed by the legislature.

In Ohio, Republican Bob Taft was elected governor, dampening any hopes for slot machines at tracks in that state. Taft said he resolutely opposes any expansion of gambling to raise money for the government, despite a budget shortfall. Racing interests in the state are still expected to push for gambling bills over the next several years, however.

In Kentucky, Republicans retained their hold on the Senate while Democrats remained in power in the House. The balance could have an impact on any future legislation for slot machines. A bill last year that would have legalized slots was never brought up in the House after Senate leaders said they would not consider the legislation.

The Maryland gubernatorial race was the most closely watched campaign in the racing industry, as the debate over allowing slots at tracks has preoccupied racing interests there for several years. Magna's investment in Pimlico and Laurel also raised the stakes in the race.

Magna's stock closed on Wednesday at $6.66, up 26 cents, or 4 percent, on heavy trading. In a conference call with analysts last week, Magna said it believed that 2,500 slots at the tracks would generate $30 million in earnings before income tax, depreciation, and amortization.