04/12/2011 12:47PM

Maryland legislature passes horse racing bill

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The Maryland legislature passed a bill Monday night that will require Laurel Park and Pimlico Race Course to hold at least 146 live racing days each year through 2013 while also allowing the tracks to use millions of dollars in annual casino subsidies for operating expenses.

The bill, which was passed in the final hours of the legislative session, is expected to be signed by Gov. Martin O’Malley, who pushed for the bill along with the state’s racing industry. The bill also requires the Thoroughbred tracks to strike an agreement with Rosecroft Raceway on cross-breed simulcasts as a precondition to the release of the casino subsidies.

Alan Foreman, legal counsel for the Maryland Thoroughbred Horsemen’s Association, said the bill would bring stability to the state’s racing industry at a time when horsemen have been at odds with the co-owners of the two Thoroughbred tracks. Late last year, the co-owners, MI Developments and Penn National, had pressed for 40 live race dates and threatened to close Laurel, but a last-minute agreement brokered by O’Malley restored the 2011 racing calendar to 146 days.

“We’ve stabilized live racing in Maryland through 2013,” Foreman said. “That is, by far, the most important part to horsemen.”

To racetracks, the bill will provide a new funding source by allowing them to use casino subsidies that had initially been restricted to capital improvements as operating funds instead. In lobbying for the lifting of the restriction, Penn National and MI Developments had contended that the tracks could not be operated profitably without some sort of operating subsidy.

Two casinos are currently operating in Maryland, and a third – a temporary facility at Arundel Mills Mall approximately 10 miles from Laurel – is expected to open later this year. The permanent facility is scheduled to be completed by late 2012.

Following the opening of the permanent Arundel Mills location, most racing officials expect subsidies from the casinos to the Thoroughbred industry to total approximately $50 million a year, with 75 percent of the total going to purses and 25 percent to the track operators.

The bill’s requirement that the Thoroughbred tracks reach an agreement with Rosecroft gives the two sides until July 1 to come to terms. Following that deadline, either one of the sides can request mediation by the state. If mediation does not resolve the issue by Oct. 1, either of the sides can request arbitration, according to the bill. As long as one side requests mediation, the funding to the Thoroughbred tracks from the casino subsidies will be released.

Under a previous agreement, Rosecroft paid the Thoroughbred industry $5.9 million a year for the right to offer betting on Thoroughbred simulcasts. Rosecroft stopped paying the fee in 2009 and shortly thereafter declared bankruptcy.

Earlier this year, Penn National reached an agreement to buy Rosecroft out of bankruptcy for $11 million, in the hopes that the company could convince the legislature to authorize a casino at the location. Penn National already operates a casino in Perryville, Md.

Because Penn National now has a stake in both the Thoroughbred tracks and Rosecroft, the legislation requires Penn to recuse itself from negotiations on cross-breed simulcasting on behalf of Laurel or Pimlico. Penn bought a 49 percent stake in Laurel and Pimlico last year, but company officials have said they are seeking to unwind the stake.