12/22/2010 12:03PM

Maryland tracks, horsemen reach deal on dates

Michael Amoruso
The owners of Laurel Park and Pimlico reached an agreement with horsemen on Wednesday for 146 days of live racing in 2011.

The owners of Laurel Park and Pimlico Race Course in Maryland reached an agreement with horsemen on Wednesday for 146 days of live racing in 2011 after a meeting with the state’s governor, according to an official representing the horsemen. The state racing commission was expected to convene on Wednesday afternoon to ratify the plan.

Under the agreement, racing will be conducted at Laurel and Pimlico next year in “substantially” the same schedule as in 2010, according to Alan Foreman, the general counsel of the Maryland Thoroughbred Horsemen’s Association. Laurel will begin its winter meet on Jan. 1 under the schedule.

The agreement, if approved, will avert a shutdown of racing and wagering in the state as of the start of the new year. Gov. Martin O’Malley called the racetrack owners and horsemen to his office on Wednesday morning to oversee discussions on a racing schedule following the rejection on Tuesday of a 146-date proposal by the racetrack owners that included a handful of conditions that were opposed by horsemen.

The proposal rejected by the Maryland Racing Commission on Tuesday would have allowed MI Developments and Penn National Gaming Inc., the co-owners of the Maryland Jockey Club, to shut the tracks following the Preakness Stakes in mid-May if the partners determined that continuing to race was unprofitable. The rejected proposal would have also required horsemen to give their consent to simulcasting for the entire year regardless of whether the tracks remained open.

Those provisions, along with a proposed increase in takeout, were cut from the agreement reached Wednesday, according to Foreman. In addition, the governor’s office pledged to rework a provision of state law that requires racetracks to use subsidies from the state’s casinos to fund capital improvements so that the tracks will be allowed instead to use the money to fund operations, Foreman said.

The agreement will expire at the end of 2011, according to Foreman.

“This is a way to give us some breathing room, to allow us to work out how we are going to move forward,” Foreman said.

Racetracks and horsemen in Maryland stand to receive approximately $80 million in subsidies from the state’s casinos when they are fully operational by the end of next year. Thoroughbred horsemen and breeders are expected to receive approximately $60 million of that total in purse subsidies and breeder awards, while racetrack operators were promised approximately $20 million. However, under the current law – which was passed as a constitutional amendment – racetracks could only use the subsidy to pay for capital improvements, and they were required to match the funds in order to use them.

Foreman said that Gov. O’Malley believes that the state can “use a mechanism” that will instead allow the racetracks to use the subsidies for their own operating expenses, without matching the funds. That was apparently enough of a concession for MI Developments and Penn National to agree to a year-round racing schedule.

The agreement will alleviate what has become bitter tensions between horsemen and the racetrack owners as each sought to protect their interests while negotiating on a plan for 2011. Horsemen had steadfastly refused to accept any proposal other than one that protected year-round racing, citing their concern for local horsemen and the potential of the subsidies’ impact on purses. MI Developments and Penn National, meanwhile – which had been at odds at various times during the talks – had maintained that the racetracks were not financially viable without a significant reduction in live racing dates.

Penn National purchased a 49 percent stake in the two tracks earlier this year, in the hopes that the company could steer a casino license to Laurel. But a referendum sponsored by Penn National and MI Developments to overturn zoning approvals for a casino that received the sole license allowed for by law in Laurel’s county was rejected by voters in November, spoiling Penn National’s plans.

At the commission meeting yesterday, Penn National’s chief executive, Peter Carlino, said that “there is no future for racing without slots.” The company owns a casino that is already up and operating in Maryland, and also owns a casino-racetrack in West Virginia, Charles Town,  that draws customers from Maryland.

Penn National’s spokesman, Eric Schippers, released a statement following the meeting with the governor that said: “We hope the compromise reached today will serve as a building block in the ongoing effort to create a long-term plan to restore the viability of Maryland racing.”