03/06/2003 1:00AM

New proposal for Maryland slots

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The Maryland racing industry braced itself for a torrent of criticism after Gov. Robert Ehrlich unveiled a slot-machine proposal Wednesday night that nearly doubles the share granted to racetracks.

The racing industry had already been portrayed by slots opponents as undeserving benefactors of the revenues that could arise from slots, and the newest proposal was expected only to sharpen those perceptions, racing officials said Thursday.

Ehrlich's proposal, a roadmap for legislation that has yet to be introduced, would give racetracks 23 percent of the net proceeds from slots to pay for expenses; the state would get 5 percent to pay for the machines. Racetracks would then get 26 percent of the money left over, a total that would net the tracks an estimated $640 million a year, up from an estimated $350 million in earlier proposals.

The proposal also slashed the licensing fees that each of three racetracks would be required to pay, from $100 million to $40 million. That would produce $120 million in fees instead of $350 million in fees under the original proposal - which included a fourth track - leaving a shortfall of $230 million for the governor's 2004 budget.

Supporters of the slot measure acknowledged that the new proposal was being sharply criticized, but they said that it was unfair to compare the new proposal to the older plan. As a whole, the racing industry had called the first plan unworkable because racetracks would lose money with slots after expenses were taken into account. "That first one was a total joke," one racing official said.

Many racing officials, fearful of jeopardizing the effort to legalize slots, declined to speak publicly about the proposal, but privately, some complained that the new proposal would solidify the opposition to slots and perhaps doom the effort for this year. The difference in opinion was the first crack in a united front that the racing industry had attempted to present.

The racing officials who criticized the proposal said that the plan attempted to hide the benefit to racetracks by taking the tracks' expense payments off the top, a mechanism that allowed Ehrlich to claim that the percentages to racetracks actually decreased. According to The Baltimore Sun and The Washington Post, Ehrlich's staff acknowledged that racing's share would increase only after reporters pressed staff members on the issue of the "fine print" in the bill.

One racing official said that the off-the-top payments to racetracks to cover expenses had already galvanized the political critics of Joe De Francis, the president of the Maryland Jockey Club, which operates Pimlico Race Course and Laurel Park. The critics claim that De Francis was using his influence to get special favors from the governor, the official said, compromising the proposal's chances and casting the racing industry in an unfavorable light.

De Francis declined to comment Thursday, citing company policy.

Also in the proposal, purses for horsemen would be allotted 3.6 percent of the proceeds, down from 4.7 percent. Tom Bowman, the president of the Maryland Horse Breeders Association and an industry spokesman, called the reduction in the purse split "disappointing," but he said the overall proposal was better for the racing industry because slots were unworkable for tracks under the old proposal.

"The initial bill was off by 100 percent as far as what was necessary," Bowman said, referring to the splits for tracks.

Alan Foreman, the general counsel of the Maryland Thoroughbred Horsemen's Association, said: "The proposal has obvious problems for us, but we hope to work with the legislative leadership to iron those out."