12/01/2010 3:13PM

Penn National has no plans to end Maryland Jockey Club investment


Penn National Gaming Inc. does not plan to back out of its investment in the Maryland Jockey Club in the wake of the state racing commission’s rejection of a plan supported by the company to race 47 days at the MJC’s two racetracks, according to a statement released by the company’s spokesman.

“PNGI has already closed on its investment in the joint venture,” the statement from spokesman Eric Schippers read. “PNGI has no intention of exiting the joint venture and will be working with our partners to explore all options for the operations of racing in Maryland.”

The rejection of the 2011 racing schedule had led to speculation that Penn National would attempt to back out of its deal to purchase a 49 percent stake in Pimlico Racecourse and Laurel Park because approval of the deal by the racing commission hinges on the commission’s acceptance of a 2011 business plan for the tracks. In rejecting the proposal to run 47 days, the commission has not yet issued its approval of the deal.

Schippers said in his statement that Penn National expects to work with the state’s horsemen to devise a 2011 racing schedule in advance of the commission’s Dec. 21 meeting. If a schedule is not approved, all Thoroughbred racing and simulcasting will cease in the state by Jan. 1.

When asked via e-mail if the agreement included specific provisions allowing Penn National to void the deal if the commission does not approve a plan, Schippers reiterated that the company has “no intention of backing out of the deal.”

But Schippers cautioned that Penn National does not intend to accept a schedule that would jeopardize the financial viability of the two tracks. Officials of Penn National and its partner, MI Developments, have said that the state cannot support the current schedule of approximately 150 live race dates because of ongoing losses at Laurel Park.

“MJC proposed that it work together with representatives of both the Maryland horsemen and the state of Maryland on an expedited basis for additional racing dates in 2011, provided such operations provide a return on the considerable investment the owners have made in the racing industry in Maryland,” the statement said.

Regardless of the outcome of the companies’ effort to revise the racing schedule, lobbyists for the racing industry are expected to ask the legislature and Gov. Martin O’Malley for some relief for the industry when the legislature goes back into session in early 2011. Casino interests in the state – which include Penn National – are expected to aggressively resist any revisions to the existing law because of the impact any changes might have on business plans and investment decisions that have been developed under the law’s current provisions.

Penn National and MI Developments proposed the revised racing schedule after voters in Anne Arundel County rejected a referendum that would have overturned zoning approvals for a planned casino 10 miles from Laurel Park. Penn National bought into the MJC earlier this year in the hopes that the approvals would be overturned and it could steer the lone license for Anne Arundel County to Laurel.

Under Maryland law, the Thoroughbred and Standardbred industries in Maryland will get as much as $100 million a year in subsidies from casino gambling, regardless of who operates the casino. Approximately $70 million would be directed to purses and breeders awards, while $30 million would be directed to racetrack owners for capital improvements as long as the owners match the funds.

In November, MJC officials said they would be unable to accept the capital-improvement subsidies because the tracks would not generate enough revenue to match the funds.

Penn National already owns a casino in Maryland, and it owns other casinos in Pennsylvania and West Virginia that compete for customers in the mid-Atlantic.