Updated on 06/16/2011 2:56PM

Penn National sells its stake in Maryland tracks to Stronach

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Penn National Gaming Inc. has reached an agreement to sell its stake in Pimlico Racecourse and Laurel Park to a company that is being set up by Frank Stronach, according to releases from the companies.

The transaction will allow Penn National to divest itself of an investment that soured shortly after the company bought the 50 percent stake in the two tracks early in 2010. At the time, Penn hoped to help the tracks' parent company, MI Developments, steer a casino license to Laurel Park, but that effort proved unsuccessful when voters in Anne Arundel County rejected a referendum that would overturn zoning approval for a casino that is planned for a location near Laurel.

The stake will be transferred to Stron-MJC Limited Partnership, Penn National said in a release. That company is also expected to receive the stake in the two tracks currently held by MI Developments, which will transfer all of its racing and gambling assets to Stronach on June 30 as part of a deal approved by shareholders of MI Developments earlier this year.

Terms of the transaction were not released, and Eric Schippers, a spokesman for Penn, said on Thursday the company would not provide them. Penn purchased the stake in May, 2010, for $50 million.

Greg Avioli, the president and chief executive officer of the company being created by Stronach to hold the racing and gambling assets, said in a release that the company is "more committed than ever to do what it takes to return Maryland to its rightful place as one of the top racing and breeding states in the country."

Earlier this year, the legislature passed a bill that will allow the tracks to use subsidies from casinos in the state for operating costs. Before the bill being passed, the tracks were restricted to using the subsidies for capital improvement projects.

Casino subsidies for purses are expected to reach $50 million when all of Maryland's casinos are operational. The largest casino, at the Anne Arundel location, is scheduled to open late in 2012.

Penn National operates a casino in Maryland, at a location in Perryville. The company also purchased Rosecroft Raceway, a Maryland harness track, out of a bankruptcy auction in January for $10.25 million.

Penn officials have said they are lobbying Maryland legislatures to relax restrictions in the state that prohibit a company from holding multiple casino licenses in the state.