Updated on 09/17/2011 9:16PM

Simo bets reveal Maryland's decline

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WASHINGTON - Throughout the years of debate over legalizing slot machines in Maryland, leaders of the state's racing industry have insisted that tracks need the devices in order to survive. Skeptics questioned their sky-is-falling rhetoric. After all, Thoroughbred racing has managed to keep going without slots for a couple of centuries.

But when Laurel Park concluded the winter season and released the data on wagering from Jan. 1 through April 17, an objective observer could look at the numbers and conclude that the sky had indeed fallen.

All of the competitive pressures affecting the Maryland tracks suddenly manifested themselves with a calamitous drop in business. The problems facing Maryland's horse industry have become a familiar litany: Since slot machines were legalized in neighboring states, they have revived Charles Town and Delaware Park, allowing those once-moribund tracks to offer purses higher than Laurel and Pimlico. Their money has lured horses from Maryland, reducing the attractiveness of its product.

The competition will increase now that Pennsylvania has legalized slots, too. As the quality of racing at Laurel and Pimlico declines, horseplayers will bet less - and fewer dollars will be available for purse money, accelerating the downward spiral.

The dwindling attendance at Laurel and Pimlico seemed to confirm the gloom-and-doom scenario, but Maryland racing nevertheless retained one solid asset. In the all-important national simulcast marketplace, Maryland racing remained a popular product. People wagering at out-of-state tracks and offtrack betting parlors continued to support it - even if Marylanders didn't. Whenever I visited a race book in Las Vegas, I was struck by the fact that Laurel and Pimlico were usually given billing as major league tracks - while competitors such as Delaware, Philly Park, and Charles Town were not. The explanation, in part, is that horseplayers are creatures of habit, and they bet the tracks with which they have long been familiar. So even though racing in Maryland had deteriorated, those simulcast bettors didn't seem to notice.

This winter, they did. Suddenly they turned away from Maryland racing en masse. One day this winter, an executive at Boston's Suffolk Downs looked at the printout of his wagering data and saw a figure that stood out: betting on Maryland was down 30 percent from the previous year. He phoned Lou Raffetto Jr., Laurel's chief operating officer, and asked if he knew of any reason for the drop.

Raffetto had to answer that a similar phenomenon was occurring in many places. "As the quality [of our racing] eroded, we lost some of our following," Raffetto acknowledged. In part, he said, this was a result of temporary circumstances: With the Laurel racing strip being rebuilt, some of its midwinter racing was conducted at Pimlico, which usually doesn't draw fields as large as Laurel. Moreover, he said, the tracks carded fewer races per week, accounting for some of the drop in wagering.

The size of the drop was stunning. While ontrack business declined by only a few percentages points, out-of-state wagering on Maryland's races plunged 24 percent - from $155.8 million in the comparable period a year ago to $118 million.

It would be comforting to believe transitory factors accounted for the decline. But the deterioration of the Maryland product is anything but a passing phenomenon. Maryland has been especially hurt at the lower end of the racing spectrum by competition from Charles Town. The bread-and-butter, cheaper claiming races have become dismal fare that is almost unbettable. In Thursday's second race at Pimlico, an event for bottom-level maidens, seven wagering interests were entered; a majority of the horses hadn't finished within 10 lengths of a winner in at least a calendar year. Even hard-core gamblers are going to shun races like this one. The simulcast marketplace offers too many better alternatives.

An optimist could point out that Maryland still has some important assets: Most trainers have not pulled their stables out of the state. Maryland's breeding industry is still superior to its neighbors'. When Laurel's new turf course goes into operation this fall, it will surely attract large fields and more bettable races. But these positives will be offset when slot machines start whirring in Pennsylvania. Philly Park's purses will dwarf Maryland's, and Penn National will join Charles Town in sucking away horses from lower-level races.

The legalization of slots in Pennsylvania was bad news for Maryland, but the recent decline in out-of-state betting numbers might have been even worse. Maryland could survive a decline in the quality of its racing product better than it can the disappearance of its customers. The simulcast customers who have been alienated are unlikely to return. This winter's precipitous drop in business might have been just the first step in a long slide toward minor league status for the state's once-proud Thoroughbred industry.

(c) 2005, The Washington Post