Maryland’s horsemen, breeders, and racetrack operators all appear to agree on one thing: Maryland can no longer afford two tracks. In the long-term, they say, racing needs to be consolidated at Pimlico Race Course, the home of the Preakness, with support provided by a new year-round training center. But from there the differences widen, to a degree that seems unresolvable. Fed up with 1/ST Racing, which owns Pimlico and its sister track, Laurel Park, horsemen and breeders have openly called for the state to buy the company out and create a non-profit to run racing in the state. 1/ST Racing says that plan is entirely unrealistic, and its officials have called for the state to shift tens of millions of dollars in casino subsidies that currently go to horsemen into the company till. “The horsemen have told us what they want, but they haven’t told us how they can do that,” said Craig Fravel, the executive vice chairman of 1/ST Racing, in a recent interview. “There’s a big gap. It’s like saying you want to buy a brand-new house in a great neighborhood, even though you don’t have enough money to do that.” :: Bet the races with a $200 First Deposit Match + FREE All Access PPs! Join DRF Bets. A resolution is looming. In nearly seven weeks, on Dec. 1, a legislatively formed commission, the Maryland Thoroughbred Racetrack Operating Authority, is set to deliver a report to the legislature outlining its recommendations for how to put Maryland racing on stable long-term footing. The legislature goes into session one month after the report’s delivery date, and there’s pressure on the racing industry to deliver options that are politically palatable, in a state where the Preakness is a sacred cow. “The legislature is getting frustrated with the delays in the plan and the uncertainty with what the long-term future of racing in Maryland is going to look like,” said Alan Foreman, a longtime leader among Maryland horsemen who is also an appointed member of the MTROA. “So there’s a sense that there’s going to have to be some forward progress going into the legislative session to keep this thing going.” 1/ST Racing officials appeared before the commission to argue for their own plan in late September, and the Maryland Thoroughbred Horsemen’s Association and Maryland Horse Breeders Association had their opportunity the next week. While both told the MTROA that consolidation is necessary – perhaps, even, inevitable – the two sides have entirely different ways of making that happen. A central issue in the competing plans is the distribution of money that horsemen and breeders receive as subsidies from casinos in Maryland. The subsidies have a complicated history. In November of 2008, voters approved casinos in Maryland through a constitutional referendum. The approval would have allowed Laurel Park to bid for a casino, but Frank Stronach, the owner of the Maryland tracks at the time, declined to submit a licensing fee, a decision that enraged horsemen. Stronach’s company, Magna International, was going through bankruptcy proceedings at the time. That led horsemen to go back to the legislature to lobby for a cut of the revenues from casinos on their own. The effort was successful, but it created a host of new problems by cutting out the tracks from their own share. Shortly after the bill was passed, management at the Maryland tracks even threatened to close Laurel. The subsidies have provided a critical lifeline to horsemen and breeders during a time of overall decline for the racing industry nationwide and in Maryland. In 2022, the total amount flowing from the casinos was $60 million, and the average purse at Laurel and Pimlico that year was approximately $44,000, 12 percent higher than the average purse nationwide. But not all of the subsidies are ending up in purses. In 2011, Maryland’s horsemen signed a 10-year agreement allowing the owner of Laurel and Pimlico to dip into a portion of the funds for its own operations. That agreement expired at the end of 2022, but it has been extended until the end of 2023. Under the various provisions in that extension, 1/ST Racing – the successor to Stronach’s racing empire, now run by his daughter Belinda after an acrimonious dispute between the two – received approximately $11 million this year for its operations. In 1/ST’s presentation to the MTROA three weeks ago, Fravel said that he pointed out to the members of the commission that the Maryland model of subsidies is out-of-step with the model in other nearby states, including Virginia, New York, and Kentucky, where tracks either receive large outlays of casino subsidies or own the casinos outright. He said that he argued that the legislature should at least consider changing the law so that the subsidies were shared “equitably.” Split down the middle, that would be $30 million to 1/ST. Fravel acknowledged that horsemen are entirely opposed to such a change. “I certainly understand their perspective on that, but we haven’t made money in Maryland since, well, forever,” Fravel said. To horsemen, 1/ST had its opportunity to run its own casino, but Stronach blew it. The subsidies have allowed Maryland to run approximately 150 to 170 days of live racing each year, which has allowed horsemen to remain in-state year-round and created, at the very least, a solid bottom for the state’s breeding industry, at a time when foal crops in most states other than New York and Kentucky are cratering. And horsemen have no intention of giving up their share. Even the current amount going to 1/ST through the extended operating agreement appears to be in jeopardy. “The breeders have made it very clear that they are not going to put another nickel into this,” Foreman said. The two sides are also far apart on the number of racing dates that Maryland should run. 1/ST is arguing for a total of 80 days, well short of the horsemen’s desire for year-round racing on a three-day a week schedule. Fravel said that Maryland’s racing product would benefit from “boutique” meets that offer hundreds of thousands of dollars a day in purses, while horsemen and breeders counter that they can’t survive year-round on limited racing days offering the kinds of purses that would attract out-of-state barns seeking the big paydays of 1/ST’s model. Another point of contention for horsemen is 1/ST’s management of the tracks. During its presentation, 1/ST provided the MTROA with a slide that showed the company losing money on the Preakness in both 2022 and 2023. The same slide showed that earnings before interest, taxes, and depreciation on the Preakness and Black-Eyed Susan began declining considerably in 2018, the year that Belinda Stronach took control of the racing assets previously controlled by her father. Prior to the decline, the Preakness and Black-Eyed Susan days were consistently generating around $7-8 million in EBITDA. Foreman said that the decline is no accident. Belinda Stronach has been attempting to position the Preakness as a high-class “entertainment” event, replete with red carpets, celebrity chefs, and pricey musical acts. Last year, the concert series featured Megan Thee Stallion and Lauryn Hill, both superstars. This year, it featured the Grammy-winning pop star Bruno Mars. Fravel said that the strategy of positioning the Preakness as something much more than a Triple Crown race was “an investment in trying to create an environment that’s worthy of a Triple Crown race,” and he said that problems with Pimlico’s grandstand, the high costs of temporary seating, and a lingering “element of recovery from COVID” were also factors in the financial decline of the Preakness. “We look every year at what makes the most sense,” Fravel said. “Obviously our objective is to try to make money on it.” To horsemen, the abrupt change in the Preakness from money-maker to money-loser is a symptom of a larger problem. They don’t trust 1/ST’s commitment to racing or to strategies that make sense for the good of Maryland racing as a whole. Their representatives told the MTROA during their own presentation that the state needs to buy Pimlico from 1/ST, allow the company to do whatever it wants with Laurel, and create a not-for-profit to manage racing in the state, along the model of Del Mar, the New York Racing Association, or Keeneland. That plan would also entail the building of a year-round training center somewhere near Pimlico, with accommodations for 1,400 horses and hundreds of backstretch employees. Pimlico’s current footprint doesn’t have enough space to house that many horses and employees, both horsemen and 1/ST say. So where would that money come from? According to horsemen and 1/ST, a bill passed in 2020 that allows the state to issue $375 million in bonds to renovate Pimlico and Laurel is still in play. Horsemen believe that the amount would be enough to buy Pimlico from 1/ST, renovate the property to make it capable of holding year-round racing, and build the separate training center.  According to the horsemen’s presentation, enticing a private operator to replace 1/ST is a non-starter. Without the possibility of on-track casino gambling with revenues accruing to the operator, no company is going to step in to run racing in a way that would sustain horsemen and breeders, they said. “With a non-profit model we might be able to achieve what Maryland horsemen and breeders think is possible and ensure the survival of our industry over the long-term,” Foreman said. “The only way a private operator could make a profit is to reduce racing days, but you can’t support the breeding industry that way, and you can’t support a year-round racing industry.” Fravel said that 1/ST is on board with a plan to consolidate racing at Pimlico and build a training center. But he said that “it’s all a question of money.” Ultimately, the state legislature will be the arbiter. The MTROA report due on Dec. 1 is not likely to be adopted wholesale, and so lobbyists are expected to fan out in the statehouse after Dec. 1 to continue to argue their sides. “There’s an opportunity for compromise,” Fravel said. “We’re not pretending we have all the answers. There just needs to be a financial model that works. How we get to that point is the dilemma.” :: Want to learn more about handicapping and wagering? Check out DRF's Handicapping 101 and Wagering 101 pages.