Laurel, Pimlico could use slots subsidies for operating expenses under bill that advances in Maryland

A bill that would allow the owner of Laurel Park and Pimlico Race Course to use slot-machine subsidies for the tracks’ operating expenses passed in the Maryland House of Delegates on Monday and was sent to the Senate.

The Senate’s Budget and Taxation Committee was scheduled to consider the bill on Wednesday. The bill has the support of the state’s racing industry and Gov. Martin O’Malley, who first offered to allow the tracks to use the casino subsidy for operating expenses in an agreement brokered in December that would allow for 146 live racing dates at the two tracks in 2011.

MI Developments Inc. and Penn National Inc., the two companies that own the tracks through the Maryland Jockey Club, have contended that the use of the subsidies for operating expenses will allow them to operate the tracks at a profit. Under current law, the subsidies can only be used for capital expenditures, and the tracks’ owners are required to match the funds before they can be used.

Under Maryland law, casinos in the state are required to pass on as much as $100 million in subsidies each year to the state’s Thoroughbred and Standardbred industries. The Thoroughbred industry would be allotted as much as $80 million, with approximately $60 million slotted for purses. The subsidies are not expected to reach the $100 million level until the state’s largest casinos are up and running in late 2012.

The bill passed on Thursday would require the tracks’ operators to submit a five-year business plan to a nine-member oversight board that would be established under the legislation. The operators would also be required to submit annual financial reports to the oversight board.