Negotiations coming down to the wire on Pimlico reconstruction legislation

A Maryland Senate budget committee meeting on Friday that was called to discuss legislation that would deed Pimlico to the state and lead to the reconstruction of the track drew outsized opposition to a small portion of the bill that would divert several million dollars of capital-expenditure money from a harness track in the state to a Thoroughbred track.

The legislation, which is being pushed by Thoroughbred constituents and is supported by Maryland Gov. Wes Moore, was being discussed on the second-to-last day of the legislative session, in a last-minute push to direct it over the finish line with Senate votes on Monday. Under the bill, the state would issue $400 million in bonds to rebuild Pimlico into a year-round facility that would keep the Preakness Stakes, the second leg of the Triple Crown, at the Baltimore track in perpetuity.

While some of the major elements of the plan were also discussed, a significant line of questioning by multiple members of the Budget and Taxation committee dealt with a provision in the bill that will use funds currently sitting dormant in an account at Rosecroft Raceway to pay for general upkeep at Laurel Park, where racing would be conducted for two years while Pimlico is being rebuilt if the bill is passed.

Many of the questions indicated opposition or outright hostility to the use of the funds for Laurel, mainly from committee members who represented districts where Rosecroft and Ocean Downs, a harness track and casino owned by Churchill Downs, are located.

:: Get the Inside Track with the FREE DRF Morning Line Email Newsletter. Subscribe now.

According to Greg Cross, the chairman of the Maryland Racetrack Thoroughbred Operating Authority, the amount of the funds in the Rosecroft account is $4 million. Rosecroft is owned by 1/ST Racing, the same company that currently owns Pimlico and Laurel, and its owners have said they are likely to sell Rosecroft to a real-estate developer in the next several years, Cross said. Laurel is expected to be sold by 1/ST once Pimlico is rebuilt, and it will be operated by the MTROA as of July 1 if the legislation passes.

With only three days remaining until the last day of the session, the opposition to the item could complicate the legislation’s passage, or at least lead to some spirited horse-trading on provisions in the bill over the weekend.

“You will see some proposal from the Prince George’s delegation about how to treat those funds as this process goes forward,” said Michael A. Jackson, who represents parts of Prince George’s County, Charles County, and Calvert County.

Representatives of Standardbred interests also provided testimony objecting to the use of the funds for capital improvements at a Thoroughbred track.

Other questions over the impact of the project centered on the financial viability and the community outreach efforts of the non-profit company that will operate Pimlico in the aftermath of the legislation passing. Under the legislation, the MTROA will create the non-profit company, which will be operated in close consultation with the state’s Thoroughbred horsemen.

The MTROA was formed at the beginning of 2023. Throughout last year, it worked with Thoroughbred constituencies throughout Maryland to issue a report earlier this year containing recommendations for the long-term future of the state’s Thoroughbred industry, which included the proposal to consolidate racing at a renovated Pimlico and build a new year-round training center.

:: Bet the races with a $200 First Deposit Match + FREE All Access PPs! Join DRF Bets.

J.B. Jennings, who represents both Baltimore and Harford Counties, asked Cross and Eric Luedtke, the chief legislative officer for Gov. Wes Moore, why the plan had to be enacted now, and whether the non-profit company could make a profit if a private company could not.

“We’ve been given all of the [1/ST Racing] numbers, and we’ve modeled all of those, and we believe we will run at a profit,” Cross said. “And I will give you my promise, we are not going to come back for a dollar of operating money. [The MTROA] will live within our means. If we run short, it will have to come out of the purses, and our horsemen have agreed to do that.”

Cross also justified the state’s involvement in the operation of the track because private operators could not generate a sufficient return on investment to direct $400 million to Pimlico’s rebuilding. That’s in part because of the high demands for return on investment in today’s business atmosphere, but also because of high interest rates in the capital markets for private businesses that are struggling, such as 1/ST Racing.

“It makes sense for the state but not for a private owner,” Cross said.

Cross added that racing operations in the state are “a profitable business,” and that the Preakness is capable of generating enough revenue to cover any marginal losses incurred by running as many as 150 live race days. But Cross also said that the rebuilt Pimlico property will have new revenue capabilities because of its multi-use redevelopment.

“It’s a marginally profitable business, but we know we have additional revenue streams that will come on-line, and we believe we can cut a lot of costs,” said Cross.

:: Get Daily Racing Form Past Performances – the exclusive home of Beyer Speed Figures

During the two-hour hearing, Cross was also asked to defend an element of the transfer agreement between the state and 1/ST Racing that will require the new racetrack operating company to pay $3 million each year to 1/ST for the rights to run the Preakness and the Black-Eyed Susan Stakes, along with 2 percent of the gross betting for both days. Together, Cross said, that would total a payment of approximately $5.5 million each year, using last year’s handle figures.

“[1/ST Racing] currently owns those intellectual rights, and it would have cost the state an enormous figure to buy them out, and, quite frankly, the state doesn’t have the stomach for that right now,” Cross said.

:: Want to learn more about handicapping and wagering? Check out DRF's Handicapping 101 and Wagering 101 pages.