New life for Maryland tracks

On Wednesday, purses at Laurel Park – the Maryland track that needed to be shut down in 2011, according to its owners – will rise 16 percent to an average of $186,000 a day, a boost that underscores the unusual economic dynamics in play in the state.

The purse increase is being entirely funded by subsidies from the state’s two existing casinos, one of which opened in the last month. As winter turns to spring and summer, and as building commences on a temporary casino near Laurel Park, the subsidies are expected to boost purses to ever higher levels and allow Laurel Park and its sister track, Pimlico Race Course in Baltimore, to begin pouring money back into the two tracks’ stakes programs, possibly leading to the reinstatement of several of Maryland’s most prestigious races, such as the Pimlico Special and Frank J. DeFrancis Memorial Dash.

Someone unfamiliar with racing in the state might be shocked that the tracks can afford purse increases, considering the doom and gloom under the dire headlines about Maryland racing late last year. At that time, the track’s owners, MI Developments and Penn National Gaming Inc., were threatening to cut more than 100 days from the state’s live racing schedule and run a 40-day meet at Pimlico, citing ongoing operating losses at Laurel. The owners backed down only after receiving concessions from Gov. Martin O’Malley late in December.

For now, purse increases from casino subsidies will be used to “stabilize” the situation in Maryland, according to Alan Foreman, the legal counsel to the Maryland Thoroughbred Horsemen’s Association. After meetings between track management and horsemen’s officials over the past month, the decision was made to target low-level claiming and maiden races for the largest percentage increases, in the hopes that rank-and-file Maryland horsemen would reap the benefits.

For example, a maiden $40,000 claiming race will now have a purse of $24,000, a 20 percent increase over the $20,000 purse that was previously allotted to that class of race. On the other hand, an allowance race for nonwinners of four will now have a purse of $37,000, up just $1,000 over the previous purse of $36,000, or about a 3 percent increase.

“The strategy here is that you reward the people who have supported the program, especially after the tough times we’ve seen over the last several years,” Foreman said.

Officials for the tracks did not respond to phone calls and e-mails on Friday.

Purse subsidies are expected to get a big boost later this year after a temporary casino at Arundel Mills Mall opens. The developer of the casino – which will be the largest in the state – broke ground on the project on Thursday, but construction could be delayed by a legal challenge to the state’s building permit that was filed by a local neighborhood association on the same day. A permanent casino at the mall location is scheduled to be completed by late 2012, when subsidies for Thoroughbred purses could hit as much as $60 million a year.

Horsemen are also hoping to get legislation passed this year that will guarantee at least 140 live days of racing a year. In addition, the tracks and horsemen are working to get legislation passed that would allow the tracks to use other casino subsidies for operating costs instead of capital expenditures, as required by a constitutional amendment passed by voters in 2008.

This year, the tracks are being allowed to use the funds for operating costs under the agreement brokered with O’Malley, who fronted the money to the tracks through the state’s economic development fund. This week, O’Malley’s office began working on legislation that would allow for the redirection of the capital-expenditure funds for the next three or four years, as long as tracks can demonstrate that the money is necessary to maintain profitability.

Foreman said horsemen are currently working with track management on a five-year plan, under the assumption that the prospect of getting slot machines for either Laurel or Pimlico is extremely unlikely during that timeframe.

“At least for the next four or five years, there’s not going to be any gaming at Thoroughbred racetracks in Maryland,” Foreman said. “So we have to look at what we’re going to do for the next five years, to get the industry stable and on firm footing, and then for the five years after that. Stability is the most important thing right now.”

As for reinstating stakes like the Special and DeFrancis Dash, Foreman said that it’s too early to tell whether the races could be brought back this year, or even the next. But it’s the horsemen’s hope that the subsidies will eventually support such a decision.

“It’s just too quick, too soon,” Foreman said. “This industry isn’t going to turn on a dime.”