State of Maryland weighs matching CDI offer on Preakness IP package

The state of Maryland is considering whether to exercise an option that would allow it to match an $85 million deal made by Churchill Downs Inc. to buy a package of intellectual property rights related to the Preakness Stakes, according to officials with knowledge of the process.

The option is contained in a state law passed in 2024 that allowed Maryland to take title to the home of the Preakness, Pimlico Race Course in Baltimore, from 1/ST Racing and Gaming, according to the officials. The option would need to be exercised by mid-June.

Under the 2024 deal, 1/ST Racing retained a bundle of intellectual property rights that would be leased annually back to the state for a flat payment of $3 million per year plus two percent of the gross wagering revenue on the Preakness card and the Black-Eyed Susan card, held the Friday before the Preakness. CDI announced an agreement to purchase the bundle on Apr. 21.

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The bundle gives CDI no formal power over any aspect of the Preakness or the operations of the Maryland Jockey Club, the state entity that now controls racing in the state. The bundle is basically an annuity with guaranteed annual payments.

Maryland has issued $400 million in state bonds to acquire Pimlico and make other investments in the racing industry. The bonds are being repaid with subsidies that the state’s racing industry receives from casinos.

The state would need to dedicate additional funds to make the purchase at a time when some legislators have expressed unease with the state’s investment in the racing industry. Last week, the state’s Legislative Policy Committee announced that it was putting a 45-day hold on the state’s plan to spend $45 million to purchase Laurel Park, which was also owned by 1/ST Racing and Gaming, and convert the track into a year-round training facility.

The state’s governor, Wes Moore, said that the purchase would save the state $50 million compared to a previous plan to build a training center at a farm that the state bought last year for $4.6 million.

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