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O’Malley proposes to extend subsidies for Laurel, Pimlico

ANNAPOLIS — Gov. Martin O’Malley wants to extend state subsidies for Pimlico Race Course and Laurel Park beyond 2011 as the struggling track owner and state and industry officials search for a long-term solution for thoroughbred racing in Maryland.

“There are clearly long-term sustainability issues in the industry that need to be addressed,” O’Malley’s Chief Legislative Officer, Joseph C. Bryce, said Wednesday. “We’re just trying to create a structure where we can figure those out while maintaining the jobs.”

O’Malley brokered an 11th-hour deal in December to maintain year-round thoroughbred racing in Maryland in 2011 after the corporate parents of the Maryland Jockey Club, the tracks’ owner, threatened to slash the racing schedule.

The state agreed to use $3.6 million in slot machine revenue that had been dedicated to match capital investments at racetracks to subsidize operations at Pimlico and Laurel Park, which has lost between $4 million and $7 million annually in recent years. The Maryland Thoroughbred Horsemen’s Association will contribute $1.7 million this year.

Bryce told the Senate Budget and Taxation Committee that the governor’s legislation, which is still being crafted, would extend the state subsidy “for several years” and give the tracks “a comparable amount” to 2011.

Many senators expressed frustration with the arrangement and the jockey club, which spent $7.5 million on a campaign to derail construction of the state’s largest casino next to the Arundel Mills shopping mall.

“I’m trying to figure out why we should give money to them if they’re going to keep blocking money from coming to the state,” said Sen. James E. DeGrange Sr., an Anne Arundel Democrat whose county anticipates about $30 million in annual tax revenue from the casino.

Sen. Nathaniel J. McFadden, the committee’s vice chairman, criticized the fractured leadership atop the jockey club. Co-owners MI Developments Inc. and Penn National Gaming Inc. publicly backed radically different plans for the tracks before the governor stepped in last year.

“You have two competing interests. We’re heavily invested and we’re putting additional money in,” the Baltimore Democrat said. “We have to have one voice speaking for the industry.”

And Sen. Edward J. Kasemeyer, the committee’s chairman, stressed the need for reorganization in the industry.

“This isn’t getting us anywhere long term,” he said of the proposed state subsidy.

Bryce acknowledged problems with the MID and Penn National arrangement, which requires the companies agree on major jockey club decisions.

“That dynamic was very difficult to deal with,” Bryce said, adding the state’s intervention was intended to save the 10,000 jobs associated with the industry.

“They own the stadium, if you will, and no one can play if there’s no stadium,” he said.

Bryce said the bill would require increased state oversight of the jockey club. The secretary of the Department of Labor, Licensing and Regulation would have to approve the level of the subsidy every year.

“They have to open up their books, essentially, and show that the level of support they’re asking for goes to support the 146-day race calendar,” Bryce said.

The struggle for the jockey club, which has seen interest in racing decline for decade, was spurred by a February 2009 decision by its owner to not submit the license fee needed to win the right to add slot machines to Laurel Park. A plan to put the machines next to Arundel Mills won approval from voters in November 2010 over the protests of the club.

Bryce said the club will have to reduce its operating expenses and examine different ways to draw crowds to the aging tracks.

“The health of standalone facilities across the country is not very good. There are some places, with support from slots, that are doing fairly well,” Bryce said. “But it’s a challenged industry.”