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Penn National close to selling Maryland Jockey Club stake

Penn National Gaming Inc. is close to divesting its 49-percent share of the Maryland Jockey Club, including its ownership of Pimlico Race Course and Laurel Park.

D. Eric Schippers, a spokesman for the Wyomissing, Pa.-based company, said Tuesday that the company is near the end of its negotiations for selling the stake. Ontario-based MI Developments Inc. is the jockey club’s majority owner.

But who the share will be sold to is not yet decided, Schippers said in an emailed response to questions.

MI Developments struck a deal Feb. 1 that would transfer all of its racing assets, including Laurel and Pimlico, to Chairman and CEO Frank Stronach. Stronach will give up control of MI Developments, according to the agreement, which is expected to close June 30.

Whether the stake will be sold to MI Developments or Stronach depends on the timing of the deal, Schippers said.

Schippers declined to comment on how much Penn National will sell its share of the ownership for and when the deal is to be announced.

Officials from MI Developments did not return phone messages seeking comment.

Penn National bought its share of the jockey club a year ago with the intent of getting slots approved at Laurel Park. Those plans were quashed when Anne Arundel County voters approved a zoning referendum that effectively gave The Cordish Cos. the right to build a casino at Arundel Mills.

Penn National also owns the state’s first casino, Hollywood Casino Perryville, which has made $64.2 million since its opening in September.

J. Michael Hopkins, executive director of the Maryland Racing Commission, said that the commission hasn’t received notice of the sale, but it has to approve changes in track ownership.

Meanwhile, officials from Penn National met with the racing commission to discuss its plans for Rosecroft Raceway in Oxon Hill, which it purchased for $11 million in February.

Penn National has submitted an application to the racing commission for a license to operate harness racing at Rosecroft, starting July 1, with standardbred and quarter horse simulcasting. The track would host 20 days of live racing this year and 54 days of live racing in 2012.

Steven T. Snyder, Penn National’s senior vice president of corporate development, said to the commission that approving the application quickly would allow Penn National to hire back about 20 employees at Rosecroft. That number could increase to about 50 in the fall, Schippers said.

In the meantime, the company has invested about $1 million in renovations at Rosecroft to prepare the racetrack’s opening, Snyder said.

Hopkins said that he is reviewing the application for racing at Rosecroft, but a decision cannot be made until the commission has a formal hearing with Penn National. Hopkins said he expects that hearing to be held before the end of June.

Louis J. Ulman, chairman of the commission, said it would be best if Penn National finalizes its deal to sell its share of the jockey club before it meets with the commission on its racing application.

“I just think it would be a little bit cleaner,” Ulman said. “If Penn National still would have to negotiate the simulcast transaction, they’re supposed to not participate on the jockey club side. It would be good to get out of that first.”

Ulman also said he expects talks on Rosecroft’s racing application to resume by the end of June.

The Maryland Jockey Club has to reach a deal by July 1 to simulcast races with Rosecroft Raceway to be eligible for up to $6 million in operating subsidies in 2012, under legislation passed in the 2011 General Assembly session.

To qualify for another year of state assistance, the club would have to craft a sustainable plan with horse breeders and owners for the future of the industry that lawmakers find acceptable. That plan is due Dec. 1.

The legislation provides for the expanding of simulcast operations to include thoroughbred races at Rosecroft. The legislation requires binding arbitration if an agreement for simulcasting of thoroughbred races is not reached between Penn National and the jockey club by Oct. 1.

Snyder said Penn National presented a simulcasting proposal to the thoroughbred industry in March, but has yet to receive a response. That proposal included a 50-50 split of all net simulcasting revenue produced at Rosecroft on thoroughbred races from out of state, excluding Penn National-owned tracks.

The legislation also says Penn National can’t negotiate on behalf of the jockey club on the Rosecroft deal unless it sells its stake in the club.

Schippers said after the commission meeting that he doesn’t think the conflict of interest will be an issue.

“We’re hopeful on reaching a near-term decision on the Maryland Jockey Club,” he said. “It’s getting close … we’re nearing the finish line on that.”

Daily Record Business Writer Nicholas Sohr contributed to this article.

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