The Maryland Racing Commission voted Wednesday to allow harness racing to return to Rosecroft Raceway for 20 dates this fall.
The commission approved the Oxon Hill track’s application on a 7-1 vote, with the condition that Penn National Gaming Inc. gives a letter of credit to its subsidiary, Prince George’s Racing Ventures LLC, saying it will absorb operating losses incurred from Aug. 1 of this year through Dec. 31, 2012.
“The Maryland Racing Commission is charged to protect live racing,” said Louis J. Ulman, chairman of the commission. “But we need to assure financial responsibility.”
The racing commission questioned Penn National executives for four hours over the application for a live racing license because the Maryland Jockey Club and Rosecroft’s owners have not yet come to an agreement on simulcasting thoroughbred races. The parties missed a July 1 deadline for the agreement, and have until Oct. 1 to settle on the issue through mediation with Secretary Alexander M. Sanchez of Maryland’s Department of Labor, Licensing and Regulation.
The uncertainty of how the simulcast revenue will be divided — and, by extension, of Rosecroft’s finances — made the commission question Penn National’s financial projections. Penn National executives provided estimates based on what kind of simulcasting agreement they thought would result from mediation or binding arbitration.
“What if you have to give [the thoroughbred industry] twice as much?” said John Franzone, a commission member. “Then your losses will be greater.”
Commission members also questioned Penn National’s commitment to operating the track, particularly if the Wyomissing, Pa.-based company does not succeed in its quest for gaining slot machines at Rosecroft.
“We want to keep this business open as long as it makes sense,” said Steven T. Snyder, senior vice president of corporate development for Penn National Gaming. “If we can’t make the economic impact work, don’t look at Penn National to underwrite its losses.”
Penn National officials have said they will seek to change Maryland legislation to add a sixth video lottery location in hopes of getting machines at Rosecroft.
“We do think that it’s important … to make that sale, in the best interest of the industry, to be the sixth site for lottery terminals,” Snyder said.
The commission further questioned Penn National over its projections that it would eventually hire 1,000 workers and hold more than 100 days of live racing if slot machines opened at Rosecroft. Many members of the commission asked Penn National officials if the company had a backup plan if slots did not come to Rosecroft and if the simulcasting agreement did not fall in Penn National’s favor.
“If there’s no approval for additional gaming, what would be your options then?” said Commissioner Mary Louise Preis.
Snyder said the company did not have a backup plan based on unknown situations and consequences.
“You didn’t get gaming [at Pimlico Race Course and Laurel Park], so you cut and run,” said Ernest R. Grecco, the lone commission member to vote against returning racing to Rosecroft. “How do you convince owners, breeders, trainers that you won’t cut again?”
Penn National predicted Rosecroft would have $2.3 million in operating losses through 2013 without additional capital contributions from the company, although officials said the company is willing to inject more money to offset losses.
Purses in 2011 would be as small as $1,800 per race during the 20 days of live racing in the fall, Penn National predicted in its report to the commission. Purses would increase over the next two years if Rosecroft applies for funding by casino revenue. Seven percent of Maryland’s casino revenue goes to racetrack purses each month.
But meager purses worried some horsemen at Rosecroft’s hearing.
Arthur Lisi, chairman of Preserve Harness Racing Group LLC, said many horsemen have left the area to train and race for bigger purses elsewhere, and it may be difficult to lure them back with such small purses. But no one in the industry wants to see the track close, he said.
“With limited purses, how is that going to be successful?” Lisi said. “I have to support it because I believe Rosecroft will disappear otherwise.”
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