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Md. horse racing industry reaches 10-year agreement

The 10-year deal between the major players in Maryland’s beleaguered horse racing industry offers more stability than breeders, jockeys and owners have seen in years, according to industry insiders.


The start of the 135th Preakness Stakes at Pimlico Race Course in May 2010. (File photo)

“I think the whole industry came together to come up with a plan that would make sure there is a stable horse racing and breeding industry in Maryland for a long time,” said Cricket Goodall, executive director of the Maryland Horse Breeders Association.

Tom Chuckas, president of the Maryland Jockey Club, said, “We created a plan that benefits everyone and develops a sustainable model for the future.”

The three partners to the agreement, announced Friday, are the MHBA, the Maryland Jockey Club and the Maryland Thoroughbred Horsemen’s Association.

The contract guarantees a minimum of 100 days of racing each year — with provisions to add more days through a revenue-sharing program — and confirms that the Maryland Jockey Club will make “badly needed” capital improvements to Pimlico Race Course and Laurel Park.

Chuckas said officials aren’t ready to announce specifics. But in February, the group will submit a detailed plan to the commission and the Maryland Department of Budget and Management.

Not everyone thinks it solves the longstanding difficulties surrounding horse racing in Maryland. Dennis Coates, a professor at the University of Maryland, Baltimore County who studies the impact of sports on local economies, cautioned against feeling overly optimistic. The industry is past its prime, Coates said, and not even a long-term contract can defeat the many obstacles it faces.

“[The decline in racing] is connected to the vast array of other entertainment options that have developed over time, and it’s also related to lots of alternative gambling options,” he said. “It used to be that if you wanted to gamble, you had to go to the track,” he said. “That’s certainly not true anymore.

“We’re just not a horse culture like we once were,” he continued. “Lots of industries disappear over time because the interest in their product falls away. I mean, you don’t buy whale oil anymore.”

The MHBA’s Goodall, however, said the sheer length of the agreement, which she called “unprecedented,” bodes well for the sport’s future in Maryland.

It will help attract breeders to this state, she said, because they need assurance that their four-year commitment to raising a thoroughbred will be worth it. She said Maryland had been signing one-year contracts, which she said drove breeders to other states.

“What we want is more business coming back to Maryland that may have left, and I think we’re beginning to see some of that already,” Goodall said. “And with this 10-year agreement, I anticipate we will see even more of it.”

There will be 146 days of live racing in 2013 — the same as in the past three years — and the Maryland Racing Commission is expected to approve the specific dates at its monthly meeting on Tuesday. The schedule will be similar to this year’s, said Chuckas, the jockey club’s president.

Conflict has erupted in the past about how many days to run live races. The state sets a minimum number of 146 as the threshold for receiving state subsidies, but the jockey club considers such a schedule financially burdensome.

UMBC’s Coates said the relentless pursuit of a heavy schedule might not be realistic, and added that he doesn’t think subsidizing the industry is the best use of government resources.

“There’s a romantic desire, I think, to keep the state the way it was,” Coates said. “If you’ve been around Maryland for a long time, the horse racing industry, 50 years ago, was a big deal. There’s a desire to protect that. … But subsidies make it possible for us to do things that are no longer economically sensible to do.”

The new agreement calls for Pimlico and Laurel to remain open year-round for racing, training and stabling. The fate of the Bowie Training Facility is still up in the air, Chuckas said.

But Goodall said Bowie will eventually close, because officials have determined it’s more efficient to operate only two training facilities, at Pimlico and Laurel, where races are already held.

“The reality is, there wasn’t a need to have three training facilities open in Maryland, and that was part of the problem for the race track operators,” Goodall said. “The losses that they sustained in part were because of having to keep training facilities open that were costly to them.”

Horse racing in Maryland has struggled to compete with neighboring states where casino revenue has bolstered their racing industries for years. But Goodall says the expanded gambling provisions passed in last month’s referendum may help close the gap.

In Maryland, 7 percent of all slots revenue from state casinos must be allocated to purses, and 1.75 percent goes to the Race Tracks Facility Renewal Account — rules that were established by a 2007 law.

Of the combined revenue of the three existing casinos — Hollywood Casino Perryville, Casino at Ocean Downs and Maryland Live Casino — about $23.3 million has been dedicated to purses so far this year and about $7.7 million has gone into the renewal account, according to the Maryland State Lottery and Gaming Control Agency. Once the three additional casinos in the pipeline open, that amount will climb, Goodall said.

Goodall said the extra revenue will be integral to maintaining the industry’s growth and reversing the downward spiral. Recent money coming in from the new Maryland Live Casino has allowed the industry to take the leap of planning for 10 years down the road, she said.

“If we didn’t have foreseeable future revenue from slots, no, we would not be able to survive here,” Goodall said. “But it’s about having the same opportunities that other states have. Now is our chance to revitalize the industry with this added funding, and now, with this long-term agreement.”

But Coates said he’s not so sure the years of financial struggles — the Maryland Jockey Club lost $5.3 million in 2011 and $20 million in 2010 — can be permanently overcome.

“I don’t think slot machine revenues are a long-term solution to a decline in the horse racing industry,” he said. “I think they’re just fighting the march of time, and that’s a battle they’re going to lose.”

The way Goodall sees it, the tide is turning.

“There’s been lots of what-ifs in the past,” she said. “But at the moment, we’re feeling pretty good.”