Maryland horse racing gambles on slots

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Saturday's Preakness Stakes highlights a Maryland

horse racing tradition in precarious transition, as an industry that long opposed other forms of gambling becomes dependent on its competition for survival.

Maryland horse racing isn't alone in its deepening reliance on other gambling to boost the payouts at racetracks. Tracks in Delaware, Pennsylvania and West Virginia have been buoyed by slot machine profits for years and, more recently, table game revenue. Even Churchill Downs, home of the hallowed Kentucky Derby, is trying to bring slots to the track.

"The only way that you can have profitable racetrack operations is with a brief, high-quality meet or a longer meeting supplemented by slots," said Tim Rice, a gambling analyst with Rice Voelker in Louisiana. "I just don't think there's any real option other than those two choices."


Kentucky vs. Maryland: no contest
The 136th Preakness Stakes is scheduled for May 21 in Baltimore.

Total Prior Attend- Prior Wagered Prior

wagered year ance year top race year
Kentucky Derby $165.2 m $162.7 m 164,858* 155,804 $112m $112.7
(May 7, 2011)
Preakness Stakes $79.2m $86.7m 95,760 77,850 $53m $60m
(May 15, 2010)
Source: Maryland Jockey Club, Churchill Downs Inc.

But Maryland has been woefully behind its competitors in legalizing other gambling. Historically, track owners resisted other gambling competition, vehemently opposing the creation of the Maryland State Lottery Agency in 1973 -- the same year Secretariat won the Triple Crown.

That change of heart toward competitors shifted after Maryland's two thoroughbred tracks, Laurel and Pimlico, began losing business to Delaware tracks, which introduced slots in 1996.

Now, for the better part of a decade, Laurel has been costing the Maryland Jockey Club millions of dollars a year and Pimlico's bottom line is saved only by Preakness. But even the Preakness is barely bringing in enough money to keep Pimlico afloat -- in 2008 and 2009, the track dropped into the red. The tracks declared bankruptcy in 2009.

"I guarantee you if the Kentucky Derby generated what Preakness generates, Churchill Downs Racing would be in the same position that Laurel and Pimlico are," Rice said.

On average, the Kentucky Derby has generated attendance and wagering levels roughly twice the amount of Preakness' draws in recent years. Slots, legalized in Maryland in a limited form in 2008, have been slow to start. Just two of five locations are open, and the added payout money has had small effect on the sport's popularity here. And as table games have opened in other states, some in the industry have begun pushing for their passage in Maryland.

This year, in addition to slots money for payouts, Maryland racing operators succeeded in getting a three-year subsidy funded by slots revenue. Track operators, now out of bankruptcy, also are charged with revamping their business plans.

Tom Chuckas, president of the jockey club, said Laurel and Pimlico could be profitable on their own under a shortened, 40-to-50-day racing schedule.

"But unfortunately from the governor and breeders' perspective, they want a year-round industry. Which is 140 days [of racing]," he said.

Kentucky's Keeneland racetrack and Southern California's Del Mar Race Track run shortened seasons profitably. But that's a far cry from the heyday when Maryland boasted six thoroughbred tracks.

Breeders say having a short season would kill the state's

horse farms by rendering Maryland's breeding incentive fund useless.

"It impacts the incentive for people to breed horses in the state if there's not a place to race them and get a bonus to do that," said Cricket Goodall, executive director of the Maryland Horse Breeders Association.