State racing regulators agreed Wednesday to grant a license for Rosecroft Raceway to resume live racing after a three-year hiatus, but placed financial conditions on the owner that some say will keep the facility's operations in limbo.
Expressing concerns about the harness track's financial viability, the Maryland Racing Commission voted 7-1 to order parent Penn National Gaming to cover projected operating losses for 2011 and 2012.
The decision means live racing won't necessarily resume any time soon at the Prince George's County track. Rosecroft, which has seen owners come and go, suspended live racing three years ago and closed last year.
Penn National will "explore our options due to the conditions," spokeswoman Karen Bailey said after the hearing.
A representative of the harness horse owners group called the conditions "onerous," and characterized the commission's decision as a denial of Penn National's license application.
"We're in total limbo," said Thomas B. Cooke, president of the Cloverleaf Standardbred Owners' Association. Cooke and other supporters, including state Sen. Anthony Muse, testified in support of Penn National.
Commission member Ernest Grecco, who cast the sole dissenting vote, said Penn National should be granted a license without conditions. He warned that the financial guarantee required of Penn National could mean the end of racing in Prince George's County.
"Maybe I'm wrong and they'll do it," he said.
Penn National submitted a proposal to open for 20 days of live racing this year beginning in October and 54 next year. It planned to resume simulcasts of standardbred and quarter-horse racing later this month.
Penn National projected operating losses from 2011 through 2013 at $2.3 million.
The company's projections did not include revenue from wagers on thoroughbred races shown at the track. That's because Rosecroft has yet to reach a new agreement to broadcast such races with Maryland's thoroughbred industry. The state has begun mediating those talks.
Craig Gegorek, an outside certified public accountant hired by the racing commission, determined that the track did not have the "financial ability" to operate because Penn National was not willing to guarantee funds to cover the facility's projected losses.
Historically, the commission has required prospective owners to demonstrate the financial means to maintain and operate a racetrack for at least two years.
Steve Snyder, Penn National's senior vice president for corporate development, said losses would be just $12,500 during the same period if the track can strike a simulcast deal. Commission member John Franzone, however, pointed out that Penn National's estimates for thoroughbred wagering revenue is based on what it would like to receive in mediation or arbitration if an agreement is not reached by Oct. 1.
Under Penn National's proposal, live racing would be guaranteed only through 2012, with the hope that the state's slots program would be expanded to allow machines at Rosecroft. Snyder acknowledged that getting the machines would be a challenge.
When Penn National bought Rosecroft for $11 million in a bankruptcy auction earlier this year, the company said it would lobby for a slots license.
Maryland voters have approved slots for five locations. Prince George's County is not among them.
Asked what Penn National would do if it couldn't get the machines at Rosecroft, Snyder said the company would "consider running" the track if it were profitable.
"We're in the business of making a profit," he said.
In response to the commission's concerns about Rosecroft's financial viability, Snyder said in his final remarks before the vote that Penn National would be willing to put up a $1 million line of credit to support capital expenses and operating losses in 2011.
But that was not enough for the commission, which deliberated behind closed doors for an hour. Commission Chairman Louis Ulman said the panel is charged not only with preserving racing, but also with ensuring the financial viability of the struggling industry.