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Expanded bonus program boosts Maryland's horse industry

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When jockey Chelsey Keiser rode Greentree Road, a 6-year-old gelding from Frederick, across the finish line to place second in the fourth race at Laurel Park on Thursday, she earned his owner 20 percent of the $15,000 purse, or $3,000.

It was far from the biggest take on a sunny opening day of the 2013 fall meet, the 103rd for the storied track. But it made history.

Thanks to a new incentive program aimed at revitalizing Maryland's sagging horse industry, Greentree Road also netted his breeders a bonus of 30 percent of its purse winnings — $900 — because the horse was born in the state.

The program, paid for out of casino revenue, nearly doubles the bonuses Maryland-bred horses earn when finishing in the top three in a Maryland race.

It increases those bonuses from 17.5 percent, bringing the state's system into line with those of nearby states like Pennsylvania, West Virginia and New York, all of which have offered bonuses of 30 percent or more to winning home-bred horses for the past several years.

Known as the Maryland-Bred Awards Program, the deal also increases the bonuses earned by the owners of those horses, though more gradually.

For the rest of this year, owners of Maryland-bred horses that finish in first place within the state will net the same 17.5 percent bonuses they have for several years. That amount will increase to 30 percent in 2014. In 2015, the 30 percent bonus will be extended to state-bred horses that finish first, second or third.

Most casino revenue flows to education but some goes to economic development and some to prop up the state's horse racing industry after years of decline.

Given the sport's struggles, critics say the state should not subsidize it when other unmet needs exist. Del. Luiz R.S. Simmons, a Montgomery County Democrat, twice tried to divert the revenue allotted for horse racing to school construction in the General Assembly.

But horse racing insiders say the program creates a strong incentive for owners to breed their horses in Maryland.

"We are farmers; our crop is these beautiful, fragile, four-legged animals," said Josh Pons, newly appointed president of the Maryland Horse Breeders' Association. "With this agreement, local produce is suddenly going to be in vogue again."

A task force, assembled last year by the Maryland Racing Commission at the behest of Gov. Martin O'Malley to determine why the state was falling behind and what could be done about it, found an industry in decline.

For instance, the state's foal crop — that is, the number of horses born in the state — plummeted from about 1,800 in 1991 to about 400 in 2011, a drop of nearly 80 percent. The number of mares born in Maryland dropped from about 2,600 to a little more than 500 during the span, also about an 80 percent decline.

Meanwhile, mares bred in Pennsylvania jumped from 976 to 1,650 between 2001 and 2010, an increase of about 67 percent.

Industry spokesmen say the decline is due mainly to the fact that states like Pennsylvania and West Virginia legalized slots and diverted slots revenue to their racing industries years before Maryland did.

That's why they were able to offer breeders the prospect of larger payouts to offset their investments in the business.

It costs an average of $50,000 to rear a horse from conception to its first race as a 2-year-old, according to Cricket Goodall, executive director of the Maryland Horse Breeders' Association.

That makes the new deal all the sweeter, said Bill Boniface, who has been breeding horses for more than 50 years at his family's 358-acre Bonita Farm in Harford County. Dapper for Opening Day in a yellow sport coat and tie, Boniface was certain the initiative would have a major effect.

"Now a horseman can look and see he's going to be able to get 60 percent more money, if he combines the breeder's bonus and the owner's bonus," said Boniface, one of whose horses, Moral High Ground, was scheduled to run in a $40,000 maiden race later in the afternoon.

Maryland horse racing and breeding were in dire straits before voters decided to amend the state constitution and allow slot machine gambling at five locations in 2008.

Until then, Goodall said, the industry only received money from wagering.

The ballot measure earmarked 7 percent of slot revenue for the state's horse racing purse account, an annual boon of tens of millions of dollars that encouraged owners and breeders nationwide to believe Maryland — which once ranked among the top three states for foal production — might again compete.

After casinos began operating in 2010, purses at Maryland tracks swelled from about $160,000 a day to nearly $300,000.

While most of the new slots revenue went to purses, 11 percent was set aside for "bred funds" — money meant to motivate breeders to remain in the state.

Until this month's agreement, that only paid for the 17.5 percent bonuses, which compared so poorly to the regional standard of 30 percent that many breeders and trainers had little choice but to leave the state, said Pons, co-owner of Country Life Farm in Harford County and Merryland in Baltimore County.

Pons said it was likely he and others in his situation would have had to sell their land — probably to developers — and relocate to states with more racing-friendly rules.

"I think almost every breeding farm in Maryland would have lost out to the competitive disadvantage we were facing," Pons said. "It was sort of like running a restaurant that didn't have a liquor license. You could have great food and take care of your patrons with world-class service, but you still couldn't compete.

"It is not a stretch to say that every breeding farm in Maryland would have gone extinct," he said.

Industry leaders discussed increasing the bonus for years, but it wasn't until 2012, when O'Malley asked the racing commission to set up the task force, that a push began in earnest.

Everyone, Pons said, agreed the bonus disparity was the key factor. During more than 100 hours of meetings, the group developed a number of formulas and ideas, taking them to the horse breeders' and horsemen's associations and the Maryland Jockey Club, which owns Pimlico Race Course and Laurel Park, for input.

A rift emerged between the breeders' and horsemen's organizations, largely because Maryland's horsemen — mainly trainers and owners — already were paying half the cost of building new stalls at Maryland tracks and had agreed to buy more racing dates with money from the purse account.

Linda Gaudet, a longtime owner and breeder in Prince George's County, mainly sided with the horsemen and still finds herself frustrated with the new deal. She doesn't understand why the parties agreed to granting 30 percent bonuses to breeders right away while phasing it in for owners.

"My question is, why couldn't we wait until all the casinos were up and running, then have the 30 percent for everyone? Or at least, until then, divvy it up 20 percent for breeders, 20 for owners, to keep it fair," she said.

With so many stakeholders, Pons said, it's hard to please everyone.

Pons, who just attended the Keeneland Auction in Kentucky, a national auction of yearlings, said friends from around the country told him they were excited about Maryland's new prospects and might bring their business back to the state.

Next weekend marks the Fasig-Tipton Fall Yearlings Auction at the Maryland State Fairgrounds, a major regional event. More than 80 Maryland-bred horses will be auctioned, and Pons said he expects the animals to fetch prices as much as 25 percent higher than last year.

Greentree Road's modest triumph netted less than $1,000 for breeder Glade Valley Horse Farms in Frederick. He brought in the 17.5 percent bonus, or $525, for owner Ben Mondello of New York.

Neither could be reached for comment Thursday, but to Pons, the payouts had the kind of meaning many a long-suffering Baltimore sports fan could relate to.

"We [in the industry] were a bit like the Orioles during their, what was it, 15 down years? We were getting used to losing," he said. "That's a hard thing to turn around, but they did it. It's hard for me to impart what this has done for morale."

jonathan.pitts@baltsun.com

Copyright © 2014, The Baltimore Sun
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