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Tracks balking at slots campaign

Maryland's pro-slots forces are planning an eight-month campaign for a referendum on expanded gambling that they say would fix the state's budget problems and save horse racing. But those who stand to benefit most - the state's racetrack owners - are balking at the effort and saying that they might not participate in the push for the ballot measure.

Scott Borgemenke, executive vice president for racing at Magna Entertainment Corp., the Canadian company that owns the Laurel and Pimlico tracks, said yesterday that the company has not decided whether to contribute to the pro-slots campaign being led by former Maryland Budget Secretary Frederick W. Puddester.

Although the Laurel track could be granted slots under the November referendum, Borgemenke said the company views the proposal as less than ideal because a license there would not be guaranteed.

"We're very supportive of our horsemen. We know slots will help the purses," he said in an interview yesterday. "We'll look at what the slots will do as far as Laurel's and Pimlico's business plans."

But Maryland horse racing officials say Magna executives have been more definitive in private conversations. John Franzone, chairman of the Maryland Racing Commission, said Frank Stronach, Magna's chairman and interim chief executive officer, told him a few weeks ago that the company would not contribute "one penny to support the referendum."

"Magna has an issue that Laurel was not named as a specific site," Franzone said. "The issue is not whether it'll go to Laurel Park, but the issue is whether it'll pass."

Franzone said he's told Stronach in subsequent conversations that a Magna failure to financially back the referendum would be "ill-advised." Franzone said he thinks Stronach might change his mind.

Under a deal structured at the time of Magna's acquisition of the Laurel track, former Maryland Jockey Club President Joseph A. De Francis, his sister Karen and others would receive 65 percent of Magna's Maryland slots profits during the first five years, 50 percent for the next five years and 40 percent in the following decade, according to filings with the Securities and Exchange Commission.

Stronach said last week that the company is trying to renegotiate the contract, but it is unclear how De Francis' announcement Friday that he will quit Magna's board would affect those discussions.

William Rickman Jr., who owns Ocean Downs near Ocean City, another track that is a potential site for slots, could not be reached for comment yesterday. Late last year, he said he did not plan to do "heavy lobbying" to gain passage of the referendum.

That's bad news to those who have been fighting for years to legalize slot machine gambling in the state.

"Without the participation of all the stakeholders, we're going to have a very difficult time," said Gerry Evans, a lobbyist for the Maryland Thoroughbred Horsemen's Association.

Slots opponents aren't so restrained. In addition to Internet advocacy and an already robust grass-roots push, slots foes are pledging a multimillion-dollar campaign to defeat the referendum.

"We intend to defeat this referendum, and we intend to do so in an intelligent kind of way. And we're going to follow the path that leads us to this goal," said Aaron Meisner, coordinating chairman of StopSlots Maryland. "And I don't know what is along that path."

Meisner said StopSlots had not ruled out taking money from out-of-state gambling interests, and others involved with the group said it probably would have to do so to fund the kind of campaign they are planning.

Slots opponents have held out hope that Penn National Gaming would invest heavily in defeating the referendum to avoid any competition for its marquee property, Charles Town Races and Slots, in Charles Town, W.Va., one of the most profitable racetrack casinos in the country.

Eric Schippers, vice president of public affairs at Penn National, said the company will not be part of any campaign to stop slots in Maryland.

Although Penn National pulled out of a deal to buy Rosecroft Raceway after the Prince George's County track was not included in the slots legislation, Schippers said the company is "exploring other options or other potential opportunities to participate, should Maryland approve gaming."

"It's safe to assume that we're looking for potential opportunities in Maryland, but it's very speculative right now," he said.

In other states, casino companies have heavily bankrolled campaigns for and against gambling. Of the $54 million spent on gambling ballot measures in six states in 2006, 89 percent came from gambling companies with a direct stake in the passage or failure of the measures, according to a study by the National Institute on Money in State Politics.

But that might not be the case in Maryland. Rickman said in an interview with The Sun late last year that pouring contributions into the measure's passage would be "a waste of money" because slots operators would only be able to retain 33 percent of the profits under the state plan.

Last week, members of the Maryland's Thoroughbred Horsemen's Association discussed in a meeting Magna's refusal so far to join the campaign.

"We need the financial backing of every stakeholder that's going to benefit from slots," said Richard Hoffberger, the association's president. "And anybody who doesn't participate makes it difficult for the pro-slots effort."

Borgemenke, who was expected in Baltimore last night, said he and Magna's lobbyist are trying to meet with Puddester, a senior dean at the Johns Hopkins University who was asked last week by Gov. Martin O'Malley to chair the pro-slots group For Maryland, For Our Future.

bradley.olson@baltsun.com hanah.cho@baltsun.com

Copyright © 2014, The Baltimore Sun
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