Bill would extend slot subsidies for harness tracks

Like many horse racing tracks across the country, the Ocean Downs harness track on the Eastern Shore is hemorrhaging money. It lost an average of $2 million annually for the past five years.

Ocean Downs' owner, William Rickman, wants the state's help. He is pushing a bill, scheduled for consideration Wednesday by a Senate committee, that would allow the state's two harness tracks to keep using a share of the purse money generated from Maryland's casinos to support daily racing operations. State law now limits the slots subsidy for harness racing to 2012.

"We absolutely need it and support it," Rickman said.

Not everyone in the harness industry in on board, though. Penn National Gaming, owner of Rosecroft Raceway in Prince George's County, plans to submit an amendment that would make the proposal more palatable, said Kelley Rogers, a company consultant who plans to testify at the hearing.

The group representing owners and trainers in harness racing opposes it, too.

"It's not fair to the horsemen," said Tom Cooke, president of the Cloverleaf Standardbred Owners' Association.

After the near-collapse of the state's ailing thoroughbred racing industry, state lawmakers approved legislation last year that diverted millions of dollars in slots proceeds to subsidize track operations for the Maryland Jockey Club, which operates Laurel Park and Pimlico Race Course in Baltimore, home of the Preakness.

Maryland's harness industry also received aid, limited to $1.2 million for each track and only for this year.

In the fiscal year that ended in June, slots revenue generated $7.2 million for purses, split 80-20 between thoroughbred and harness racing.

Ocean Downs runs 40 live races annually as well as taking bets on thoroughbred and harness races from across the country that are broadcast at the track.

Continued support, Rickman said, is crucial to sustaining Ocean Downs. Attendance and wagering at the track have fallen amid growing competition from states such as Delaware and Pennsylvania, whose racetracks offer slot machines and card games, he said.

Bets at the track plummeted from $20 million in 2006 to about $12 million in 2010, according to Maryland Racing Commission data. Ocean Downs did not host a live race that year because of construction of its adjacent slots parlor.

During the same period, the track reported annual losses of $1.7 million to $2.5 million, according to financial documents submitted to the racing commission. Rickman said the track lost $2.3 million last year.

Slots revenue from Ocean Downs casino, which opened in January 2011, has been below the state's and management's expectations.

"Unfortunately, the two businesses are losing money," Rickman said. "It's not like one could support the other."

Cooke said the horse owners' group would be willing to provide a $600,000 contribution rather than $1.2 million to help Ocean Downs mitigate losses. The lower amount would cover expenses for 40 days of live racing, Cooke said, noting that the group's figure was based on data from harness tracks in neighboring states.

Rickman said the group needs to step up to make harness racing viable.

"It's unrealistic for them to think that I can continue taking multimillion dollars in losses every year in order to give them a place to race," he said.

Under the current law, Rosecroft does not qualify for this year's subsidy because of a provision that requires the track to rehire about 200 workers who were employed there when the facility suspended live racing in 2008. The track's financial troubles eventually led to bankruptcy a year later and the track's closure in 2010.

Penn National — which bought Rosecroft for $11 million and resumed live racing last year — employs about 100 people during its live racing meets. Its spring racing season starts March 10.

The company's amendment would lower the subsidy to about $600,000 and eliminate the hiring language from the law, though Rogers said Penn National plans to hire more workers.

The national casino operator is "not in position to do that" yet because Rosecroft has not resolved a disagreement over fees associated with the track's broadcast of thoroughbred races, Rogers said. Rosecroft and the state's thoroughbred industry are in state-mandated arbitration.