Off-track betting probably would help Maryland's racing industry in the short run. But its impact over the long haul -- where it even could threaten live racing in some locations -- is less certain, according to experts.
After years of consideration, the Maryland Legislature appears to be on the verge of legalizing off-track betting, a system whereby fans can go to special outlets to bet on races and watch them on closed-circuit television. The Senate Finance Committee is expected to vote on it today.
Backers in the racing and breeding industry say it will increase gambling on horse racing, thus making more purse money available to track and horse owners. This, in turn, would help reverse the slump in the business and help keep Maryland-based trainers from being drawn away by richer purses in neighboring states, proponents say.
Opponents say other things could be done to boost racing, such as reallocating the wagers and investing more in the tracks. More of the money could be set aside for bettors or horse owners, for example.
But the bill, sponsored by Senate President Thomas V. Mike Miller Jr., a Democrat from Prince George's, appears well on its way toward passage. It has the support of Gov. William Donald Schaefer, as well as groups representing breeders, the tracks and Local 27 of the United Food and Commercial Workers, the union for some track workers.
"Other things being equal, it can help," said Eugene Christiansen, with Christiansen & Cummings, a gaming consulting firm in New York and Boston.
"It depends upon how it is done. It's easy to screw it up," Christiansen said.
The key is to do it in a way that minimizes a loss of fans at the tracks, he said. Off-track betting fans typically don't pay admissions or parking fees -- important revenue for tracks. Concession profits also may be lost to the tracks if other companies operate the parlors.
The theory is that the parlors cut the cost of attending the races -- most significantly the transportation costs -- for people who live far from the tracks. Observers say several locations are candidates for off-track parlors, including a nighttime harness parlor in Baltimore, a thoroughbred outlet close to the Virginia border and ones in Western Maryland and the Eastern Shore.
The result should be an increase in betting, the lifeblood of the industry.
"Theoretically, if you lower the cost to the patron, they should bet more, and you should attract more patrons," said Richard Thalheimer, a professor of equine administration at the University of Louisville and president of Thalheimer Research Associations, an economic consulting and research firm.
The classic example of failed off-track betting is New York, where the system was pioneered in 1970. Parlors were opened and operated by a quasi-public city agency, despite objections from the state's tracks. The spartan parlors were put in neighborhoods to compete with bookies and lacked amenities, such as seating areas or food service.
Fans now bet more money at the 260 New York City Off-Track Betting Corp. outlets than at the six harness and thoroughbred tracks the parlors use. The tracks are not happy about it, because they have little control over the parlors and get a smaller take of the wagers than at the tracks, said Marjorie Longly, a spokeswoman with the OTB Corp. Still, the corporation provided about $50 million to the tracks in wagers last year, she said.
Most states that since have legalized off-track betting have given more control to the tracks and have found it helped the industry, Thalheimer said. Illinois, for example, has a system of satellite "tele-theater" operations in Peoria and other cities that aren't within easy driving distance of Chicago's Arlington International Racecourse.
But even successful off-track betting will not by itself reverse racing's long-term loss of business to lotteries, riverboat gambling, casinos and competing entertainment outlets. And, along with other technological developments such as intertrack wagering, it could hasten the day when fans around the country bet on the same few races each day, Thalheimer said.
"Intertrack wagering is like dipping your foot in the water. Off-track betting is putting your other foot in the water," Thalheimer said.
"When the day comes that they take whole [race]cards, that could be real competition for live races. . . . You're embarking into the electronic age," he said. A typical race card contains nine or 10 races.
Already, fans can watch and bet on some major out-of-state races at local tracks. Eventually, they may come to prefer betting top-quality, national races every day, even if they are being run on the other side of the country, Thalheimer said.
Connecticut has off-track betting, but no live races.
The Maryland plan, contained in the proposed legislation before the General Assembly, contains several protections for the industry: It allows track owners to prohibit off-track parlors within 25 miles of a track, requires the tracks to operate the pari-mutuel betting equipment and gives a community the right to reject a parlor.
Track owners could open off-track parlors or transmit their races to the parlors in exchange for a portion of the wagers. In this respect, the tracks will have considerable control over the establishment of off-track betting.
Existing law already limits the simulcast of out-of-state races to those with $50,000 or more in purse money. Miller's bill would do away with that prohibition but retain a provision that requires the approval of horse breeder and horsemen associations for simulcasts.
Del. Ethel A. Murray, a Cecil County Democrat, failed to get protection for live racing included in the industry-backed bill. She has introduced legislation requiring the state's harness and thoroughbred tracks to run a minimum number of live races each day.
Richard Wilcke, executive vice president of the Maryland Breeders Association, said his group believes its veto will prevent the elimination of live races in Maryland.
"We want Maryland to be one of the surviving sending states, rather than one of the weak receiving states," he said.
"I don't argue that OTB is a panacea. But it can help business,"