New racing alliance gambles on gamblers

THE BALTIMORE SUN

Merging with Virginia's start-up thoroughbred track could be the lucrative boost Maryland's beleaguered racing industry needs, but the innovative venture will have to overcome obstacles that have proved ruinous to most recent attempts to expand racing.

Only a handful of states have tried to add pari-mutuel horse racing over the past decade, and the record has been remarkably poor. Tracks in Texas, Minnesota, Alabama and Kansas have all stumbled out of their starting gates, unable to pry dollars and fans away from lotteries, casinos and other diversions.

Virginia hopes to avoid that fate through a pioneering agreement with Maryland's Pimlico and Laurel racetracks.

Under the alliance with Laurel and Pimlico owner Joseph A. De Francis, the Maryland tracks will close to live racing for four months in the summer, beginning in 1996. Fans will be left to bet on televised "simulcasts" of races run elsewhere, including the new Virginia track, to be built southeast of Richmond.

When the Maryland tracks reopen, the Virginia facility will close and its network of a half-dozen off-track betting facilities across the Old Dominion will carry the Maryland signals for free, as well as other races.

This allows both states to avoid a cross-border war for fans and horses. But it also leaves a lengthy gap in Maryland's racing schedule, ending a tradition of year-round racing begun in 1974.

Supporters of the idea say it represents an acknowledgment of the realities of modern economics, as well as a unique opportunity for Maryland racing to reach 6 million Virginians.

And the return of limited meets, with "opening day" ceremonies, should bring an element of exclusivity back to racing in Maryland.

"I've always thought the idea of seasonal racing would be better. When I was a kid, the opening of Pimlico meant spring," said ABC broadcaster Jim McKay, who raises racehorses at a farm in Monkton.

Critics say the plan amounts to unilateral disarmament for Maryland, and worry about a ripple of lost revenues for the tracks, track employees, state coffers and related businesses if the enterprise does not go as planned.

"This is devastating, and I cannot believe that the people that are guiding Maryland racing are considering this," said Chick Lang, a racing consultant and former general manager of Pimlico.

"If they think for a minute that these horsemen here are going to van down to Richmond to race when they can go to New Jersey for purses that are far greater, they are crazy. I don't know if Virginia will support major-league racing," Lang said.

But De Francis said he had little alternative when faced with the possibility of a competing racetrack or off-track wagering facility looming to the south, siphoning off revenues from Northern Virginia.

"This Virginia project is going to be critically important to the financial success and well-being of Maryland racing," he said.

He predicts that total betting, or handle, will grow as Virginians get into the game. Profits for Laurel and Pimlico, which lost a combined $7.2 million last year, should also grow, as will the purses paid out to winning horses. This will result in more breeding, and more horses for races.

De Francis' management team will run the live meet in Virginia and will receive 2 percent of the handle there as a management fee. The tracks get about 7.5 percent of the handle on races run or simulcast in Maryland.

De Francis acknowledged that there would be a likely loss of admission, concession and parking revenue during the summer months. And he makes less money on a televised race than a live one. But he's convinced that the new money coming in from Virginia will more than make up the difference and catapult the combined circuit into the upper echelon of American racing.

The Maryland Racing Commission has been supportive of the venture, although Commissioner John H. Mosner Jr., a retired banker who heads a committee examining the troubled finances of the Laurel and Pimlico, said he will have plenty of questions when the matter comes up for review.

"I've looked doubtfully at the whole Virginia thing," he said. "I don't know what the effect will be on Maryland. There's not a betting culture in Virginia, I just don't think the people in Virginia are going to bet at the rate that will make this thing work."

Although it has an active breeding industry, Virginia was without pari-mutuel betting in modern times until it was legalized by referendum in 1988. There have been steeplechase meets with wagering since then, but full-blown thoroughbred racing will be a new experience for Virginians.

If betting does not measure up to expectations, it will be disastrous. The enterprise is premised on the notion that purses -- derived from the dollars bet -- will be sufficiently high to get Maryland owners to send their horses to the new track. "I think what we have to do is figure out what will draw a Maryland horseman to Virginia instead of New Jersey," said Richard W. Wilcke, executive vice president of the Maryland Horse Breeders association.

He said incentives, such as free transportation of horses to Richmond, may be needed to keep owners from shipping their horses to other nearby tracks.

"We figure that if Virginia's racing and breeding industries get strong, we will benefit from it," he said.

J. Brian McGrath, commissioner of the Thoroughbred Racing Association, a trade group for the nation's major racetrack owners, said cooperative ventures across state lines should grow more common in the industry as it struggles to compete against casinos, riverboats and other entertainment alternatives.

"I think it is a wave of the future," he said. "As tracks that are particularly strong look for opportunities, they will look for other tracks that are operating."

Malcolm Comer, an agricultural economist and equine specialist with the University of Maryland's Wye Research Center, said the Virginia-Maryland axis could prove visionary.

"Anytime you are starting something new there is risk," he said. "But assuming the thing is structured right, I would say the downside risk to Maryland racing is minimal.

"It will be either remembered as one of De Francis' great accomplishments or something that led to his downfall. It is a pivotal point."

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