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Racing fears Bally's plans for new OTB Hagerstown site seen as foothold for casino gambling; Profit sharing excluded; De Francis to fight project, says company wants crisis at tracks

THE BALTIMORE SUN

The battle over the future of Maryland horse racing is being waged in an unlikely place -- a strip shopping center on U.S. 11 outside Hagerstown.

It is there that the huge Bally casino-hotel company wants to topple the status quo in state racing with its proposal to open an off-track betting operation that would directly compete with Maryland's powerful thoroughbred industry.

While several of the nation's biggest casino companies have hired lobbyists to patrol the State House, Bally is the first to make a multimillion-dollar investment in a state gambling enterprise, having already purchased an Eastern Shore harness track and acquired an option on another near Washington.

The brash moves by the Chicago-based company have shaken the state's racing industry and launched a war that will likely have to be settled by a court or the General Assembly or both.

Bally says it is simply trying to make money in racing while it waits for the state to authorize slot machines at Maryland racetracks. But the leader of Maryland's thoroughbred industry says the casino giant has no interest in racing and is trying to hasten the industry's death.

"If they can create as much of a crisis in the racing industry as possible, that would maximize the likelihood, from their point of view, of getting [casino-style] gaming as a way to bail out racing," said Joseph A. De Francis, majority owner of Pimlico and Laurel, the state's two main thoroughbred race courses.

Bally Entertainment Corp., which operates casinos in Atlantic City, N.J., and Las Vegas, was purchased last year by Hilton Hotels Corp. for $3 billion.

The company's long-range game plan for Maryland became a little clearer this month when it asked the Maryland Racing Commission for permission to open the off-track betting outlet in an empty Hagerstown storefront next to a drugstore.

The facility would hold as many as 800 patrons and would offer a "fine dining" area as well as a more traditional betting parlor serving hot dogs and hamburgers.

The state has five OTB outlets, but this would be the first to be affiliated with one of the state's two harness tracks. It would also set a new tone, Bally representatives said.

"It would be a nice setting, a nice ambience -- not someplace where people spit in the corner," said Dennis C. McCoy, the company's Annapolis lobbyist.

With the request for an OTB license, Bally asked for permission to simulcast thoroughbred races from tracks around the country xTC -- but to break a long-standing state precedent by not sharing any of the profits with Maryland's thoroughbred track owners.

Why, asked Bally's representatives, should the owners of Laurel and Pimlico reap revenue from bets placed at a Bally operation in Hagerstown on a race run, for example, in Kentucky?

Because that's the way it has always been done, says De Francis. The General Assembly always intended thoroughbred tracks to control the betting on thoroughbred races brought in from out of state, he said.

"Even though the law wasn't explicit in this respect, I think the legislature clearly contemplated that harness belonged to harness and thoroughbred belonged to thoroughbred," De Francis said.

It is not a minor question.

Bettors in Maryland are increasingly opting to place their wagers on simulcast races from nationally known thoroughbred tracks such as Churchill Downs in Kentucky or Gulfstream Park in Florida, rather than on the horses running at Pimlico or Laurel.

With millions of dollars at stake, the thoroughbred track owners are fighting Bally's effort vigorously and promise to take the matter to court if necessary.

"This is absolutely a life or death issue for us," De Francis said.

Bally entered Maryland racing two years ago, when it lent money to the state's Standardbred owners and trainers to purchase the state's two harness tracks, which were on the verge of bankruptcy.

"The shark is now in the tank," one thoroughbred racing representative remembers saying after the deal was completed.

With losses mounting last year, the horsemen's association agreed to sell Ocean Downs, a rundown summer-racing track in Berlin, to Bally for $2 million.

Bally's efforts are designed, many in Maryland racing circles say, to give the company a strong foothold -- not to be a long-term player in state racing, but to be ready if and when casino-style gambling is approved here.

"We would obviously like to see slot machines at racetracks," said Dennis Dowd, president of Bally's Maryland operation. "We also believe that, without [them], racing is in grave danger."

Under its agreement with the harness horsemen's organization, if casino-style gambling is legalized at Maryland tracks, Bally would assume a majority interest in Rosecroft racetrack in Prince George's County. The track, near Virginia and the District of Columbia, is considered a can't-lose site for slot machines.

The company has also scouted sites for restarting harness racing in Cumberland, where racing ceased many years ago. That could give the company another site in case slot machines are authorized.

Some representatives of the thoroughbred industry fear the impact if Bally lands racing footholds on the Eastern Shore, in Western Maryland, Prince George's County and potentially at other OTB sites around the state.

With only so much gambling money to go around, that would inevitably weaken Pimlico and Laurel, they said.

Bally officials make no apologies for the fight they've picked.

"If people didn't move forward and deal with change, we'd all be living in caves," said Bally's Dowd. "I work for a Fortune 500 company that has stockholders, and we have obligations to try to make money for them."

In any case, it is far too early to begin writing a death notice for the state's thoroughbred tracks, the cornerstone of Maryland's 250-year-old racing industry.

"There's a whole package of history, politics and strength that goes into this equation," said Tom Aronson, a racing consultant based in Alexandria, Va. "Bally hasn't built up the base of support -- political or otherwise."

In the nearly two years since it crept into Maryland racing, Bally has tried to develop some clout.

The company hired one of Annapolis' best-known lobbyists in McCoy, a former Baltimore delegate. Company representatives, meanwhile, gave at least $10,000 in political contributions to two key legislators, according to figures compiled by Common Cause/Maryland, an advocacy group that keeps tabs on political spending in the state.

But some thoroughbred advocates suggest that Bally's clash with the thoroughbred industry will backfire with state political leaders, who prize the history and prestige of Laurel and Pimlico and races such as the Preakness Stakes.

"It could give Bally's a whole lot less good will if they have the whole thoroughbred industry against them," said Alan M. Rifkin, a State House lobbyist representing the owners of Laurel and Pimlico.

Some lawmakers seem already turned off by the infighting.

"I've just become so equivocal about the whole gambling issue," said Senate President Thomas V. Mike Miller, a Prince George's Democrat and a longtime supporter of Maryland racing. "You see the greed surfacing from so many angles."

Pub Date: 7/27/97

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