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Pimlico Special halted, raising stakes on slots

The Baltimore Sun

In a move that increases pressure for slots legislation this year, the Maryland Jockey Club announced yesterday that a storied Pimlico event first run 70 years ago will be canceled because of competition from states where expanded gambling subsidizes horse tracks.

The cancellation of this year's Pimlico Special - a race that in 1938 pitted Seabiscuit against War Admiral at the height of thoroughbred racing's golden age - coincided with a day of testimony from horse racing officials in Annapolis about how their industry is suffering without slots revenue.

Officials predicted that the addition of slot machines in Pennsylvania to existing competition from Delaware and West Virginia will lead to the death of Maryland racing within a few years. They mounted the argument even as the Jockey Club ended one of its most successful years, with its gambling handle rising 7.2 percent to $960 million mainly because of higher attendance at large events such as the Pimlico Special and the Preakness Stakes.

Still, Senate President Thomas V. Mike Miller seized on the news to renew his push for gambling - a perennial debate in Annapolis and the unsuccessful top initiative of former Gov. Robert L. Ehrlich Jr.

Miller insisted yesterday that slots must be part of the equation to solve the state's long-term budget woes, and that if they are not legalized immediately, the Maryland horse racing industry will be lost.

"Everything is a downhill spiral for racing until they get these video lottery terminals at the tracks," Miller said. "The purses can benefit, but mostly the state benefits, because the profits don't go to the owners, the profits go to the state, and we can build schools here in the state of Maryland instead of letting personal disposable money go to [West] Virginia, Delaware and western Pennsylvania."

The day's events returned the dominant issue of the last term to the forefront of a General Assembly session in which most contentious topics have been pushed off until next year.

It is not a debate the newly elected governor, Martin O'Malley, wants to have in his first legislative session.

O'Malley nominally supports slots at racetracks to save the horse industry, and he accepted tens of thousands of dollars in contributions from gambling interests in the past few weeks to help retire debt from his campaign, according to campaign finance reports. But he did not introduce a slots bill, and he said last week that he wants to spend this 90-day General Assembly session working on other things.

"That issue is one that got us into drawing lines in the sand," O'Malley said last week, referring to the debates during Ehrlich's term. "Every other issue fell hostage to that debate. I do not want to allow education, health care and all the other issues we need to deal with in the next months to fall hostage to that standoff."

But horse racing officials - close Miller allies and supporters - worked yesterday to force the issue back into the spotlight.

The Maryland Jockey Club's president and chief operating officer, Lou Raffetto, testified before the Senate Finance Committee that canceling the race for at least one year was a painful decision and probably not the only one that the horse industry will have to make soon. Raffetto said he expects that the Jockey Club, which runs the Pimlico and Laurel race courses, will have to cut racing dates by 20 percent next year, dropping from 180 to about 145.

"It's not what we want to do," he said. "It's what we may be driven to do."

Raffetto and other racing officials did not suggest that the Preakness Stakes - the middle jewel of horse racing's Triple Crown - would be at risk, a perennial threat to stoke the slots debate.

The decision not to hold the Pimlico Special is far from unprecedented; the race went on a 30-year hiatus from 1958 to 1988. It also was canceled in 2002.

Still, the historic race is one of the top draws at Pimlico, with horse owners paying $10,000 per entry. A crowd of 24,429 watched last year's running, and nearly $14 million was wagered on Pimlico races that day, track records show. Officials said they plan to redistribute the $500,000 in Pimlico Special purse money to other races.

The plight of the horse industry is an old argument in Annapolis and a complicated one. Horsemen testified yesterday that they are having difficulty making ends meet in Maryland and are feeling pressure to move to Pennsylvania and elsewhere.

Meanwhile, an executive with Magna Entertainment Corp., which owns Pimlico and Laurel, testified that the company recently made $200 million by selling a track with a slots license in Pennsylvania, and William Rickman, a track operator who is pushing for slots in Maryland, told senators that he is making millions in profits from his slots license in Delaware.

"What we're seeing in the rural counties is the reality that competition is having a significant impact on the breeding farms. That's certainly legit," said Sen. E.J. Pipkin, an Eastern Shore Republican who attended the hearing. "The rest of it is much more difficult to analyze."

But what might give slots a boost now is the capital's focus on the projected budget shortfalls that Maryland faces. Next year, revenue is projected to fall about $1.3 billion short of spending.

Miller and many of his allies in the Senate remain determined not to accept any tax increases before they take advantage of easy money from gambling.

"I'd be hard pressed to support any kind of tax increase before we tap slots," said Sen. James N. Robey, a Howard County Democrat.

Miller hasn't introduced a slots bill this year, and there appears to be little movement on the issue so far in this legislative session. But elected officials and others close to the issue say Miller has been working behind the scenes to keep slots in the spotlight and to make sure that they are part of any fiscal solution that is adopted.

House Speaker Michael E. Busch, who blocked slots for much of the past four years, remains a big obstacle. He said yesterday that he sees the problems of the horse industry and the decision on whether to expand gambling as separate issues, meaning that the cancellation of the Pimlico Special is unlikely to change the dynamics in his chamber.

Busch said the House tried to support the racing industry last year by passing a bill to allocate $15 million from the state lottery to supplement purses, but the plan was rejected by the Senate.

"The [slots] issue in the last couple of years was part of looking for a comprehensive solution to budget problems," Busch said. "I look at slots as nothing more than another revenue source to deal with that, and not a positive one from my point of view."

Del. Galen R. Clagett, a Frederick County Democrat, has introduced the only full-fledged slots bill so far in this year's legislative session. The plan would call for 12,500 machines, operated by the lottery, with the money dedicated to school construction, horse racing and aid to local governments.

Slots backers say they hope they can overcome opposition to gambling by packaging slots with other taxes, thereby giving cover to legislators whose liberal constituencies object to slots and to those whose conservative districts oppose tax increases. Clagett said he thinks the fiscal crisis is going to make gambling much more attractive.

"People are going to be a little more open and realistic about what has to be done," he said.

But major pockets of opposition to slots remain, particularly in the Washington suburbs where many legislators made the issue part of their campaigns last year. Of the 45 delegates from Montgomery and Prince George's counties, just four are on record as supporting slots.

"Slots are very divisive," said Del. Thomas Hucker, a freshman Democrat from Montgomery County who previously lobbied against slots. "I think there's a lot more support for adding more fairness to the income tax code and closing corporate tax loopholes."

Miller allies say he is confident that he has the votes to move a slots bill through the Senate, but the election made the task more difficult than it was four years ago. The last slots bill passed the Senate with three votes to spare, and two gambling backers who retired before the November election were replaced by slots opponents.

"I haven't seen any good they've done anywhere else," said Sen. C. Anthony Muse, a Prince George's County Democrat who replaced slots backer Gloria G. Lawlah. "Look at New Jersey. ... They're still having to raise taxes this year."

Republicans, who almost uniformly backed Ehrlich's slots bills, are also expressing skepticism.

"It was one of those things I held my nose and voted for it," said Sen. Nancy Jacobs, a Harford County Republican. "I am not inclined to support it."

andy.green@baltsun.com

Sun reporter Justin Fenton contributed to this article.

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