Less than two weeks after Maryland lawmakers excluded Rosecroft Raceway from a list of sites that might get slot machines, Penn National Gaming announced yesterday that it has dropped its bid to buy the struggling harness-racing track in Prince George's County.
The company, which owns Charles Town Races and Slots in West Virginia and several other gambling venues in the U.S. and Canada, announced its intent to buy the Fort Washington standardbred track this fall, just as Gov. Martin O'Malley was beginning his push for a special legislative session to legalize slots.
The company insisted in public testimony that it was committed to the track for the long term, regardless of whether slots were allowed. But after the session ended with Rosecroft shut out of Maryland's gambling expansion, the company backed out.
"Rosecroft, which already has been operating at a loss, will be denied the opportunity for an alternative revenue source that would enable it to compete with other tracks in the state and racing and gaming venues in neighboring states," the company said in a news release. "Reflecting this development and other factors, Penn National Gaming has decided ... not to move forward with its acquisition of Rosecroft Raceway."
Prince George's County officials have long objected to slots in their community, and the exclusion of slots at Rosecroft helped secure the votes of many of that county's legislative delegation for a gambling expansion.
The legislature voted to place a constitutional amendment on the November 2008 ballot authorizing up to 15,000 slot machines in five locations, one each in Baltimore City and Allegany, Anne Arundel, Cecil, and Worcester counties. That would allow slots at Laurel Park and Ocean Downs racetracks, but not at Rosecroft or Baltimore's Pimlico Race Course.
Rosecroft Chief Executive Officer Thomas Chuckas Jr. said that with Penn National out of the picture, the harness track's owner, Cloverleaf Enterprises, will continue to operate as usual. He said, however, that the owners will have to consider changes in the coming years.
"As we sit here today, we're at a competitive disadvantage on the harness side with Delaware and Pennsylvania" where slots are legal, he said. "That disadvantage will only be exacerbated by in-state locations and tracks getting gaming when Rosecroft doesn't have it."
Sen. J. Lowell Stoltzfus, an Eastern Shore Republican who opposes slots in general, tried to put Rosecroft in the referendum bill, but he said it was mainly an effort to remove another harness track, Ocean Downs.
With O'Malley and legislative leaders opposed to Rosecroft, though, the idea never received much consideration.
Tom Cooke, president of the Cloverleaf Standardbred Owners Association, said he is disappointed that the company is backing out of the deal. But he said it could be a chance for a community-based consortium to buy the track and take advantage of the benefits Rosecroft will get if slots are legalized.
Up to $20 million a year in slots revenue would go to subsidizing standardbred purses if voters approve the gambling referendum. Even without slots at Rosecroft, that still puts the track in a better position than it is now, Cooke said.
"I look at this as an opportunity," Cooke said.
Jeffrey C. Hooke, a financial consultant who has studied the gambling industry, said he expects Rosecroft will survive without slots and without Penn National.
"It's already viable, and the purse subsidies will make it more viable," he said.
The big question, Hooke said, is what Penn National will do in the lead-up to next year's slots referendum vote. Hooke said the company stands to lose a great deal if slots become legal in Maryland.
Charles Town is Penn National's most lucrative property, and much of its revenue comes from Maryland and from parts of Northern Virginia that are more convenient to a possible slots site at Laurel, Hooke said.
Said Hooke: "It's obvious to me that Penn National has a vested interest in seeing the referendum go down" to defeat.