A Baltimore legislator is asking the state attorney general to investigate whether the Maryland Racing Commission has improperly awarded public subsidies to the state’s biggest racetrack owner and to evaluate why so many of the horse racing regulators earn money from the sport they govern.
State Del. Nick Mosby, a Baltimore Democrat, sent a letter Tuesday to Attorney General Brian Frosh that highlighted two recent investigations by The Baltimore Sun that detailed questionable practices by the racing commission.
The Sun reported last week that six people serving on the commission have a financial stake in horse racing despite a state law allowing no more than four such members on the nine-seat panel. Five of those commissioners have been winning lucrative bonus awards from a state-funded account managed by the commission.
In June, The Sun reported that the commission awarded nearly $22.5 million in public subsidies to The Stronach Group and its Maryland Jockey Club, owner of Pimlico Race Course and Laurel Park, for track upgrades without approving a spending plan and construction timelines as required by law. Stronach ended up spending nearly 90 percent of the state subsidies at Laurel while the 149-year-old Pimlico continued to deteriorate.
“I am requesting you to conduct an independent audit and investigation into [The Stronach Group] and Maryland Jockey Club’s suitability to maintain the privilege of holding a racing license in our state,” Mosby wrote. “To date, the Maryland Jockey Club has repeatedly received tens of millions of dollars in [state] reimbursements without having the statutorily required Capital Improvement Plan on record with the Maryland Racing Commission.”
Asked for comment, the Maryland Jockey Club issued a statement that did not address the specifics of Mosby’s letter but noted that the track owner remains in “good faith discussions” with the city and others over the future of Pimlico. It said the jockey club “remains in good standing with the Racing Commission. Any suggestion to the contrary is not supported by the facts or by law.”
A spokeswoman for the attorney general’s office said the agency had not yet received Mosby’s request. Racing commission officials could not be reached for comment.
The delegate wants the attorney general’s office to determine whether the jockey club is “satisfying requirements” for maintaining its license to operate in Maryland. He asked the state’s top lawyer “to diligently audit and confirm whether racing licensees are meeting statutory and regulatory thresholds for receiving hundreds of millions of taxpayer dollars.”
Since 2010, the horse racing industry’s revival has been fostered by the nearly $454 million in gambling funds allotted to the industry. The money has gone to help pay for racetrack renovations, bigger purses, and bonuses for breeders and owners of Maryland horses.
Mosby and other critics began to scrutinize the commission’s oversight of the money this year after Stronach sought new state legislation in support of its plan to close Pimlico and move the Preakness Stakes to Laurel. The legislative maneuver died in Annapolis, leading to the current discussions over the fate of Pimlico.
Critics took issue with why the commission has not held the jockey club accountable for how it has spent subsidies from the slots-funded Racetrack Facility Renewal Account. The law allows the commission to recoup the grants if the company does not spend the money according to a spending plan and timeline — which the commission never approved. The commission has recently delayed awarding $4.4 million for Laurel Park until the company submits a new plan, a move Stronach cannot make until negotiations over the future of Pimlico are resolved. The Democrat points out in the letter that the jockey club has not completed a barn at Laurel Park three years after the commission awarded the company $1.7 million from the renewal account.
The letter requests that the attorney general determine whether any of the renewal account funds “were improperly released by the state” to Stronach and, if so, whether they “should be returned.”
Mosby also points to the ongoing legal battle between Stronach founder Frank Stronach and his daughter Belinda, who is president of the Canadian company. Several court filings in the legal fight have alleged “fiscal abuse, misappropriation of money, and deceptive and fraudulent business practices,” his letter states.
The Baltimore lawmaker also wrote that the attorney general’s office needs to determine whether state ethics law prohibits commissioners from voting on the size of bonuses that — as owners or breeders of racehorses — they are eligible to win. Officials with the state Department of Labor, Licensing and Regulation have said previously there is no conflict because the commissioners are not guaranteed to win the bonuses.
Five of the commissioners who own or breed racehorses have repeatedly voted on the size of bonuses they are eligible to win when their Maryland-bred horses are top finishers in state races at Pimlico, Laurel or harness racing tracks.
One racing commissioner, R. Thomas Bowman, is an owner and breeder who has earned $1 million in breeding bonuses over the past five years with various partners — including the breeding division of The Stronach Group. And commissioner David Hayden has won nearly $500,000 in bonuses with partners for breeding winning thoroughbred horses in Maryland.
State law does not allow more than four commissioners to have a financial interest in racing. The commission, appointed by the governor’s office, generally has nine members but currently has one vacancy.
State labor and licensing officials have said that governors of both parties have for years appointed a panel with at least five members who are owners or breeders, and the Maryland Senate has confirmed them.
“At no point during Senate confirmation hearings or legislative audits has this precedent been questioned,” the agency has said.
Mosby said he wants an independent assessment of the commission’s practices.
“I am also requesting you to evaluate the board’s configuration in accordance with current law and identify, if any, conflict of interest violations,” Mosby wrote. “An overwhelming amount of votes have been cast unanimously with zero abstentions from commissioners who have direct financial interest in the outcome of the votes.”