I used to think the Maryland Jockey Club (MJC) was a bunch of guys smoking cigars in an oak-paneled room with leather furniture. I thought that when I registered a foal, I was somehow a part of the club.
Well, those days are gone, I’m afraid. The Maryland Jockey Club is today no more than a business owned by two companies that are traded on the stock exchange. One of those companies, Canadian-based MI Developments, Inc., explains its rationale for investing in the MJC as follows. “We are excited about the development opportunities represented by the land owned by MJC. The land is comprised of 565 acres in three major properties well located in the greater Baltimore-Washington area.”
The other company, Penn National Gaming, Inc., generates much of its revenue from slots in West Virginia and Pennsylvania. Hollywood Casino in Charlestown, WV is its most lucrative venue and draws most of its business from central Maryland. I personally don’t trust either of these companies to decide the political strategy for efforts to revitalize the Maryland horse racing industry. In fact, I wish that the Magna bankruptcy auction had taken place, and that one of the local bidders had acquired the tracks.
Fortunately for the horse industry, however, the “Club” is highly regulated by the Maryland Racing Commission and must adhere to laws passed by our elected General Assembly. Racing calendars, breeder incentives, transfers of track ownership, and even track closures are all overseen by the Commission to ensure compliance with state law.
When Maryland voters approved slots in 2008 by a wide margin at the polls, the law was a compromise among political players, including the horse racing industry. It defined the geographic areas where casinos could be built, stated how many machines would be allowed at each casino, determined the criteria by which a new Commission would approve casino licenses, and specified the distribution of slots revenue, including 7% to a horse racing purse enhancement fund and 2.5% to a racetrack renewal fund.
Given the specificity of the law approved by voters, how is it that Anne Arundel County residents are being asked to vote on slots this coming November? It’s a long, sad story. Read on.
Most people, including myself, assumed and hoped that the state’s largest casino would end up at Laurel Racetrack. Two bids went to the state for the license in Anne Arundel County, one from MJC for a casino at Laurel, and the other from Baltimore-based Cordish Companies for a casino in the parking lot of Arundel Mills Mall. Projections by a private consulting firm for revenues from the Cordish proposal were higher than for Laurel, and the Laurel application did not include the required $28.5 million application fee. The state Video Lottery Facility Location Commission awarded the license to Cordish, contingent on Anne Arundel County passing a zoning law that would allow a casino to be built.
Anne Arundel County passed a slots zoning law in January of this year, and it applies to the exact geographic area that was approved by voters in 2008. It would allow a casino to be built either at Arundel Mills, at Laurel Racetrack, or at other locations in the zone. The fact that Cordish has a license for Arundel Mills means that if the law stands, the casino will be built at Arundel Mills.
Enter the Maryland Jockey Club in an alliance with the NIMBYs, which stands for Not In My Backyard. Most major developments are opposed by NIMBYs. Our Maryland Horse Park in Gambrills was blocked by very vocal NIMBYs who managed to get a couple of politicians on their side. This casino is opposed by residents of the neighborhood adjacent to Arundel Mills. I find it ironic that people who live near a mall that attracts 14 million visitors per year and is a hangout for bored teenagers would oppose a facility on that site that is projected to generate $250 million per year for the state’s Education Trust Fund and 4,000 jobs. There is nothing like more schooling and jobs to keep the kids from getting bored and selling drugs in the mall parking lot, but maybe I just don’t think like other people.
Once the county council had passed zoning for slots and the state had awarded the license to Cordish, the only way for anyone to stop the project would be to collect over 19,000 valid signatures from Anne Arundel County voters to seek a repeal of the law by referendum. The NIMBYs would not have had much chance of collecting that many signatures on their own, so MJC paid Chicago-based Fieldworks to come in with paid canvassers at the cost of close to $600,000, which is over $30 per valid signature. They have also paid hundreds of thousands in attorney’s fees to argue for the validity of the process, and their spending has just begun. The campaign to convince voters to “Stop Slots at the Mall,” is likely to be the most expensive political effort by any player in our county’s history.
I, personally, am a turncoat. I fought hard alongside the MJC back in December to convince the Anne Arundel County Council to hold off on its zoning law to allow Laurel a chance to compete with Cordish for the license. Then I got some phone calls from people in the racing industry for whom I have great respect. They argued that racing would be better off with a profitable casino now than a less lucrative casino at the track in the future. They pointed me to articles and studies suggesting that casinos at racetracks do not increase the attendance or the betting handle for the horse races. The success of the racinos, they say, is that casino revenue goes to purse enhancements. Higher purses means bigger fields and more betting. That is how racing benefits.
Our state’s slots law provides the same cut of slots revenue to racing regardless of whether the casino is at the tracks or elsewhere. State projections for Maryland Live! at Arundel Mills are $35 million for purse enhancements and $12.5 million for racetrack renewal funds annually. The law allows casino operators to keep only 33% of revenue, which is very low by industry standards. That low figure makes it unlikely that a casino operator at the track, such as Penn National Gaming, would share any of the operator’s money with the racetrack itself. Why, then, are the track owners so desperate to get a slots license? The answer, I believe, lies in the value of the real estate. Whether they plan to develop all or just a part of the land around Laurel Racetrack, it becomes prime for hotels, restaurants and shopping when a casino is on the site.
Even if you think all of the facts I have stated are irrelevant, please consider the politics of what they are attempting. At both the Anne Arundel County and State levels a resentment toward the MJC is building. State legislators who worked to get slots to the voters are outraged that a company that failed to play by the very rules it helped to negotiate is now standing in the way of progress. Talk of amending the law to cut racing from the slots revenue formula is growing among lawmakers. The Prince George’s County delegation is working as you read this to convince its peers to rechannel that money to financially strapped county governments. This would effectively kill Maryland racing, paving the way for MID to sell off our tracks as real estate and make out quite handsomely. As long as we have new revenue coming to racing, the battle to prevent track closures will have traction. Ask the people who were evicted from Rosecroft how that dynamic works.
At the Anne Arundel County level the strategy to get slots to Laurel depends not only on success at the polls in overturning the existing slots law, but also in later convincing the next Anne Arundel County Council to write a new zoning law that would redefine the zone to exclude Arundel Mills. The County Executive’s legal staff assures him that such a law would not stand up in the courts. Furthermore, the county council would have to consider that many of the residents who voted to overturn the law were doing so because they oppose slots anywhere. Finally, nobody doubts that residents adjacent to Laurel Racetrack would become the new NIMBYs. With the backing of Cordish, those folks could play the same game to overturn the next law by petition and referendum. And finally, the council member who represents Laurel is extremely popular, very influential on the council, and opposed to slots anywhere, especially in his district.
The Maryland Horse Council (MHC) learned recently that nobody from MJC, MID, or PNG has met with county officials to discuss the viability of their Anne Arundel County strategy. As president of MHC, I sent a letter to MID and PNG warning them of these political obstacles and asking them to come to Maryland for a meeting with Anne Arundel County officials. There has been no response.
I also sent MID and PNG the results of the Maryland Horse Council survey of people in racing. Full results can be viewed on the Save Maryland Racing page of www.marylandhorsecouncil.org. The part of most relevance is that 63% of 314 respondents said that our organization should support the “zoning for slots in Anne Arundel County throughout the area that voters approved in the 2008 statewide referendum (including Arundel Mills).” Only 25% said that we should oppose that zoning and 12% had no opinion.
I wish more horse people would speak out publicly about the absurdity of this referendum in Anne Arundel County, and I suspect that in the coming months they will. Publicly opposing the MJC when you own or train racehorses can be costly. MJC decides who gets stalls and what races to run.
For my part I will do whatever I can to convince horse people in my county to vote to uphold the slots zoning law that our elected representatives passed in response to the state law that Maryland voters approved in 2008. Maryland racing needs the revenue and the horse industry needs to stand by the allies that helped us pass slots in 2008. Bolstering the real estate value of Laurel Racetrack is not a cause that we should take up. Promoting horse racing is.