Advocates hope new bill creates framework for Md. racing’s future

Three years after the passage of the Racing and Community Development Act seemed to presage a new day for Maryland racing, nothing much has happened on the ground. Meanwhile, the 10-year agreement that governed Maryland racing has expired, though the parties to it are operating on a short-term extension while trying to hammer out a longer term pact.

These are, as the old proverb threatens, interesting times in Maryland’s thoroughbred industry.

So in its just completed session, the General Assembly created a Maryland Thoroughbred Racetrack Operating Authority and charged it with maintaining “the state as a best–in–class thoroughbred horse racing venue.”

The Authority could have both short- and long-term impacts.

“This bill creates the framework should we need to break the glass and activate an Authority to keep racing moving,” said Bill Cole, who has been involved in negotiations first for the City of Baltimore and now on behalf of Gov. Wes Moore (D), in testimony to the Assembly.

 “This is going to allow us to, I think, not only plan for the future but protect the industry,” added Maryland Thoroughbred Horsemen’s Association general counsel Alan Foreman.

The vote in the Senate was 47-0; in the House, it was 138-2. The bill, SB 720, now heads to Gov. Moore, whose signature is expected.

The new Authority has a four-year lifespan under the bill, though that could be lengthened in the future. It represents a significantly altered approach to racing for the state, which has regulated horse racing, via the Maryland Racing Commission, and subsidized it with slot machine revenues but otherwise left it to the industry itself to figure out how to thrive, or not.

The Authority, which is a state entity but also has wide-ranging abilities to act as a private corporation might, is a different beast altogether. It can own or lease property, develop new facilities, manage  day-to-day racing: take any steps it believes necessary to “support and sustain Maryland Thoroughbred racing and parimutuel wagering activity.”

“A monumental moment in the history of Maryland racing,” Foreman called it.

Because of all that, the legislation creates a structure to continue racing in the absence of the Maryland Jockey Club, or if the MJC remains in Maryland but with a diminished presence; that’s something that has become an increasingly real possibility, as MJC parent company the Stronach Group (also known as 1/ST) has made clear it is willing to discuss ceding control of at least day-to-day racing in the state, if not the Preakness.

“There’s no mystery that running day-to-day racing is not profitable,” Alan Rifkin told The Racing Biz last November. Rifkin is an attorney representing the Stronach Group and its Maryland Jockey Club subsidiary. “And consequently there’s always a pressure on the day-to-day racing enterprise to make the kinds of judgments one often makes about whether or not there’s a better model, a more streamlined  model that the horsemen can operate themselves.”

Under the legislation, the new authority is permitted to be allocated racing days by the Maryland Racing Commission, and to “manage and oversee day-to-day Thoroughbred horse racing operations.” Were it to perform those functions – which it could do in the short term if a crisis arose or the longer term if that were chosen as the best model – the expectation is that it would enter into a contract with another entity to staff the racing.

It also is empowered, in coordination with other state entities, to “develop new and existing horse racing and training facilities in the state.” That includes exploring the feasibility of developing “at least two alternative thoroughbred training facilities.”

“If Maryland racing is to move forward, it needs to have an entity. With the Authority in existence, that’s why I say it’s a monumental step,” Foreman explained.

The Authority could unloose the Gordian Knot binding the industry since the 2020 passage of the Racing and Community Development Act, which provided the Maryland Stadium Authority about $375 million in bonding authority to support the redevelopment of Laurel Park and Pimlico Race Course. Little progress has been made in the complicated project, with rising costs, supply chain issues, and difficulties reaching accord on the shape of the projects driving prices ever higher and making the future ever less clear.

“I think it’ll take us out of the stalemate we’ve been in with the Stronach Group,” said Kent Murray, president of the Maryland Horse Breeders Association. “This allows us to have more of a governing body for the changes.”

Murray also believes that the framework the bill creates should be good for the state’s breeding industry in the long run.

“I think it [puts the breeding industry on firmer ground],” he said. “You know, the breeding industry depends on being able to run at the local tracks. If you can’t do that, that has a huge impact on the breeding industry.” 

The funding available for the facilities redevelopments, about $375 million, is now acknowledged to be insufficient to the tasks at hand. The legislation does not identify potential additional avenues of funding, and sources said the next several months are critical to ironing out a clearer vision of the future.

The Authority is tasked with reporting to the General Assembly by December 1, 2023 on “a review of best practices for thoroughbred industry operating models” and recommendations on what would work best for Maryland, as well as providing an update on the status of the Laurel and Pimlico rebuilds.

While in Maryland, racing has always operated on a model in which the tracks have been run by a for-profit entity, industry participants have begun to coalesce around the idea that at least day-to-day racing may be better managed under a hybrid model with a state entity, such as the Authority, owning the property, and a separate operator in charge of daily racing. Relevant examples include Monmouth Park, the NYRA tracks, and Del Mar. Without slots or casino gambling at the racetracks, it is unlikely a private operator will show much interest, at least, not one willing to continue something approximating a year-round racing calendar.

The Authority, which will have its own staff, is to be governed by a board comprised of nine voting members and supported by four ex officio, nonvoting members. 

The Governor appoints five of the nine, including the chair. These include one from a list of two submitted by the Maryland Thoroughbred Horsemen’s Association, along with one from a list of two submitted by the Maryland Horse Breeders Association. The Governor also is to appoint three others with “relevant industry, business, or government experience,” one of whom is to chair the Authority.

The other voting board members include a representative of the Maryland Stadium Authority and a representative of the Maryland Economic Development Corporation, along with one each appointed by the Senate President and the Speaker of the House.

The Maryland Racing Commission is represented by one ex officio, nonvoting member. MRC chair Michael Algeo declined to comment.

Other ex officio members include representatives of the communities near Laurel, Pimlico, and the now-shuttered Bowie Training Center. State law previously required the MJC to convey Bowie to the City of Bowie by the end of this year, but an amendment in this legislation pushes that date back by one year.

The Maryland Jockey Club does not have a representative on the Authority. Alan Rifkin, an attorney who has represented the company in negotiations surrounding the Laurel and Pimlico facilities, also declined to comment.

Three years ago, the passage of the Racing and Community Development Act was lauded by industry insiders as “our triple crown.” The passage of this legislation has occasioned optimism, but of a more muted variety.

“I told people at a meeting last night that this is a critical step that was really hard to accomplish, but the real work begins now,” Foreman said. “We’re trying to identify how we can best set up Maryland racing for the future.”