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By Dan Genz
Capital News Service
Friday, February 21, 2003

ANNAPOLIS - Three racetracks will spend more than $1 billion to upgrade their facilities, largely for slot-machine players, and they're asking for a bigger share of the proceeds to pay for their trouble.

Laurel, Pimlico and Rosecroft will each dish out $100 million for a slots license and spend $250 million to revamp their facilities once the machines are approved by the state, lobbyists say. About $150 million of the total cost will be devoted to improvements for racing, including barns and pavilions.

Turning the Pimlico and Laurel tracks "upside down" to prepare for slots and improve the racing facilities will cost $500 million, Jockey Club lobbyist Tim Capps said.

Rosecroft's new purchaser, Centaur, will pay for $250 million in enhancements if the machines are approved, said track lobbyist Dennis McCoy. And its investment in racing improvements and the slot machine hall will depend on the size of its cut of the profits.

"Can't make those developments, can't enhance the facility if you don't have the money going in," said Rosecroft spokeswoman Lisa Powers.

But the plan Gov. Robert Ehrlich has proposed, which gives owners 23 percent of slots profits, isn't enough to cover the tracks' commitments of $350 million each, according to a new study commissioned by Magna Corp., the majority owner of the Jockey Club tracks.

That means that the portion of the expected $1.3 billion in proceeds that Ehrlich devotes to education, 61 percent, is going to have to take a significant trim, said study co-author Paul Girvan.

The study recommends giving only 42.6 percent of the profits to the state for education and says the average effective tax rate is 32 percent.

The study also predicts that proceeds for next year will come in substantially lower than Ehrlich's budget of $600.

Negotiations on a final percentage are already underway, an administration spokesman said.

"We have not pinpointed a specific percentage point that is acceptable," said spokesman Henry Fawell.

"The governor has begun consulting with various voices in the industry to ensure that the allocationn of revenues is reasonable," Fawell said.

Improvements to the facilities have been long-awaited.

"We hear chapter and verse about `How can this be a Triple Crown track?'" Jockey Club lobbyist Alan Rifkin told the Senate Finance Committee, referring to the Triple Crown of thoroughbred racing -- the Kentucky Derby, the Belmont Stakes and the Preakness, which is run at Pimlico.

Rosecroft's stands are "like an old high school football stadium," McCoy said.

A fourth track would also be permitted to run slot machines under Ehrlich's proposal. Owner William Rickman's track is under construction in Cumberland.

"We'll have to wait and look at the figures," Rickman said, before determining how much his track will spend for renovations.

While slot machine passage this year is not assured -- some powerful opponents have lined up against it in the General Assembly -- when it does pass, the Jockey Club will be ready, Capps said. The tracks are already planning job fairs March 8 and 15 to hire initial construction workers.

The Magna study said renovations will create about 9,500 temporary construction jobs and salaries of more than $170 million for workers at the three existing tracks.

Six slot-machine proposals will be debated in Maryland's House Ways and Means Committee Tuesday. Ehrlich's plan and three other bills will also be heard in the Senate Budget and Taxation Committee.
 

Copyright © 2003 University of Maryland Philip Merrill College of Journalism