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By Dan Genz
Capital News Service
Thursday, May 1, 2003

ANNAPOLIS - Without the infusion of cash from slot machines, Maryland's historically significant horse racing industry, worth $2 billion to the state's economy, may fail, Gov. Robert Ehrlich argued before the General Assembly this year.

But many studies and a Capital News Service analysis show that figure may be highly inflated and other pastimes may equal or surpass thoroughbred racing's economic and historic value, activities like recreational boating and the arts.

Ehrlich told the House Ways and Means Committee that horse racing is "in excess of a $2 billion industry worth saving in this state" in arguing for his failed plan to put 11,500 machines at four race tracks to bring in more business for the struggling racing industry.

Hay farmers, veterinarians, and union workers taking tickets at the tracks all contribute to the value of the industry - a value that would encompass all of agriculture, forest and fishery's $1.6 billion gross state product, according to the Commerce Department's Bureau of Economic Analysis.

Even the owner of the state's major tracks, Maryland Jockey Club Executive Vice President Tim Capps, said the industry's value is about $800 million, or 40 percent of Ehrlich's number.

And the Maryland Horse Breeders Association values racing at more than $1 billion on its Web site.

"When you make the statement that it's a $2 billion industry, people are surprised," Ehrlich said after the committee killed his plan. "It goes to show you (the industry has) really fallen behind the curve on their communications and the case they need to make with the public."

But Ehrlich's figure is mostly unsupported by economic impact studies of the sport.

A 1999 review by the University of Maryland valued the industry at $596 million, but its authors acknowledged they failed to include some key figures.

A 1996 study by the American Horse Council appraised it at $826 million. Even using the larger figure, and calculating inflation, Ehrlich's analysis is nearly $1 billion too high.

"He (Ehrlich) just shoots from the hip without getting his numbers straight," said Sean Dobson with anti-slots Progressive Maryland.

If the administration grossly exaggerated the industry's worth, Dobson said, it would be further evidence of what he calls the governor's "credibility gap" on issues from school funding to his slot machine plan.

The administration wouldn't say where Ehrlich's numbers came from, despite repeated calls and visits. Their only reply put equine-related spending at $765 million. Spokesmen gave no horse-racing-specific statistics.

Even if Ehrlich included the state's entire equine industry - worth $1.5 billion in 1996, according to the American Horse Council - and factored in more than $225 million for inflation, the industry would have to be growing significantly, not declining, to meet his $2 billion figure.

Certainly a part of Maryland's horse industry is on the upswing, but not racing.

Animals used for showing or recreation account for 60 percent of the state's horse population according to the 2002 Equine Census, and experts say that sector of the equine industry has boomed in recent years.

But other leisure activities are worth as much or more to the state's economic vitality.

Maryland saw more spent on the arts - $817 million in 2001 - than on the combined horse industry, and double that on recreational boating - $1.6 billion - a pastime with as much or more historical significance as thoroughbred racing.

The Bureau of Economic Analysis' report of the gross state products of 77 different industries in 2000 shows Ehrlich's estimate of horse racing's value would surpass not only agriculture's $1.6 billion, but legal services, $1.85 billion; trucking and warehousing, $1.81 billion; and auto repair and parking, $1.87 billion.

The bureau puts Maryland's entire economic value at $186.1 billion, 16th largest in the nation.

Although racing has no public studies to support the $2 billion claim, industry experts were quick to put its worth in solid terms.

Losing the racing industry would be catastrophic, said Robert Burke of the Horse Industry Board.

Whole hay farms would go out of business across the state, he said.

Horses are a $2.09 billion industry in Maryland, said Extension Equine Economist Malcolm Commer of the University of Maryland, who conducted his own economic analysis.

Commer combined $765 million in equine-related spending with $119 million spent on purchasing horses, $250 million in facility and fencing upgrades and the more than $950 million bet on Maryland races to hit the $2 billion mark.

But another economist disputes the rationale for including the betting figures.

The only reason to include the $950 million would be "to bump up the numbers," said fellow agricultural economist Wesley Musser.

"It's arbitrary, really, what you put in there," Musser said.

Commer and Musser worked together on the university's 1999 study that valued horse racing at $596 million, but both say there were major holes because of time limitations.

That analysis didn't include out-of-state horse owner's expenses in Maryland or the impact of travel accommodations for race visitation.

For instance, the Preakness Stakes at Baltimore's Pimlico track produces about $29 million a year if an 18-year-old economic impact study by Maryland's Department of Business and Economic Development, updated for inflation, is still accurate.

DBED is "in the very early stages" of conducting a new study of Maryland's equine industry, said spokeswoman Andrea Harrison.

No one knows whether a new analysis will show the sport topping $2 billion, but Stop Slots Maryland lobbyist Minor Carter said it's possible.

"To get that, my, they're counting the dry cleaning for the jockey's uniforms, and I guess that's viable."

Numbers aside, the Maryland General Assembly will go its own way on the slots issue, and figures didn't figure in this year's decision to kill slots, said House Speaker Michael Busch, D-Anne Arundel.

By January, when the General Assembly is next scheduled to meet, slots and racing are expected to once again dominate the budget discussion.
 

Copyright © 2003 University of Maryland Philip Merrill College of Journalism