Donít Bet On It
Recently our neighbor to the southwest raised the ante on the Maryland racing industry. By overwhelming numbers the Jefferson County, West Virginia, voters approved a measure to take “racing” there to the next level. The measure that passed approved table games to complement the horse races and slots at Charles Town.
Prior to the introduction of slots, Charles Town was a dying town with little left in the way of jobs and the traditional farm related industry that was borne of racing thoroughbreds. As West Virginia’s eastern panhandle has seen a significant economic turnaround, Maryland has seen their industry grow old and wither.
With the success in the neighboring states of Delaware, Pennsylvania and West Virginia, Maryland officials have pushed for similar outcomes to save their historical horse industry.
To this point none of the five approved venues have turned over one shovelful of dirt and broken ground in building a slots facility.
The question remains: Is Maryland ready to go all-in or cash out?
The racing industry in Maryland desperately hopes for the former. But will it work?
Based on recent developments, the odds of success are starting to look more and more like a long shot.
West Virginia has been successful at building upon there long history of racing all while saving the local communities in the process. Their slots facilities are built upon existing racing venues (Charles Town Races and Mountaineer Horse Track).
Likewise, Delaware has had great success with slots located at their two tracks – Dover Downs and Harrington Raceway & Casino.
In Pennsylvania there are nine casinos in operation. Six are racing venues that have added slot machines – Mohegan Sun, Philadelphia Park, Harrah’s Chester Downs, Presque Isle, The Meadows and Penn National. Others include the resorts of Mount Airy and the Sand’s Bethlehem. There is also one facility that is a slots-only casino. The Rivers Casino is in Downtown Pittsburgh near the new stadium facilities.
Which of these casinos is faltering? Rivers Casino in Pittsburgh is. It is the only slots-only casino and is taking in revenues that may only reach 50% of projected first year revenues. According to the Allegheny Institute for Public Policy, if the trend continues it may not be able to meet its debt obligations of $55 million in 2010, and $75 million in 2011.
According to Standard & Poor’s, it is not uncommon for upstart casino’s to flounder under initial debt responsibilities. With little else to draw consumers to the River’s Casino, and a weakened economy, it comes as no surprise that it is struggling. Other venues in Pennsylvania tied directly to racing are succeeding.
What does this mean to Maryland and their feeble racing industry?
Rocky Gap, Ocean Downs, Cecil County, Baltimore and Anne Arundel County where the initial five sites determined after Maryland voters amended the state constitution to allow for this type of gaming. Of these five only one is currently related the horse industry – Ocean Downs.
As for Ocean Downs, there are significant structural issues to the property and an owner who is balking at paying the second highest tax rate on slots revenue in the nation.
Laurel Racetrack lost the opportunity when its owners went bankrupt waiting for the slots to save them.
That leaves Cecil County, Baltimore (with no location), Anne Arundel mall and Rocky Gap Resort as slots-only facilities.
If the intent is to save the racing industry, this will fall flat on its face.
As it stands now, it may be too late for slots to save the racing industry. They may provide some needed tax revenues to the state coffers. But there is no guarantee that these casinos will succeed.
Slots-only facilities are unlikely to generate the needed revenue the state needs, and they do nothing to bring bettors to races or save the 9,000 or so jobs that are still tied to the racing industry.
As Jeff Brummer pointed out in the Frederick News Post on December 6th, we stand at the brink of losing our rich heritage. We stand ready to lose out on all the farm-related jobs that the industry has provided over the years.
By delaying the slots issue by several years to deny a political victory to then Governor Robert Ehrlich, the Democrat leaders in Annapolis may just have written the death notice on this once great and proud industry.
Unless we can bring slots to the track, you may as well not even saddle up.