Odds On Racing - Harness Racing

Bill Seeks to Divert Slot Funds

March 8, 2010

Maryland horse racers may not see the money they were promised when slots were legalized in 2008.

While one bill that would have cut the purse dedication account -- the 7 percent of slots revenues that would go to winners -- in half has been withdrawn from consideration, another threatens to get rid of the pot of money completely.

Delegate Luiz Simmons, a Montgomery County Democrat, is proposing to take that 7 percent -- or up to $100 million a year -- and use it for a school construction fund.

"I don't have any ill will toward horse racing, but I don't feel that we should be giving a handout to the horses when most other groups are scouring in the weeds for pennies," Simmons said, calling the purse dedication account "a public subsidy of a moribund business."

His legislation, House Bill 885, would create a school construction and improvement account that could be used in addition to general obligation bonds on public education infrastructure. The state has cut or delayed most of those projects because of the $2.5 billion budget deficit predicted in 2010.

"We really have to think about priorities," Simmons said. "If we don't think in terms of priorities, we are going to basically neglect and ignore some serious aspects of our social and economic structure because we are dumping $100 million a year into what I regard as a rat hole."

However, the amount going into that fund, whether it is for school construction or racing purses, will not reach the $100 million ceiling for quite some time. That number was calculated based on the state issuing all 15,000 available video lottery terminals to the five locations. Last fall, only three locations were awarded licenses accounting for less than half of the available machines.

Simmons does not have a horse racing track in his district. The bill is cosponsored by four other Montgomery County delegates.

Another bill that threatened racing purse funds -- this time reducing them by half -- has been withdrawn, although the sponsoring legislator said he may try again next year.

Delegate Frank Turner, a Howard County Democrat, has taken what was known as House Bill 40 out of consideration, saying that the extra money would not be needed to purchase video lottery terminals until some of the larger proposed facilities are operational.

"If I thought we had needed the revenue this year, then I would have continued with the bill," Turner said. "But with only two sites coming online that aren't even the biggest sites, there wasn't the need."

The legislation sought to cut in half the purse dedication account for horse racers, leaving only 3.5 percent of slots revenue, or no more than $50 million, to be split among winners. The other 3.5 percent would be added to the Maryland State Lottery's cut for administration costs and investment in slot machines. With the change, the state would have 5.5 percent of VLT revenues, or no more than $7.5 million, enough to provide top-of-the-line machines, Turner said, the type needed to lure people away from casinos in West Virginia, Pennsylvania and Delaware.

While the state will need more than the $30 million already set aside to stock all three approved sites with the best VLTs, the delegate added, the original allocation will pay for Ocean Downs in Worcester County and the new facility in Cecil County, both on track to open later this year.

However, the 2,300 machines headed to the facilities account for only a third of the 7,050 awarded. The rest will go to the Cordish Companies' development in Anne Arundel County. That site was approved in December after more than a year of debate in the county council over local zoning, and will likely not be ready until 2011.

No bids were received for the Rocky Gap State Park location and an application for the Baltimore City facility was rejected after the applicant failed to pay a licensing fee. Both will be rebid by the state.

With that in mind, the Turner said he plans to resubmit the legislation in the future.