Report Challenges Racing
Industry's Claims
By
Alyson Klein
Capital News Service
Tuesday, Nov. 11, 2003
ANNAPOLIS - The racing industry's claims that off-track slot facilities
will jeopardize its survival are dubious, said a report due out today from
the Maryland Tax Education Foundation.
The state should carefully consider market dynamics of slot legislation
when crafting policy, the agency concluded. The foundation will present its
findings at a 10 a.m. news conference here.
"It's clear to me that the racetracks are still a very potent force on
this issue. We've still got a lot of people and legislators believing that
race tracks have some kind of special claim on slot machines, that the
industry will go bankrupt without them," said foundation Chairman Jeff
Hooke. "Most of those arguments have little or no substance."
But racing industry executives question Hooke's methods and motives,
after reviewing his three previous reports on gambling, the first of which
was issued last Sept. before the governor's election.
"I have some credibility questions with regard to Jeff. He's a good
numbers cruncher and all that, but previous things he has done have had very
large holes in them," said Tim Capps, executive vice president of the
Maryland Jockey Club. "He makes estimates grossly over anything anyone has
come up with."
Hooke's findings come just two months before the start of the legislative
session, when slots are expected to be a hot-button issue.
Last session, Gov. Robert Ehrlich presented slot machines at local
racetracks as a solution to both the state's budget crisis and the decline
of its racing industry.
The legislation passed in the Senate, but died in the House.
This year, Maryland faces a budget deficit of at least $700 million. The
governor "still believes his proposal from last session is the best deal for
the state," said spokesman Henry Falwell, in a previous interview.
House Speaker Michael Busch, D-Anne Arundel, who led the fight against
the legislation, could not be reached for comment on the report.
This summer, he suggested if the state chooses to support expanded
gambling, it should retain tighter control over it, rather than giving the
tracks a monopoly.
"I think everybody agrees," Busch said in a previous interview, "that
last year's bill was not very well thought out."
Hooke also supports more state control, calling it "the most practical
option for the state of Maryland."
But Capps said the racing industry is "unique."
"It's the only industry in the state in competition with the state while
being regulated by the state. All we've said all along is to let us compete
doing what we do and have the same competitive advantages tracks in
neighboring states have."
If the state goes with off-track slots, then based on the experience in
other states, betting at tracks in Maryland may not drop at all, and
fall-off will only hit 10 percent, according to the report.
The racing industry contends some people will leave tracks in favor of
new slots parlors.
However, there isn't much crossover between race track gamblers and slots
enthusiasts, according to the report, which based its findings on venues and
tracks in other states.
Race track owners have argued that if the state used money from slots to
subsidize tracks' purses - the money offered to winning horses - it would
attract bigger equine stars and more gambling, which would translate into
more jobs.
Although the study agrees, it found purses would need to increase by a
considerable margin, taking away about 3 to 5 percent of the revenue from
slots. That amounts to a $55 million to $95 million subsidy of the industry.
"The question is whether or not it's really worth it," Hooke said.
The industry said in a series of hearings that it employs about 30,000
people, said Hooke. Capps said that the correct number is closer to 17,000.
The study found the industry supplied only 8,300 jobs, and last year's
proposal would have created about 1,600 new ones. If new legislation calls
for off-track slots, just 800 jobs will be lost.
Last session's slots bill allocated $300 million annually to the racing
industry and about $90 million additional for the increased purses. That
would mean the state would spend about $34,375 to $68,750 per job, the
report found.
"Most of these jobs don't really pay that much . . . Yes, the subsidy
will work, but it's going to be very costly on a per-job basis," Hooke said,
"The track ownership option could work in theory, but I think the owners
will never strike a reasonable bargain for the state."
Copyright ©
2003
University of Maryland
Philip Merrill College of
Journalism
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