Slots, Subsidies, and Waffles

- Maryland House Speaker Michael Busch is working on a legislative response to Magna’s proposal to cut racing days in the state. Not surprisingly, it does not include slot machines. The proposal would include taxpayer-funded purse subsidies, which would allow Magna to distribute higher purses without cutting racing days as drastically as proposed. But since such subsidies would go to the horsemen and not to Magna, the company’s reaction was predictable.

Magna officials say a purse subsidy is no substitute for a slots plan, which would provide them with a large and steady revenue source for their operations.

"The problem with a yearly appropriation is it's just that. You can't build a long-term business plan based on that," said Paul Cellucci, the former Massachussets governor and a Magna vice president. "We are losing money in Maryland, and a purse subsidy doesn't address that." [Baltimore Sun]

Busch has long railed against giving Magna a handout in the form of slots, especially given their demonstrated inefficiency, and their broken vow to invest in track infrastructure even without the machines. Angry Maryland horsemen are preparing a response of their own.

“Certainly, we think the plan as presented is one of the silliest plans ever seen," said Maryland Thoroughbred Horsemen's Association president Richard Hoffberger. "I'm not prepared to say everything we're going to do. Did Gen. Rommel tell the world his battle plan? Our options are somewhat limited, but they are severe and significant."

Among those options is denying the Maryland Jockey Club the right to simulcast races at Laurel Park and Pimlico Race Course , an option given the MTHA through the Interstate Horse Racing Act of 1978 that was amended in 2000 to accommodate simulcast racing.

It is no insignificant option, given it would cut significantly into the betting income at local tracks, where from two-thirds to three-fourths of daily wagering is based on simulcasts.

Hoffberger spoke about a question he had for Magna when briefed on the plan on Wednesday.

"I asked them, 'Why spend $20 million on a new turf course and on the first day you use it say you're not going to use it next season - unless you assume you can use it in November, December, January and February, which I don't think anyone believes?"'

What answer was he given?

"I got the same thing my mother used to serve me for breakfast on Sundays when I was a kid," he said. "Waffles." [Baltimore Sun]

Magna’s plan also calls for shutting down the training facilities at Bowie.

- Slots in Pennsylvania is one of the main things causing angst to Maryland horsemen, and the gaming board there started the process of taking applications for licenses. The five existing racetracks in the state are virtually assured of licenses, but competition for the five standalone casinos -- two in Philadelphia, one in Pittsburgh, and two to be determined in the rest of the state -- is expected to be spirited. [Penn Live]

The process may be slowed by a dispute over the distribution of the slot machines. Pennsylvania law requires them to be sold only through state-based distributors; and also requires all decisions by the gaming board to be unanimous.

The original idea was to allow manufacturers to decide how many distributors would be needed in the state.

But one board member, former State Rep. Jeffrey Coy, has been pushing a counter plan, one that would divide the state into five regions, with a different distributor in each region.

He believes that approach would create jobs for minorities and other contractors who otherwise would have a difficult time competing statewide with large companies. On the opposite side are those who believe that such a system would create an unnecessary layer of bureaucracy.

With Coy in disagreement, no action can be taken. [Philadelphia Inquirer]