Horse racing subsidies to keep Preakness not worth the debt
As Maryland prepares for the 145th Preakness on Saturday amid the COVID-19 pandemic, the state’s thoroughbred racetracks are also getting ready for some extravagant overhauls in the years ahead. That’s because earlier this year, the Maryland General Assembly passed the Racing and Community Development Act (RCDA)— a wasteful horse racing subsidy bill masked as a clever economic development scheme.
Unfortunately, the only thing likely to grow when this “economic growth” plan is implemented is the size of Maryland’s debt. The legislation authorizes the state to issue $375 million in 30-year bonds to rebuild Maryland’s two dilapidated horse racetracks: Pimlico Race Course in Baltimore and Laurel Park in Anne Arundel County. Both tracks, currently owned by the Stronach Group, a Canadian company, will be transferred to each local government or to the Maryland Stadium Authority, thereby shifting all financial risks of the project to the state.
The $17 million a year debt service for the 30-year bonds will be repaid using subsidies that the state’s horse racing industry already receives from Maryland casinos. In other words, the bill diverts budget from Maryland’s schoolchildren to rebuild entertainment facilities that are no longer even very popular.
Between 2002 and 2018, horse racing handles in the U.S. fell from $15 billion to $11 billion. While the rising popularity of legalized sports betting is partly to blame, an even bigger image problem relates to doping — administering illegal or tightly restricted medications to horses to enhance their performance. According to the Jockey Club, 225 horses died of injury at Pimlico and Laurel between 2009 and 2019.
Sure, the renovated racetracks will create some new jobs, but not the type of jobs Maryland should be subsidizing to keep in-state. Labor conditions at horse racetracks are usually horrible, with the minimum wage workers working day and night without additional compensation. Last year, The Sun wrote of conditions at Laurel Park: “animal troughs used as sinks, widespread mold, no food preparation or refrigeration facilities, and 32 employees using one shower.”
This partly explains why Baltimoreans do not believe that rebuilding Pimlico will change the neighborhood’s fate. Melvin Ward, a local restaurant owner in the Park Heights neighborhood told The Undefeated sports news site that, “Pimlico is not a sign of life for this neighborhood … Horse racing is dead. The Preakness does nothing for the community. If it leaves, things will be the same as they always are here.”
Despite this, a recent study by the Maryland Public Policy Institute found that Maryland’s horse racing industry received over $450 million in casino subsidies between 2011 and 2019 — more money than Maryland’s football and baseball stadiums combined. It is clear that wealthy horse racers and track owners pocket the subsidies, which do not trickle down to the industry’s workers. Also, these enormous subsidies have not reversed horse racing’s fate in Maryland — in 2018, the combined operating loss for Pimlico and Laurel was a hefty $15 million.
Given this, Maryland should immediately halt the RCDA plans and reconsider the option that the Stronach Group pushed for in 2019: Close Pimlico and move the Preakness Stakes to Laurel Park. After all, it is absurd to pour hundreds of millions into a venue that holds events just 12 times a year. And if the Preakness decamps to Laurel, it will still be held just 20 minutes away from Baltimore. All proposed economic benefits of the Preakness would stay in Maryland.
Meanwhile, private developers should turn Pimlico into a multi-use facility. In terms of potential for Baltimore’s development, rebuilding a rarely used horse racetrack does not come close to a year-round facility that would create hundreds of new full-time retail and service jobs.
Admittedly, horse racing is a beloved tradition for some Marylanders, but ultimately, nostalgia is not a good enough reason to justify the RCDA’s massive price tag. As Maryland struggles from the economic damages of the COVID-19 pandemic, it is time to evaluate whether jeopardizing the state’s AAAbond rating to rebuild its outdated horse race tracks will do anything to help bring Maryland’s economy back on track.