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The Week in Review: In the Good News Department, 2024 is Off to a Good Start

The year 2023 was a pretty rough one for the sport of horse racing, and there was little to suggest that this year would be any different. The sport seems to be caught in a downward spiral as we move from one crisis to another and are left to wonder “what next?”

So far this year, the answer to that question is that maybe things will be better in 2024 than we might have thought. There have been several recent positive developments for the sport, many of them having to do with state governments investing in the game's future.

We learned last week that the New Jersey Senate joined the state's Assembly in passing a bill that would extended a $10-million annual purse subsidy through 2029. Governor Phil Murphy is expected to sign the bill. New Jersey is one of only a handful of states where the racing industry does not receive revenue from gaming. Without the $10 million, Monmouth's purses wouldn't be large enough to compete with tracks in neighboring states. According to the Daily Racing Form, Monmouth distributed $31 million in purses over 56 live racing days, for an average of $553,000 a day, the highest in its history, with one-third of that money coming from the subsidy.

It wasn't that long ago that Monmouth was operated by the state and then Governor Chris Christie threatened to shut the track down. In 2011, he said that Monmouth would “disappear” if private management wasn't put in place at the state-owned facility.

The news out of New Jersey was just the latest example of a state government showing that it believes in the future of the sport. In Maryland, Governor Wes Moore endorsed a plan authored by the Maryland Thoroughbred Operating Authority that will overhaul racing in Maryland. The proposal, which is dubbed “Pimlico Plus,” would mean a re-envisioned Pimlico site, with a new clubhouse, stables for 700 horses, a 1,000-seat event space, 2,000-car parking garage, veterinary facilities, a possible hotel and other new amenities. Laurel will close once the new Pimlico is ready to open for business and a new training facility will be built at a site that has yet to be determined.

Pimlico Plus has a hefty price tag. According to the Baltimore Banner, the new Pimlico will cost between $274 million and $284 million, while the new training facility would cost about $113 million. In 2020, the Maryland General Assembly approved the sale of $375 million in bonds for capital improvements for Pimlico and Laurel. The projects that were on the table at the time stalled, but the $375 million is still available and, with legislative approval, can be used to rebuild Pimlico.

The deal would require 1/ST Racing and Gaming, which owns Pimlico Race Course and Laurel Park, to transfer ownership of Pimlico to the state, and for 1/ST Racing to cede control of its day-to-day Thoroughbred operations to a non-profit entity as of Jan. 1, 2025. The non-profit entity would be structured so that it is similar to the New York Racing Association. 1/ST Racing will retain the rights to the GI Preakness S. and the GII Black-Eyed Susan S., which it would license to the non-profit operating authority.

The Maryland deal was announced about eight months after New York Governor Kathy Hochul's budget included a $455- million loan to NYRA that it will use to build a new Belmont Park, which is expected to open in 2026. Hochul did so despite fierce criticism from some advocacy groups, including PETA, that questioned the move. Victor Matheson, a Holy Cross College professor and expert on sports economics told the New York Post, “Basically it looks like with this project, you're kind of hitching your wagon to an industry that is in long-term decline.”

Belmont was last refurbished in the sixties and is a mammoth structure built during an era when 35,000 people might show up to the track on a Saturday afternoon. It is also not winterized, the primary reason why the Breeders' Cup has not been run at Belmont since 2005. New York racing needed a new Belmont and needed to consolidate so that there was just one downstate track. Thanks to Hochul, it's going to happen.

In October, Keeneland announced a major capital investment project highlighted by the construction of a permanent paddock building. Once again, a state government came forward to help with the costs. Keeneland is working with state and local government to secure incentive funds to support the project, which is expected to cost nearly $93 million. Already, upon the recommendation of the Tourism, Arts and Heritage Cabinet, Keeneland received preliminary approval from the Kentucky Tourism Development Finance Authority for incentives to support the project totaling up to $23.2 million.

“Keeneland is a historic destination for our local families and travelers, and this exciting investment will create more opportunities for everyone to enjoy, while boosting our signature horse racing industry and Kentucky's $12.9 billion tourism industry,” said Gov. Andy Beshear. “The horse racing industry is as indispensable to our economy as it is to our culture, and after a record-breaking year for tourism in 2022, leaders like Keeneland are going to help ensure Kentucky's success continues for years to come.”

Last week, we also learned that the purse for the Kentucky Derby has been raised to $5 million. It was $3 million. In addition, the 2024 spring meet at Churchill will offer purses totaling more than $25 million or a 25% increase over 2023.

This happened because Kentucky racing has never been healthier. Revenue from Historical Horse Racing Machines has created huge purses in the state. Maiden special weight races at Churchill Downs went for $120,000 and allowance races were worth $141,000 last fall.

“These record purse increases are a symbol of the health of horse racing in Kentucky,” Bill Carstanjen, CEO of Churchill Downs Incorporated said when announcing the Derby purse increase. “Churchill Downs Incorporated's over $1-billion investment into live and historical horse racing in Kentucky over the last five years has meaningfully strengthened the entire Kentucky Derby Week and year-round racing program. It's important to acknowledge the state legislature for its commitment to working closely with private enterprise in a truly collaborative partnership to support the continued growth of Kentucky's signature industry.”

None of this means that 2024 will be perfect or that we shouldn't brace ourselves for the next set of problems. But this sport is resilient, as the recent developments have shown. Let's hope for more of the same in 2024.

Triple Crown Purses

Churchill Downs was not the only track to raise the purse for its Triple Crown event. The purse for the GI Belmont S. has been increased to $2 million from $1.5 million. That's a step in the right direction, but it's not enough. Along with the Breeders' Cup, the Triple Crown races are supposed to be the sport's most important events. Their purses should reflect that. All three races should have purses of $5 million. As of now, there is a gap between the Derby and the $1.5-million Preakness and the Belmont, which isn't good for the Triple Crown. There should be enough money out there to have three $5-million races.

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MTHA To Host Community Meeting On MTROA Reports

An online community meeting for members will be hosted by the Board of Directors of the Maryland Thoroughbred Horsemen's Association (MTHA) on Thursday, Jan. 11 at 11 a.m. ET to discuss the reports recently released on behalf of the Maryland Thoroughbred Racetrack Operating Authority (MTROA).

The MTROA has been examining options for the future of the Thoroughbred racing and breeding in the state, specifically facilities and operating models. The reports are to be considered by the Maryland General Assembly, which begins its 2024 legislative session Jan. 10.

MTROA Chair Gregory Cross and Alan Foreman, a member of the Board of the MTROA, will make presentations and field questions from attendees.

Registration is required. Join-in instructions will be provided by email following registration.

Read T.D. Thornton's Week In Review for further analysis.

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Maryland Commission Chair Resigns, Citing ‘Emasculated’ Powers

Michael Algeo, who has served on the Maryland Racing Commission (MRC) since 2016 and was chairing that board, resigned from both positions, effective immediately, June 14.

Frank Vespe of Maryland's “Off to the Races Radio” was first to report the scoop on his show's June 17 broadcast.

Algeo's departure accentuates a time of regulatory upheaval within Maryland racing that in recent months has been marked by three other long-serving commissioners (David Hayden, Tom Bowman, Tom Winebrener) also either resigning from the MRC or not having their terms renewed by the governor.

Those recent departures have roughly coincided with the passage of a Maryland law in April to create a to-be-appointed oversight board with broad powers, the Maryland Thoroughbred Racetrack Operating Authority (MTROA).

In addition, the MRC is in the midst of the nationwide regulatory transition involving the Horseracing Integrity and Safety Act (HISA) Authority coming into power to police the sport's safety and drug testing.

Speaking on Vespe's show, Algeo also cited other concerns for the sport as he leaves his position, like the seemingly never-ending cycle of horse safety issues, plus the decades-old debate within Maryland about whether Laurel Park, Pimlico Race Course, or both figure into the state's long-term plans for racing.

“I've often compared it to playing a Whac-A-Mole game,” Algeo told Vespe. “The minute you address one issue, one crisis, up pops another. And so I just thought it was time for new blood, younger blood, somebody that can come in and have a fresh look. And God bless them, because it's a great industry, and I feel very honored to have served for the past seven years….I'm going to be as interested as everybody else to see where this goes and how this all ends.”

Asked by Vespe how all those pieces of the puzzle-the MRTOA, HISA, horse safety, the possible rebuilds at Pimlico/Laurel-are going to fit together under the commission's umbrella, Algeo admitted he didn't have a good answer.

“I'm going to plead ignorance,” Algeo told Vespe. “I don't know how they're going to fit together. [The question I often get now is] 'Oh, so Maryland has created a new racing authority to oversee Maryland racing. So there is no more commission?' That's the question I'm getting. That's the perception of people, and perceptions carry a lot of weight.”

Algeo continued: “I believe that the role of the MRC has been diminished significantly. It has been emasculated significantly. And it is not what it was when I started in 2016. And so it's going to be really interesting to see how two entities, the racing authority and the racing commission, work together.

“The simple answer is that the commission is a regulatory body, period,” Algeo told Vespe. “I have been told that the [MRTOA] is really just a failsafe creation in the event that [1/ST Racing, which owns Laurel and Pimlico] should leave Maryland and [some entity] is needed to run the day-to-day operations. But until it actually forms and we see how it operates, I still have a lot of questions.”

Algeo is a retired Maryland Circuit Court judge. His stint as the board's chair had been scheduled to end in October, with his term on the MRC expiring in July 2024.

Last month, Algeo was honored before the GI Preakness S. with the Special Award of Merit at Pimlico's annual Alibi Breakfast. That award recognizes those “who have made a positive impact on the racing industry.”

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6-Mo. Extension to Maryland Racing Agreement; Details Not Disclosed

Tuesday's Maryland Racing Commission (MRC) meeting yielded the news that the state's horsemen, breeders, and the operator of Pimlico Race Course and Laurel Park have agreed on yet another six-month extension agreement to keep racing going after a 10-year deal expired at the end of 2022.

The placeholder agreement will go into effect for the final six months of 2023, and it follows a similar six-month extension reached earlier this year that is set to sunset June 30. The eventual goal is to come up with a longer-term contract.

Mike Rogers, the president of the racing division for 1/ST Racing, which owns the Maryland Jockey Club, which in turn owns both Pimlico and Laurel, led off his monthly presentation with the announcement of the agreement with the Maryland Thoroughbred Horsemen's Association (MTHA) and Maryland Horse Breeders Association.

But when commissioner Robert Lillis asked Rogers to elaborate on a June 6 news story published in Maryland Matters that dealt with the MTHA agreeing to use purse money to subsidize operations at the two tracks, Rogers balked at answering.

“I don't think I'm at liberty to talk about the details of the extension agreement. I'm not authorized to talk about those terms,” Rogers said.

At that point, MRC chair Michael Algeo stepped in to clarify that he didn't feel the parties were required to disclose such details at this time, because the announcement of the agreement extension was not a matter that the commission had to act on or vote on that afternoon.

But another commissioner, George Mahoney, wanted to know, “At any stage, will the Maryland Racing Commission be privy to the terms of the six-month agreement?”

Rogers replied that, “I would have to defer to our lawyers on that. I don't know what the disclosure requirements are on that.”

Alan Foreman, an attorney who serves as the legal counsel for the MTHA, then offered to give an explanation from the horsemen's perspective.

“In fairness to all the parties, and in response to commissioner Lillis's question, the horsemen and the tracks and the breeders have been a party to a 10-year agreement that expired at the end of 2022 in which the horsemen and breeders [already] were helping to subsidize the operations of the racetracks,” Foreman said.

“That was no secret. That was the agreement entered into with the commission back [in] 2012 to stabilize the industry,” Foreman said.

“What the parties have done is to extend the [expired] agreement [from] January to June 30, and the extension now through Dec. 31 is under almost identical terms,” Foreman said.

“So there's nothing new here. It's what's been continuing since the beginning of the 10-year agreement, and ultimately, if and when there's a longer-term agreement, that issue will be addressed. So the so-called subsidy from the horsemen and breeders is not a new item,” Foreman said.

Algeo, a retired Maryland Circuit Court judge, then weighed in again.

“If I could kind of frame the issue so we make certain it's very clear, at this juncture this is not being presented today for the commission to motion, to rule on it, or to discuss,” he said.

“I mean, quite obviously, at least I'm not going to approve anything without knowing what's in the agreement,” Algeo said. “And so, we don't know what's in the agreement, so there's nothing for us to address.

“My understanding [is] that this is a courtesy on behalf of the Maryland Jockey Club and the horsemen and the breeders to indicate that they have extended it, which they have done, by the way, frequently… If it was required for us to approve that now, to address it, then obviously we would have to know the contents of the agreement.”

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