Preakness Stakes Betting Handle Drops To Three-Year Low

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Preakness Stakes betting reached $54.56 million Saturday, the lowest total handle on the race since 2020.

The middle jewel of horse racing’s Triple Crown experienced a 16% drop in handle compared to last year when horseplayers bet $65.3 million. Preakness Stakes betting dropped more than 20% since hitting record levels in 2021 at $68.7 million.

According to race charts, the overall handle across 14 races at Pimlico Race Course on Saturday ($100.2 million) dropped 5% compared to Preakness Day 2022 ($105.5 million.)

MD sports betting contributes more to state revenue

The Stronach Group owns the Maryland Jockey Club, and manages Pimlico Race Course and Laurel Park, Maryland’s other thoroughbred race track. The Stronach Group also owns the Preakness.

Betting on horse racing from both tracks reached $501.5 million in 2021, the latest year data is available from the Maryland Racing Commission. The state collected $1.82 million in tax revenue.

To compare, MD sports betting handled $980 million and contributed $6.1 million in tax revenue to the state in 2022. Maryland has received $14 million in sports betting tax revenue to begin 2023. Online sports betting launched in the state near the end of 2022.

Uncertainty over MD horse racing

With the Preakness Stakes in the rearview mirror, local stakeholders are shifting their focus to sustaining the future of Maryland racing.

Alan Foreman, general counsel for the Maryland Thoroughbred Horsemen’s Association, described racing in the Old Line State as uncompetitive and “not a model for the future.”

Foreman estimates the entire equine industry creates $2 billion in economic activity in Maryland, with $525 million coming from racing alone.

Hoosier best comparison?

Indiana is a state with a similar-sized sports betting market. According to a recent Purdue University study, the Hoosier State’s thoroughbred racing industry contributed $933 million to the state’s economy in 2021, generating $1.44 billion in economic activity.

In 2019, the latest full-year data available, thoroughbred racing handle in Indiana reached more than $134 million. The state received $2.1 million in revenue.

Mounting concerns in last five years

When Maryland legalized slot machines in 2012, the Stronach Group failed to make a bid to bring additional gaming to Laurel Park. As a result, industry sources tell LSR infrastructure at the two tracks started to decline significantly without the added revenue stream.

In 2018, Stronach told Baltimore city officials it planned to permanently close Pimlico and move the Preakness to Laurel Park. Bill Cole, a Maryland Stadium Authority board member, successfully negotiated on behalf of the city to keep the race in Baltimore.

“Pimlico is very important to our elected leaders. It is very important to the City of Baltimore,” Cole told LSR last week.

Pimlico issues leading up to Preakness Day

A 6,700-seat section of the grandstand was shut down on Preakness Day in 2019 after engineers determined that a piece of the building was unsafe. Overflowing toilets put a damper on the excitement that day too.

Leading up to this year’s race, reports circulated on social media last week about a broken-down elevator preventing media members from accessing the press box.

More concerns at Laurel Park

Laurel Park suspended racing twice in April. Several horse deaths brought on concerns about the racing surface. In both instances, racing and training halted for a few days, then resumed.

“We know Laurel has tremendous problems that cannot be allowed to continue long term,” Foreman said.

How to sustain future racing in Maryland?

In 2020, Maryland lawmakers approved HB1056, the Racing and Community Development Act. It authorized $375 million in bonds to pay for the rebuilding of Laurel Park and Pimlico. None of the work has started though, as the project was not feasible given the budget and required work.

“The original deal we did for Laurel Park did not anticipate some of the construction challenges we encountered specifically regarding the track surface,” Cole said.

Maryland’s horse racing industry in fiscal year 2022 received $90.8 million from casino gaming to support racing purses and its facilities. The industry then relies on betting handle for funding, which Foreman believes makes any future plans financially challenging.

Latest redevelopment plans on hold

On April 24, Gov. Wes Moore signed SB720 into law, creating the Maryland Thoroughbred Racetrack Operating Authority (MTROA.) It will oversee redevelopment plans and determine the best future for Maryland horse racing.

“It is going to look at various operating models going forward and the economics of the industry,” Foreman said. “The MTROA will investigate the options that involve consolidating racing in Maryland. They can explore public-private partnerships and innovative ways of operating in the future.”

SB720 takes effect on June 1. The MTROA must present at least two potential options to the state legislature by December 1, 2023.

“It’s a massive project and one of the most complicated projects anyone has ever seen,” Foreman said. “There is no playbook for this.”

Future for Pimlico and Preakness?

Redeveloping Pimlico cannot go forward unless a consolidation plan is in place. Foreman explained that consolidating racing and redeveloping Pimlico are interdependent.

Foreman admits there are challenges with making Pimlico the year-round home of Maryland racing. The 1,400 horses stabled at Laurel Park, plus backstretch workers living on the grounds, would all need accommodations.

“Pimlico is not large enough to accommodate the consolidation of Laurel Park. There is insufficient room for the stalls, there is insufficient housing for the backstretch workers. It has a lot of challenges,” Foreman said. “If you make Pimlico the year-round hub, how do you accommodate the needs of the industry?”

Pimlico and the Preakness ‘too important’ to Baltimore

The state legislature and Gov. Moore have made clear the Preakness will continue to be held at Pimlico. Cole believes that is an absolute, which requires the industry to rebuild the facility.

“I find it impossible to believe there is a path that does not include a rebuilt Pimlico,” Cole said. “The Preakness is too important. No one wants to lose the second jewel of the Triple Crown.

Cole added that doing nothing is not an option because Maryland currently has two failing facilities.

Neither the Stronach Group nor its attorney Alan Rifkin responded to multiple requests for comment from LSR.