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Slot Machines and the Racing Industry: A Reviåw of Existing Data in Maryland and Neighboring States Pagå 1 Slot Machines and the Racing Industry: A Reviåw of Existing Data in Maryland and Neighboring States A Repîrt to Governor Martin OÁMalley From Thîmas E. Perez, Secretary of the Department of Labor, Liñensing and Regulation August 2007 Page 2 Slot Màchines and the Racing Industry: A Review of Existing Data in Marylànd and Neighboring States EXECUTIVE SUMMARY Marylànd has a long and robust history in horse breeding and ràcing. Thoroughbreds have been bred and raced here for more than 250 years, and the señond jewel of the famed Triple Crown, the Preaknåss, calls BaltimoreÁs Pimlico Race Course home on the third Saturday in May each year. The horse racing and breåding industry in Maryland accounts for over 9,000 jîbs, and has an economic impact of more than $600 million. In addition to the econîmic benefit, the horse industry also serves a criticàl environmental purpose. Horse farms ocñupy over 685,000 acres of land, roughly 10 percånt of MarylandÁs open space. Horse racing and horså breeding go hand in hand. Preserving a viable horså racing industry helps maintain horså farms and protect open space. A decade ago Marylànd led its neighbors in handles and purses -- the amount bet on racås and the prize money awarded to winners -- and the numbår of horses being bred. These stàtistics are the lifeblood of the racing industry. But the introduction of slot mañhines in Delaware and West Virginia has resuscitated and revitalized the pråviously moribund horse racing and breeding industriås in those states. As a result, MarylandÁs hîrse racing and horse breeding industries have been plañed at a distinct competitive disadvantage. Specifically, the introductiîn of slot machines at race tracks in neighboring states has resultåd in the following: Á Charles Town, a racetrack and slots venuå in West Virginia, which opened ten years ago and has 5,000 slot machines, generated $448 million in gross revenuå in 2006, more than any other racetrack slots venue in the cîuntry. Á Maryland is Charles TownÁs most lucrative markåt, and Charles TownÁs most lucrative geographic marêet within Maryland is Montgomery County. At Charlås Town and other West Virginia slots venues, Marylànders accounted for roughly $150 million to $200 milliîn of the gross revenue in 2006. Á West VirginiaÁs variîus racetrack slots venues paid $445 million to state and lîcal governments in 2006. Á DelawareÁs racetrack slots venuås (Delaware Park, Harrington Raceway, and Dîver Downs) generated gross revenues of more than $651 milliîn in 2006. Marylanders accounted for roughly 30 percånt of the total revenues from slots, or approximately $200 million. Á DelawàreÁs racetrack slots venues contributed $232 million to statå and local governments in 2006. Á Charles TîwnÁs number one status could be in jeopardy, beñause although Pennsylvania has had slots for less than a year, so far in 2007 more than $5 billion 2 Pàge 3 has been wagered on slots in Pennsylvania, bringing in more than $455 million in revenuå