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August 25, 2009

Laurel Racing won't get readmission to slots bidding

"This symphony has a long way to go," I wrote six months ago about the desperate attempt by Laurel Racing, the Maryland Jockey Club and Magna Entertainment to ask for a do-over in their botched bid for a slots license. We're now up to -- oh -- the third movement. Molto lacrimoso.

The companies (or somebody. Maybe it's Joe DeFrancis and other partners who stand to make a mint if Laurel Park gets slots) are wasting more money on lawyers to try to get the state to reopen slots bidding. Their argument: Since the state is taking modified offers from qualifying bidders, it should start over and let everybody submit new packages.

Nice try. Here is the way to think about this. Imagine you're buying a house. It is customary to put up earnest money -- $1,000 or so. This demonstrates that you have at least a minimum amount of scratch, a small token of solvency implying that you can consummate your offer. That's when the negotiating begins. The seller makes a counteroffer, you reciprocate etc. Without the earnest money you don't even get to sit down at the table.

Laurel Racing and the Jockey Club didn't put up the earnest money. They were supposed to front $28.5 million for their bid. Now they're accusing the state of changing the slots award rules in the middle of the game. Actually, the rules were quite clear, and Laurel Racing didn't abide by them. There was reason to think that the entities that ran Pimlico and Magna into the ground would not be good bidders. When they failed to put up the bidding deposit, they proved that proposition correct. The system worked.

Posted by Jay Hancock at 5:30 AM | | Comments (3)
Categories: Slots
        

Comments

One problem with your analogy. If some buts $1000 ernest money for a house you usually do not say "ok, we'll let you have the house next door if you want it." Changing the available property from a 3 acre site set back from Russel Street to 11 acres on Russel street is not a small change.

Magna is financially banckrupt and should not qualify for that reason. Slots are "morally bankrupt" according to MOM, and we are seing that play out before our eyes in the form of sweetheart deals for the well connected.

Get the violins out for poor Joe DeFrancis and Frank Stronach, the two who have run MD racing into the ground. Maybe, just maybe Cordish is entitled to a gripe about the relocation but a gripe is all he gets because the rules of the game allow for the relocation. Let's get on with the game and let the money start rolling. Heloooo, is anyone in AA County alive and listening?

Is this the end of 400 years of horse racing in MD?
Pimlico & Laurel won't survive without enhanced gaming

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About Jay Hancock
Jay Hancock has been a financial columnist for The Baltimore Sun since 2001. He has also been The Baltimore Sun's diplomatic correspondent in Washington and its chief economics writer. Before moving to Baltimore in 1994 he worked for The Virginian-Pilot of Norfolk and The Daily Press of Newport News.

His columns appear Tuesdays and Sundays.
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