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Sunday, November 30, 2003
Racino turmoil threatens Maine racing's revival
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After years of struggling with declining attendance and shrinking purses, Maine's horse racing industry seemed to have a brighter future on the horizon only a month ago. The Legislature had overwhelmingly passed a law to allow slot machines at off-track betting parlors, with some of the profits allocated to the racing industry. Support was strong enough to override a threatened veto by Gov. John Baldacci. Then, on Election Day, Maine voters approved a referendum allowing slot machines at Scarborough Downs and Bangor Raceway, opening the door to more cash for harness racing. But in the past few weeks, a series of events has once again threatened the industry. After Scarborough voters rejected a local referendum on Election Day to allow slot machines at Scarborough Downs, the track's owners have been in a race against the clock to find a new host community. Shawn Scott, who wants to build a racino at Bangor Raceway, went to court to block public access to records from a background check he must pass to obtain a state harness racing license. And last week, Scarborough and Bangor track owners turned on each other in another court battle over the chance to build a racino in Westbrook or Saco - just as voters are trying to decide whether to support the idea. "It has been like snatching defeat from the jaws of victory," said Robert Tardy, a lobbyist for Scarborough Downs. Reflecting a national trend, reven- ues for Maine harness racing are in sharp decline. The total amount of money bet in the state on Maine harness racing - either races viewed in person or via simulcast - fell from $12.4 million in 1997 to $9.9 million last year, a 20 percent drop. For more than a decade, the industry has seen slot machines as a way to breathe new life into a sector of gambling that is losing its audience nationwide to state lotteries and casinos. At stake in Maine are roughly 1,700 full- and part-time jobs, from horse breeders to blacksmiths. Industry officials point to other places, such as Delaware and Ontario, which allowed slot machines at their racetracks and saw their horse racing revenues rebound. In Delaware, for example, harness tracks were averaging daily purses of about $10,000 before slot machines were allowed in 1995. Now the tracks average daily purses of about $100,000. Enter Shawn Scott Three years ago the prognosis for slots at Maine racetracks looked grim. Maine voters turned down a slot machine referendum by a 3-to-2 margin. But Tardy said members of the harness racing community were convinced they could bring voters over to their side with a new, more aggressive campaign. He said the 2000 campaign, financed by late Scarborough Downs owner Joe Ricci, was not the most vigorous. Ricci spent only $80,000 on the referendum, and during the campaign he fell ill before dying in January 2001. "The fire in the belly to win the referendum had disappeared," Tardy said. By early 2002, Tardy was already at work on another proposed referendum to allow slots at the tracks. He worked with a group of investors from Newport called NTO, who hoped to team up with Bangor Raceway backers. Tardy said they had already gathered about 20,000 signatures. Then, in May 2002, Shawn Scott, a Las Vegas-based racino operator who made millions buying and selling racinos in other parts of the country, entered the picture. "Scott showed up with a pocketful of money and an offer to buy out the stock of Bangor Raceway," Tardy said. As Tardy put it, the owners of the Bangor Historic Track, who lease the raceway from the city, promptly divorced NTO and embraced Scott instead. Fred Nichols, one of the group of investors that owns Bangor Historic Track, said he and his partners were eager to work with Scott because they had concluded another referendum was going nowhere. Nichols said as far as he could determine there was no one with enough money in Maine to wage the kind of expensive campaign needed to win voter approval. "Mr. Scott was the first and only one to arrive on the scene, the only one willing to start from scratch and get a referendum under way and get it approved," Nichols said. Nichols said investors had been struggling for years to keep the financially strapped racetrack afloat. "We kept her in a holding period until something dynamic came along," he said. Scott's plans were dynamic. He proposed financing a new referendum to allow slot machines at the track and spending $30 million to transform it into a combination racetrack and casino, complete with a new grandstand, stable and clubhouse, a hotel-conference center with 250 luxury suites, a restaurant and parking for 2,500 vehicles. Nichols and his group sold Scott's company, Capital Seven LLC, a 49 percent share of Bangor Historic Track, with an option to buy the rest after he obtained a state harness racing license. It was Scott's willingness to put up the cash that won over the horse racing industry. "We thought he was going to be a savior," said Sandra Hall, who owns Cranberry Meadow Farms, a 30-horse farm in Berwick, and is a member of the Maine Harness Racing Promotion Board. Scott then approached Bangor city officials with his plan. He won local voter approval for slots and eventually reached an agreement with the city to invest $30 million in the track and share a percentage of the slot revenues. Harness racers were eager to get involved in the drafting of the racino referendum proposed by Scott, said Tardy, the Scarborough Downs lobbyist. But when they finally got to see the draft of Scott's racino law, just a day or two before Scott filed the referendum language with the secretary of state, they were disappointed. Edward MacColl, lawyer for Scarborough Downs, said the proposed law failed to address a number of issues, such as allowing slot machines at off-track betting parlors, which the industry considered crucial. MacColl said he also asked Scott to extend a deadline for local approval of slot machines from Dec. 31, 2004, to Dec. 31, 2005. Scarborough's city council had already turned down a request by the track for slot machines, and MacColl said track owner Sharon Terry hoped to gain more time to try to reverse their decision and win public support. But the final racino referendum bill shortened the deadline by a year, rather than extend it. Slots at OTB parlors Tardy said the racing community was worried that a racino only in Bangor would not do enough to revitalize the industry. So the racetrack owners and horsemen went to the Legislature with a proposal to allow slot machines in off-track betting parlors, as well as at the tracks in Bangor and Scarborough. Because the racino referendum already contained language to allow slots at the two tracks, lawmakers amended the bill to allow slots at off-track betting parlors only, and to increase the maximum number of parlors to 10. The bill sailed through the Legislature last June by more than a two-thirds vote. Over the summer, Scott, Scarborough Downs, most of the five off-track betting parlors and representatives of the racing community and agricultural fairs hammered out an agreement that details how they would lobby the Legislature, the governor and others to make changes in the racino law after Election Day. The plan included asking lawmakers to extend the deadline for a local referendum on racinos, as Scarborough Downs had sought in the original bill. Racing and slot machine backers also wanted to remove language that limited the location of any racino to within five miles of the existing racetracks. The agreement also called for all of the parties to give Scott their "complete and unequivocal" support when the Maine Harness Racing Commission considers his moral character and financial suitability as part of his application for a harness racing license and race dates at Bangor Raceway. In addition, the industry agreed to seek increases in the percentage of slot machine revenue that would go to harness racing purses, agricultural fairs and the Maine sire stakes fund. The 11-page agreement was submitted to Henry Jackson, the executive director of the harness racing commission, on Oct. 27. It wasn't forwarded to the governor's office until Nov. 5, the day after the election. In the ensuing weeks, cooperation among track owners and horsemen has broken down. After Scarborough voters turned down slot machines in their town, Scarborough Downs began a quest to find another host community within the required five-mile radius of the track before the Dec. 31, 2003, deadline. At one point Scarborough Downs was talking about a possible partnership with Scott to operate the slot machines at its track. But those talks abruptly ended earlier this month. Scott optioned his own parcel of land in Saco, where Scarborough Downs was also eyeing property for a new track. Background check Last week, Scott sued Scarborough Downs, claiming the track violated the terms of an oral agreement to work together on a racino. He accused the track of using information he produced and paid for when it joined with a competitor, Penn National Gaming Inc., to pursue a racino in Westbrook. Also last week, Scott was linked, at least indirectly, with an anti-racino campaign aimed at Scarborough Downs' potential host communities by a political action committee called Good Morals for Maine. Scott said he had no personal knowledge of the organization. He said the committee was formed by an overly zealous employee. More information about Scott and his business dealings may come to light during the week of Dec. 15, when the harness racing commission takes up his racing license application and reviews his background check. But how much the public will learn about him is not at all clear. He filed another lawsuit last week to prevent Agriculture Commissioner Robert Spear, who oversees the commission, from releasing records related to Scott's background check. Spear was responding to a Freedom of Access law request by the Portland Press Herald/Maine Sunday Telegram, the Associated Press and Maine Public Radio. The Maine Supreme Judicial Court on Wednesday stopped the release of a background check, at least temporarily. The court is scheduled to decide Monday whether to allow release of the records while it is considering the track's appeal. In recent weeks some Bangor city councilors have had second thoughts about the deal they made with Scott. Some of the councilors have launched a petition drive to have another referendum on whether to allow slots at the track - in part because an Iowa-based casino operator has offered the city a better deal than Scott. But legislative support for the off-track betting parlor bill may be eroding. A recent survey of two dozen legislators showed interest may have cooled enough to prevent an override of Baldacci's veto. Tardy said the events of the past few weeks have been tumultuous for the industry. Still, he said, he has hope that the horse racing industry will survive, at least for awhile. But, he said, it could be that even slot machines will eventually go out of fashion. Just as people lost interest in horse racing with the advent of lotteries and casinos, he said it may be that those too fall out of fashion in favor of betting from the comfort of one's home by telephone or the Internet. "They can smoke a cigarette at home and drink their beer without worrying about an OUI," he said. Fred Nichols, the Bangor Historic Track investor, said he has not given up hope. "This project will happen," he said. Staff Writer Beth Quimby can be contacted at 324-4888 or at:
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