'Risky bet'? Question 2 would add 2 racinos in Maine, create opportunity in Scarborough

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SCARBOROUGH — Supporters say it would be a boon to the economy and the tradition of harness racing in Maine. Opponents say it would make its owners a fortune, but have a negative effect on local economies.

Either way, officials in Scarborough say Question 2 on the Nov. 8 ballot could create a great opportunity to redevelop prime property along Interstate 95 and Route 1.

The referendum will ask voters throughout the state to allow two proposed harness racing tracks – one in Biddeford and one in Washington County – to also offer slot-machine gambling. If the referendum is approved, Scarborough Downs, a 60-year-old harness racing track off Route 1, will close and move to Biddeford.

In Scarborough, that could mean the redevelopment of the 485 acres now owned by Scarborough Downs.

“The Downs is part of Scarborough’s heritage,” said Harvey Rosenfeld, president of the Scarborough Economic Development Corp. “As you lose something like that, you take something away from the community historically, which I hate to see. But as Scarborough continues to attract residential growth, we have to find a way to pay for the services people want. The development possibilities there are beneficial to that end.”

An investment in Maine

Last November, Biddeford residents approved the construction of a racino in their city.

If voters statewide approve the racino question this year, proponents promise 800 temporary construction jobs to build the facility and another 500 full-time positions to staff the Biddeford racino and accompanying resort hotel and entertainment facility.

Crystal Canney, a spokeswoman for the Yes on 2 campaign, said the full-time jobs will offer an average salary of about $35,000 per year and health benefits.

Scarborough Downs and its racino partner, Ocean Properties LLC, say their racino will attract customers from throughout northern New England and Canada, and will boost business for local restaurants, hotels and shops.

Proponents also argue that their racino proposals would support Maine’s harness racing industry with purse supplements and by protecting the need for 1,500 jobs in harness racing and accompanying industries – people like stable employees, hay farmers and veterinarians.

In Maine, a portion of net slot machine income is earmarked for various state funds. According to a May report from the Legislature’s Committee on Veterans and Legal Affairs, the two racinos are expected to contribute more than $10 million to supplement harness purses and more than $3 million to support agricultural fairs in the state.

Supporters also say hefty sums will be awarded to various state programs. More than $2 million is expected for University of Maine scholarships, more than $1 million for community college scholarships, and $34 million is slated for the state’s General Fund. 

The committee also said it doesn’t expect the presence of two additional racinos to reduce business at Maine’s only operating racino, Hollywood Slots in Bangor.

Canney said racetracks that have combined other forms of gaming in states like Pennsylvania, Delaware, Maryland and New York have flourished. Hollywood Slots raked in $61.6 million in net slot income in 2010, according to documents filed with the state Gambling Control Board. Of that, $28.3 million was earmarked for state funds.

Ed McColl, attorney for Scarborough Downs, said he’s seen the booming business that combined racinos attract.

“I went to the original Penn National race course (in Grantville, Pa.) last January,” McColl said in a recent interview. “They recently added a gaming facility and have a full-fledged racino. They knocked down and rebuilt their grandstand with tiered dining and seating. I showed up at a Saturday evening and asked for a table for two, and I couldn’t get it.”

A raw deal for Maine?

Opponents of Question 2 say the complexes are a threat to local economies and question whether the money raked in by the proposed racinos will really do anything to help Maine’s struggling harness racing industry.

“We’ve heard all of these arguments in 2003 (when voters approved the racino in Bangor), about how this was going to be an economic engine in Bangor and revive harness racing,” said Dennis Bailey, spokesman for CasinosNo!, a group lobbying against casino expansion in Maine.

“It’s a scam for these owners to get a lot of money out of people,” he said.

State harness racing bets and attendance are down, even after the opening of Hollywood Slots in 2008 and the money it pumped into the harness racing industry. Since 2007, the Bangor racino has contributed more than $35.1 million to the harness racing industry in Maine. That money has supplemented purses and gone to general funds used to boost the sport.

Despite all that money, live bets in Maine dropped 43 percent from 2003 to 2010. Money bet on Maine races at off-track betting facilities also dropped, by 50 percent, since 2003.

Charles Colgan, an economist at the University of Southern Maine, also wondered whether slot machines would do much to meaningfully help the struggling harness racing industry.

“You’ve got a product with a falling demand, and you try to diversify around it to increase the attractiveness of it,” he said in a recent interview. “That’s one of the oldest strategies in the book.”

But, he said, the demand for gambling opportunities in Maine is relatively stable, and the supply to meet that demand keeps growing with each new casino allowed in the state – not to mention the lotteries, bingo and travel to other “destination” casinos, like Foxwoods in Connecticut.

“If there were no other gambling except at horse racing tracks, as there once was, then adding slot machines would clearly be a boon,” Colgan said. “But today, with the population of gamblers not growing and more competition coming up, it’s a risky bet.”

Bailey also said people should think twice before agreeing to allow the racinos because of the promise of money for the state.

“It’s a misnomer to think the state makes out well here. It’s the track owners and horse owners,” he said. “It’s just a bribe. It’s pennies compared to what the track owners will get.”

Last year, Maine’s harness racing industry received more than $9.8 million from Hollywood Slots revenue, according to the state Gambling Control Board. Money sent to other state-designated funds totalled $17.9 million.

The one area where CasinosNo! says it agrees with backers of the proposed plan is on job creation.

“There’s no question that it’s jobs,” Bailey said. “… I don’t know any other business that comes to town and must immediately devote money to the addiction programs.”

An opportunity for the future

Scarborough town officials and Scarborough Downs owner Sharon Terry have been in talks to develop a plan that fits in with the goals set in the town’s Comprehensive Plan and also makes the parcel attractive to potential buyers.

Currently, most of the Scarborough Downs land is in the town’s B2 Business zone, which allows for large-scale retail and strip malls. Town Manager Tom Hall said that when the zoning was done 10 years ago, that was the direction the economy was headed. But with the recession, he said a new approach is needed.

“The economy has turned 180 degrees,” Hall said. “Ten years ago, big boxes were the thing. But they’re not building them anymore.”

Scarborough Downs is in an area the Comprehensive Plan calls “The Crossroads Mixed Use Development District.” The plan describes the district as “the new heart of Scarborough,” and calls for the development of efficient neighborhoods, small retail (and no big-box stores), municipal and community service uses, recreational facilities and business and professional offices.

“This is an opportunity that the town has been looking forward to,” said Ed McColl, Scarborough Downs’ attorney. “A largely blank 500-acre canvas right by the Maine Turnpike gateway to town with an owner who’s willing, if she’s relocating, to work with the town to help paint a picture for the development they want.”

Hall said the the location of the Downs, operation of which takes up about a quarter of the parcel in the center of the property, has made it hard for Terry to sell other portions of the land to developers. If Question 2 passes and the Downs moves to Biddeford, development becomes easier.

“The nostalgia and history of having Scarborough Downs in Scarborough is legendary in the state,” Hall said. “That will be a loss. But from a development point of view, it may ready the site for quicker development than it might be otherwise.”

Over the past five years, Scarborough Downs has paid nearly $600,000 in property taxes. That’s a large sum, but falls far short of Piper Shores, the town’s No. 1 taxpayer, which paid nearly $770,000 just last year.

“It’s not insignificant, but I don’t believe it’s even in the top 10 of our tax payers,” Hall said. “The plan we’re talking to them about has the potential of adding vast additional value.”

Colgan, the USM economist, agreed that Scarborough may be in the best position to benefit if Question 2 is passed and Scarborough Downs moves to Biddeford.

“It’s a fast-growing, essentially urban community with a lot of office space and commercial industrial space,” he said, “so that land will probably be used pretty quickly once the economy gets going again.”

Mario Moretto can be reached at 781-3661 ext. 106 or mmoretto@theforecaster.net. Follo him on Twitter: @riocarmine.

Sidebar Elements

A preliminary sketch design of the proposed Biddeford Downs harness racing and slot-machine resort, or “racino.” Question 2 on the Nov. 8 ballot will ask Mainers whether they approve the construction of the racino in Biddeford, and another in Washington County.