An investment or a gamble?

The Maryland General Assembly will be asked during its upcoming session to place a $375 million bet on the future of horse racing in Maryland. And it will be asked to do so at a time when the odds of horse racing surviving as a viable industry are dropping rapidly.

The City of Baltimore and The Stronach Group announced last month that they had reached a deal that would keep the Preakness Stakes in Baltimore. Stronach owns Pimlico Race Course in the city, Laurel Park in Anne Arundel County, and the right to run the Preakness.

Amid the rejoicing by politicians and editorial boards over the prospect of the second jewel of horse racing’s triple crown staying in the city was nary a mention that horse racing faces not one but two existential threats. Ignoring the threats will be at the taxpayers’ peril.

The deal to keep the Preakness in Baltimore calls for the state to invest $375 million in racetrack construction. About $200 million would be used to rebuild Pimlico Race Course and about $175 million would go toward renovating Laurel Park in Anne Arundel County.

The Stronach Group would continue to own Laurel, but ownership of Pimlico would be transferred to the city or state, which would lease it back to Stronach for the Preakness. About $27 million of the $375 million would come from money in the state’s Racetrack Facilities Renewal Fund. The rest, $348 million, would be raised by the sale of bonds issued by the Maryland Stadium Authority and repaid by the state over a period of 30 years.

The problem is that no one knows whether horse racing will survive as anything other than a niche industry for the next five years, let alone the next 30.

Two factors have caused the strength of the headwinds facing the industry to increase dramatically. One is competition from legalized sports betting. The other is the growing sentiment that horse racing is inhumane and should be banned.

Competition from legalized sports betting

In 2018, the Supreme Court sent shockwaves through the horse racing industry when it struck down a federal law that banned commercial gambling on sports other than horse racing, dog racing, and jai alai in most states. Some states, including New Jersey, Pennsylvania and West Virginia, already have responded to the decision by legalizing sports betting, including online betting. The Maryland General Assembly is poised to take up the issue in the upcoming session.

The consensus is that legalized sports betting will have a negative impact on horse racing revenues by reducing track attendance and betting handles, although it is too early to tell how significant the impact will be.

The effect in Maryland would depend on which land-based facilities (casinos, racetracks, off-track betting locations) are permitted to offer sports betting, and whether online betting is approved.

Even optimists within the industry acknowledge that it will have to change to survive, believing, for example, that pari-mutuel wagering will have to give way to fixed odds wagering to compete with sports betting. There is no doubt that horse racing in Maryland faces major challenges to its financial model if sports betting is legalized in the state.

Public concern over the mistreatment of racehorses

Even if horse racing can withstand the competition from legalized sports betting, there is a darker cloud on the horizon: An anti-horse racing movement that is gaining momentum.

For anyone concerned about the future of horse racing, the headline of ESPN’s story about the marquee race of the Breeder’s Cup in California earlier this month was ominous: “Breeders’ Cup ends with death of 37th horse at Santa Anita.” ABC captioned its account of the race “Breeders’ Cup, the Super Bowl of racing, marred by another horse’s death at Santa Anita.”

It was the rash of equine fatalities during the 2019 racing season at Santa Anita, owned by Stronach, that propelled animal cruelty accusations into the mainstream media. In April, Sports Illustrated published a story by one of the country’s most prominent sports journalists, Tim Layden. He described the deaths as horse racing’s “biggest problem.” Layden observed that, although there have been “surges of awareness” in the past about the sport’s toll on horses, “this does not feel like a blip.”

In May, National Geographic ran a story titled “Why horse racing is so dangerous.” Ironically, the story featured a photograph of horses running at the 2017 Preakness. There have been many similar stories, and even The New York Times weighed in with a piece captioned “Horse Racing Deaths Threaten the Racing Industry. Is the Sport Obsolete?”

Although the deaths at Santa Anita drew the most attention, it is hardly the only racetrack where they occur. Last month, USA Today reported that its research revealed that an average of more than 600 thoroughbreds a year died because of racing over the past decade.

And then there are the slaughterhouses. USA Today also pointed out that an estimated 7,500 thoroughbreds end up in slaughterhouses in Canada and Mexico after their racing careers are over, with the horse meat shipped to Europe and Asia for human consumption. A previous study calculated that 70% of thoroughbreds bred in the United States end up in slaughterhouses.

The thoroughbred industry, led by Stronach’s president, Belinda Stronach, has been working to burnish the sport’s public image by making it more humane. It may be too little, too late.

Animal rights protests now routinely accompany racing events even in Kentucky, the de facto capital of horse racing in the United States. If anti-racing sentiment reaches a flash point on social media it will only be a matter of time before its impact on the industry becomes catastrophic.

Stop and think

There is a story about an exchange that took place during the first meeting of the Board of Public Works presided over by newly elected governor William Donald Schaefer. Schaefer favored quick action on an agenda item, explaining that as mayor of Baltimore he had a saying, “do it now.”

The state comptroller, the venerable Louis L. Goldstein from Calvert County, replied that in Southern Maryland they had another saying, “stop and think.” This is a stop-and-think moment for the General Assembly.

The threats to horse racing posed by legalized sports betting and the perceived mistreatment of racehorses could accelerate the decades-long decline in the popularity of horse racing. Attendance at racetracks is becoming increasingly geriatric. Suffice to say that the availability of online sports betting and a reputation for animal mistreatment will do nothing to attract a younger crowd.

The deal allows Stronach to divest itself of Pimlico, a derelict racetrack that it doesn’t want. The state would take on the responsibility for building, operating, and maintaining a new Pimlico. The state also would assume the risk of the rebuilt racecourse becoming an expensive white elephant if horse racing revenues tank, putting enormous pressure on the state to increase industry subsidies to protect its investment.

I am not saying that the above concerns necessarily make the proposed deal a bad one. I am saying that it would be absolutely reckless of the General Assembly not to consider them in the course of ensuring that the deal is an investment rather than just a gamble.

[Published as guest commentary by Maryland Matters on November 15, 2019 but not posted to my blog until December 19, 2019. The date of posting that appears above was backdated to place all posts in the order in which they were written.]

Maryland public records board needs more teeth

Many reports done by agencies in the executive branch of state government at the request of the Maryland General Assembly are perfunctory and of limited value. That is not the case with the preliminary report on the Maryland Public Information Act (PIA) by the Public Access Ombudsman and Public Information Act Compliance Board. Their report, issued Nov. 6th, is thorough and thoughtful, detailing shortcomings by state and local government agencies in complying with the PIA.

The report makes two excellent recommendations that should be enacted into law at the upcoming session of the General Assembly. The first is authorizing the compliance board to issue binding decisions on PIA disputes that are not resolved after mediation or attempted mediation with the ombudsman.

That would give persons seeking public records a much quicker and far less expensive remedy than filing lawsuits when requests are denied by records custodians. Under current law a requester may ask for mediation of a dispute but has no recourse to compel compliance with the PIA other than going to court.

The ombudsman and board observed that many routine PIA disputes involve simple fact patterns and the application of a limited body of law not requiring complex judicial proceedings to resolve. They also believed that over time the board’s decisions would lead to a body of published opinions serving as guidance to both requesters and agencies that could reduce the number of disputes.

Based on my experience inside and outside of government, I am confident that implementation of this recommendation by the General Assembly would go a long way toward combating an unfortunate tendency by some state and local agencies to slow-walk and even deny appropriate requests for records. Delay or denial too often is used to protect agencies from public scrutiny. Agencies, backed by taxpayer-funded attorneys, are well aware that the expense of lawsuits can deter even established news organizations from pursuing access to records through the courts.

The second recommendation is that state and local agencies be required to adopt a uniform self-tracking and reporting system to monitor the timeliness of their compliance with the PIA. About 20% of the mediation caseload involves long overdue or missing responses. Based on that experience and on survey data from state and local agencies, the ombudsman and board concluded that many agencies are not adequately tracking PIA requests, leading to tardy responses and other compliance issues.

It may be that sanctions ultimately will have to be added to the law to get some agencies to respond to requests in a timely manner. It makes eminent sense, however, to first gather reliable data on the scope of the problem. Also, the prospect of having to record and disclose their non-compliance alone is likely to induce agencies to improve their performance — a prediction based on the beneficent effect of sunshine illuminating the internal workings of government and a principle at the core of the PIA.

It is important to keep in mind that access to public records is a means to an end, not an end in itself. The goal of the PIA is not simply to satisfy someone’s idle curiosity; it is to enable citizens to gather the information necessary to hold government agencies accountable.

It’s a simple proposition: Without a properly functioning PIA, there is no public accountability. And the absence of public accountability is an invitation to mediocrity and corruption in government.

There is more good news: The compliance board projects that if given the authority to issue binding decisions on PIA disputes it can handle the increased workload by adding only two employees. That is an incredible bargain when considering the savings in time and money not only to citizens and the members of the news media but also to government agencies from a streamlined mechanism for resolving PIA disputes.

On one more positive note, it is gratifying to see the interests of the general public taken so seriously by the ombudsman and the PIA compliance board. Suffice it to say that not all state and local agencies share their commitment to the goals of open and transparent government.

I trust that the final report issued by the ombudsman and compliance board will include the two recommendations described above. If it does, I urge the General Assembly to implement them as quickly as possible.

[Published as an op ed by the Baltimore Sun on November 13, 2019 but not posted to my blog until December 18, 2019. The date of posting that appears above was backdated to place all posts in the order in which they were written.]

Scrutiny Required for County Attorney Nominee

The appointment of James R. Benjamin, Jr. by Baltimore County Executive Johnny Olszewski to be the new County Attorney is subject to confirmation by an affirmative vote of at least four of the seven members of the County Council. If fewer than four members vote in favor of confirmation the appointment is rejected. The council has scheduled a public hearing on the proposed appointment of Mr. Benjamin on November 12th and a vote on November 18th.

It is absolutely essential that the County Council interview Mr. Benjamin at the hearing on November 12th and exercise its independent judgment when it votes whether or not to confirm his appointment on November 18th. I couldn’t agree more with the sentiment expressed by Councilman David Marks.

Mr. Marks told the Baltimore Sun that he expects the council to put “more scrutiny” on this appointment than seen with other appointments, because the county attorney sometimes will find himself in the middle of disputes between the county executive and county council on how an issue should be handled. According to Mr. Marks: “It is somewhat unique that he is the legal advisor to both the council and the executive, and for that reason I believe there will be some in depth discussion about his appointment.”

The position of county attorney is unique. The county attorney is the legal advisor to both the county executive and the county council. The requirement that the county attorney provide objective legal advice to both branches of county government is one of the checks and balances on executive and legislative power built into the county charter.

The Baltimore County Charter, like most county charters in Maryland, specifies that with limited exceptions “no office, department, board, commission or other agency or branch of the county government shall have any authority or power to employ or retain any legal counsel other than the county attorney.” The intent of the charter is that all county officials get the benefit of the best possible legal advice the county has to offer, and that the county attorney serves as an honest broker when there are legal squabbles among agencies and officials.

There are times when a county attorney must opine on whether a proposal by one branch or the other of county government exceeds its authority. The accuracy of such an opinion is an essential check on governmental power, and the credibility of the opinion depends on the reputation of the county attorney for impartiality and objectivity.

A principle that is sound in theory, but challenging in practice

The concept of getting legal advice from a single, competent source is sound in theory. While there is a place for the adversary system of justice, it is not within the internal workings of local government. Two things, however, are required for the principle to work in practice: A county executive who understands and accepts the proper role of the county attorney and, more importantly, a county attorney with the integrity to adhere to that role under pressure.

The county and its agencies are the clients of the county attorney, not the individual county officials through which the county acts. When rendering advice and issuing opinions as required by Section 508 of the county charter to those officials who act in various capacities on behalf of the county, the county attorney is under an ethical duty in each instance to “exercise independent professional judgment and render candid advice” as set forth in the Maryland Attorneys’ Rules of Professional Conduct.

To Mr. Marks and other members of the County Council:

Ask Mr. Benjamin at his confirmation hearing if he understands and accepts the role described above. Would he be willing to tell the council when a measure proposed by the county executive is outside the limits of the law? Does he concur that he would have an ethical duty to render candid advice to the council even if the county executive disapproves of the advice?

Yes, the county attorney is under a duty of candor as a matter of law, but it is important to hear him acknowledge it in his own words, on the record. Let there be no doubt of Mr. Benjamin’s personal commitment to the requirements of the job, the most important of which is integrity.

To Mr. Benjamin:

Don’t take the job unless the county executive assures you that he understands and accepts the role of the county attorney as described above. And, even if given such assurance, refuse the position unless you’re willing to adhere to that role in the event that he changes his mind.

Yes, the job is a good one and the salary, $225,000, is attractive. But for the sake of the citizens of Baltimore County walk away from the job unless you are prepared to give advice to one branch of government that the other branch of government doesn’t want to hear.

To Mr. Olszewski:

Please tell both Mr. Benjamin and the county council that you expect Mr. Benjamin to be as candid in his advice to the county council as he is in his advice to you. Tell them that you don’t expect personal loyalty from Mr. Benjamin; you expect him to be loyal to the duties of his position and the ethical tenets of his profession.

Yes, there may be a time or two when his candor with the council throws cold water on something that you want to do. But in the long run having a county attorney with a reputation for integrity and independence of judgment will inure not only to your benefit, but also to the benefit of county citizens.

[Published as guest commentary by Forward Baltimore on November 5, 2019 but not posted to my blog until November 5, 2019. The date of posting that appears above was backdated to place all posts in the order in which they were written.]