Accusations of irresponsible spending and an abrupt restructuring of the central power overseeing Maryland thoroughbred racing haven’t changed the industry’s most pressing challenge: making the economics work.

The state paid a premium last year to wrest control of daily horse racing from an unpopular operator, arguing that a state-funded rebuild of the historic but decaying 155-year-old Pimlico Race Course would help make the industry financially stable.

Maryland also installed a new nonprofit operator. Adopting the historic name of the “Maryland Jockey Club,” that nine-member board was formed Friday, and it will oversee an ambitious plan to operate racing in the state.

That‘s easier said than done. Despite public subsidies, horse racing is furlongs away from its 20th century heyday.

Foal crops are down, interest has waned and substantially fewer dollars are gambled annually on horses than in years past, meaning less revenue for the most storied U.S. sport.

Even the Preakness Stakes — a beloved Baltimore tradition that will be held Saturday for the final time at the original “Old Hilltop” — has not been profitable in recent years.

Equipped with a rebuilt Pimlico, the new Maryland Jockey Club will try to reverse that trend, while paying roughly $5 million every year to the old operator, The Stronach Group, for the right to operate the Preakness.

Maryland officials and industry leaders have long grasped for a solution to the economic quagmire that is Maryland racing. Most glaring was Pimlico’s dilapidated condition.

“This has been an issue since I first came to Annapolis, literally 30 years ago,” State Treasurer Dereck Davis said last week.

But even as he questioned whether further state investment was simply “a pipe dream,” he, Gov. Wes Moore and Comptroller Brooke Lierman approved another step in the plan to rebuild Pimlico at long last.

The project to reconstruct Pimlico in Park Heights, as well as build a training track in Carroll County, was often reported last year as costing $400 million, but the budget for the projects actually tops $500 million in state funds.

Making that price tag work has always been tight — and that was before President Donald Trump‘s tariffs caused the likely rise of construction costs.

But supporters hope the opening of a shiny venue will coincide with break-even operations.

“I wouldn’t be here if I didn’t think it was feasible,” said Bill Knauf, the new nonprofit‘s president. A 26-year veteran of Monmouth Park in New Jersey, Knauf uprooted to move to Maryland.

Efforts to revitalize Maryland racing have been proposed and fizzled before.

During an update on the Pimlico project at an April meeting of the Maryland Stadium Authority, one board member, former state delegate Maggie McIntosh, leaned over to another to quietly share an aside that reflects the feelings of many frustrated Marylanders.

“Just get it done,” she said.

Carefully counting $500 million

Five years ago, the Maryland General Assembly agreed on a plan to revitalize both Pimlico and Anne Arundel County’s Laurel Park. But before any shovel touched dirt, the project ran over budget, and the industry returned to a familiar place: square one.

Then, in 2023, the state legislature created the Maryland Thoroughbred Racetrack Operating Authority to both stabilize the industry and chart a path forward.

Moore tapped Greg Cross, a Baltimore-based Venable attorney with relevant experience, to chair the board.

Initially legislated to exist until 2027, but later changed to 2029, the authority was abruptly and prematurely sunsetted and will cease to exist at the end of next month. The Maryland Stadium Authority and the Maryland Economic Development Corporation will take over the authority’s responsibilities.

During a Maryland Stadium Authority meeting last week, board member William Cole chastised the soon-to-expire racing authority. He called for a “deep dive” audit of its spending and criticized its use of state money on “nonessential items” including “duplicative efforts.”

Cross has countered that the racing authority operated “lean and mean” and spent well below the money it was allocated by the state. Hired consultants’ efforts were not duplicative, Cross said, and focused on design and operational issues outside the stadium authority’s scope.

Cole’s concerns, however, underscore how tight the budget is expected to be. Gary McGuigan, an executive vice president with the stadium authority, has called the entire Pimlico rebuild “the most complex undertaking” in the authority’s 39-year history.

As Pimlico and the training track are simultaneously constructed, the 2026 Preakness will be held at Laurel Park. The goal is to return the Preakness Stakes at a rebuilt Pimlico in 2027 — as long as the construction timeline holds.

Treading water until 2027

The last several years have featured start-and-stop efforts and failed plans. Now, the hard part begins.

The Stronach Group, a Canadian company also known as 1/ST, had run Maryland racing since 2002. 1/ST often was blamed for the industry’s issues, but racing’s solvency now lies with the newly formed nonprofit, and ultimately the state.

“You go from one difficult challenge to another,” said Alan Foreman, general counsel for Maryland’s horsemen. “But the difference here is, rather than being at the mercy of a third-party operator, we get to be in charge of our own destiny.”

First up in the quest to balance the books: cutting costs by holding fewer racing days. This year, Maryland will only see 127 days of racing, down from 187 as recently as 2019.

While the Maryland nonprofit now controls day-to-day racing, 1/ST will operate the Preakness this year and next. That means the state misses out on a potential cash cow, making it nearly impossible to break even.

Preakness has lost money in recent years, according to 1/ST, but many in the industry see it as an underperforming asset that, with better management, could return to being a breadwinner.

To keep the nonprofit afloat until it can run its own Preakness, the state legislature last year earmarked $10 million in state funds as working capital.

Pimlico’s shortcomings have been ridiculed ad nauseam. The hope is that with a new venue comes renewed profitability.

“Obviously, everybody is very excited for 2027,” Knauf said.

How lucrative the Preakness can be remains to be seen. One figure, however, is already known: a subtraction of roughly $5 million.

As part of Maryland’s agreement with 1/ST, which owns the Preakness, the nonprofit will pay $3 million annually for the rights to Preakness, plus 2% of the total money wagered over Preakness weekend (a figure that will likely be about $2 million, based upon recent handle).

1/ST will go from losing money annually on racing in the state to making a risk-free $5 million.

Stuart Janney, a prominent thoroughbred owner based in Maryland, described the payment as an “unjust reward.”

If racing operates in the red, the nonprofit will need to save money by cutting racing days or lowering prize money. That could lead to a disastrous spiral, however, as weaker purses means lower-quality horses competing, which results in fewer gambling dollars and less revenue.

To avoid that snowball effect, the Maryland Jockey Club will simply need to make enough off of the Preakness to break even.

“Even though there is some arrangement with a licensing fee to 1/ST, the Preakness is obviously a world-class event, generates millions and millions of dollars, and that is, by far, the biggest revenue generator that we’re going to have that will sustain us,” Knauf said, noting other revenue streams will also supplement it. “That should make us financially viable.”

Banner reporter Pamela Wood contributed to this article.