Race tracks to expand despite hurdle; legislative setback won't halt plans to diversify.

Los Angeles County's two premier racetrack companies suffered a setback last week on proposals to operate California card clubs, but officials vowed to go ahead with plans to create major retail and entertainment centers at their respective facilities.

Inglewood-based Hollywood Park Inc. and Arcadia-based Santa Anita Cos. officials said they will continue with multimillion-dollar expansion plans to diversify beyond thoroughbred horse racing, a sport which is losing fans.

Last week, two bills that would allow race track companies to operate card clubs in California failed to get the necessary votes to pass the state Assembly Appropriations Committee. Currently, publicly traded companies are prohibited from operating card clubs in California.

AB 11, sponsored by Assemblyman Phillip Isenberg, D-Sacramento, would allow any public company to operate a card club and would set up a state gaming commission to oversee California's expanding gaming industry.

AB 396, sponsored by Curtis Tucker, D-Inglewood, would specifically allow race track companies to operate card clubs. Under current state regulations, public companies can own card casinos but they cannot manage or operate the facilities.

The bills will be reconsidered by the committee in a few weeks.

Bills which would expand gambling in California have faced stiff opposition in recent years, including from Gov. Pete Wilson, who is "adamantly opposed" to expanding casino-style gambling, according to a spokesman.

But Cliff Goodrich, president of Santa Anita, was optimistic, despite the committee's failure to pass the bills. "It's a minor setback," he said in a telephone interview from Sacramento.

Goodrich said he is "hopeful" the bills will ultimately pass. In the next few weeks, the bills may be amended to quell opposition, he said.

"I don't think they (legislators) realize the importance of the racing industry in the state's economy," Goodrich said.

The horse racing industry currently, directly and indirectly, generates 30,000 to 40,000 jobs and $2 billion to $4.5 billion in annual business activity in the state, according to officials from Santa Anita and Hollywood Park.

In L.A. County, horseracing annually pumps $323 million into the local economy, according to a study by the Los Angeles Sports Council, a private/public agency that works to luret sports events to the L.A. area.

A spokesman for Hollywood Park Chairman R.D. Hubbard said plans will still move forward to build a $200 million football stadium and a $20 million retail and entertainment center on the grounds of the race track.

Last year Hubbard's company opened a card club casino adjacent to the race track, which is situated on the company's 338 acres of land in Inglewood. Hollywood Park owns the club but does not manage it.

Card club planned

Santa Anita, just last month, filed plans with the City of Arcadia to build a 1.5 million square foot entertainment-retail center adjacent to the race track.

The development is expected to include movie theaters, high-end specialty retailers, restaurants, a sports bar and an ice skating rink, and to open in 1997.

Goodrich said he has promised the Citizens of Arcadia that he would not build a card club as part of the development.

But in February, Santa Anita announced that it had purchased an option to acquire a 50 percent interest in the Bell Jackpot Casino in the city of Bell. The price paid for the option was not disclosed.

Under the terms of the agreement, Santa Anita will receive a five-year option to receive a 50 percent interest in the casino at such time that California enacts a law to allow public companies to operate casinos.

Santa Anita has time

"We still have five years," Goodrich said, after the Assembly committee failed to pass the hills which would allow the company to operate a casino.

"Our major focus is developing the Arcadia property," said Brian Fleming, chief financial officer of Santa Anita. "The card-club endeavors is our way of preparing for the expansion of gaming in California, which is going to take a while."

Industry analysts say the race track companies' plans to expand into card clubs and other forms of entertainment is important to the future of the horse-racing industry.

In recent years, as attendance and betting has flattened out at the two tracks, the owners have begun to look for new sources of revenue.

"Overall, attendance at tracks is going down about 2 or 3 percent a year and wagering on horse racing is falling at a rate of about 5 percent a year," said Gordon Hedge, a gaming industry analyst at Montgomery Securities in San Francisco. "What's happening is that operators are looking at all this land they have and the numbers for horse racing and saying that they should do something to produce more revenue."

Industry troubles are national

In a recent interview with the CBS-TV program "48 Hours," Hubbard said, "The horse-racing industry is in trouble all over the country, and we've got to make some major changes." He noted, "There's no question that we're fighting for survival."

The explosion of gambling opportunities has created a lot of competition for the horse track owners, said industry experts.

"Horse racing will continue to be our core business," said Hollywood Park Vice President of Marketing and Public Relations Rick Baedeker.

He said that if all goes according to plan, the area around Hollywood Park race track will include the card club casino, a 65,000-seat football stadium and a 28-acre retail and entertainment center.