Maryland Faces Scrutiny Over Preakness Stakes Intellectual Property Sale to Churchill Downs

On April 21, 2026, Churchill Downs Incorporated (CDI) announced a definitive agreement to acquire the intellectual property rights to the Preakness Stakes and Black Eyed Susan Stakes from 1/ST Maryland LLC, an entity controlled by the Stronach family as part of The Stronach Group. This transaction has raised significant questions regarding Maryland’s role and financial commitments in the horse racing industry, particularly given the state’s prior investments.

Maryland has committed over $500 million toward revitalizing Pimlico Race Course and supporting the local horse racing industry. Despite this, the intellectual property (IP) rights to two of the state’s most prominent races remain privately owned. This arrangement stems from an Exclusive Use Agreement dated June 28, 2024, under which Maryland agreed to lease the Preakness IP from Stronach as part of a broader deal transferring ownership of the Pimlico facility to the state.

Under the lease terms, once Maryland began operating the Preakness in 2026, it would pay an annual fee comprising a base amount of $3 million—subject to a 2.5% compounded annual increase—plus 2% of the betting handle on both the Black Eyed Susan and Preakness race days combined. For context, had this fee been payable in 2025, it would have totaled approximately $5.7 million. Notably, these fees are payable "off the top," regardless of Maryland’s profitability in running the races. Moreover, the fee tied to the betting handle escalates as wagering increases, effectively allowing CDI to benefit directly from Maryland’s success in promoting the events.

With the proposed sale of the IP rights to CDI, Maryland would be paying these fees to the owners of the Kentucky Derby, a competitor in the horse racing market, as well as Colonial Downs, which has occasionally competed with Maryland’s racing interests. This financial obligation is in addition to the state’s substantial capital outlays, including the purchase and redevelopment of Pimlico, investments in Laurel Park as a training facility (currently under legislative review), and sunk costs associated with the now-defunct Maryland Thoroughbred Racetrack Operating Authority and the abandoned Shamrock Farm project.

The timing of the IP sale announcement coincided closely with the Maryland Stadium Authority’s board approval of the purchase of Laurel Park from Stronach, adding to concerns about the coordination and transparency of these transactions.

Despite Maryland’s considerable leverage over Stronach, including statutory quick-take authority over Stronach’s assets, the state agreed to lease the IP rather than secure ownership. Questions remain about whether an independent appraisal of the IP’s value was conducted prior to the lease agreement and, if so, what the findings indicated.

Maryland Code Business Regulation Section 11-520, which addresses penalties for transferring the Preakness Stakes out of Maryland, effectively imposes no penalty, raising speculation that Stronach may have anticipated monetizing the IP through a sale to the highest bidder. This possibility prompts criticism of the May 15, 2024, Board of Public Works meeting, where no inquiries were made regarding the IP lease or its implications.

The statute grants Maryland a 60-day right of first refusal to purchase the IP on the same terms agreed to by CDI. The state appears to be considering exercising this option, which would require an additional investment of approximately $85 million or continuing to lease the IP from CDI under terms similar to those with Stronach.

This potential expenditure raises critical questions about fiscal prudence. With no guarantee of long-term success for Maryland racing, an $85 million investment would bring total state spending to around $600 million, with uncertain returns. Alternatively, a partnership with CDI could secure a guaranteed 120 days of racing annually and revenue tied to Preakness performance, potentially offering a more stable outcome for both the industry and taxpayers.

Critics argue that Governor Wes Moore should have engaged Maryland citizens more directly on these matters, providing comprehensive information to enable public input on whether such a significant investment in horse racing is justified. Transparency and accountability from the governor and legislature are urged before any further decisions are made.

Editorial Advisory Board members Nancy Forster and Julie C. Janofsky did not participate in this opinion. The Daily Record Editorial Advisory Board comprises legal professionals who offer independent perspectives on issues affecting the bench, bar, and public. Community members are invited to contribute letters or columns responding to the board’s views.