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[MEC LOGO] Magna Entertainment Corp.
337 Magna Drive
Aurora, Ontario,
Canada L4G 7K1
Tel (905) 726-2462
Fax (905) 726-7172
EXHIBIT 99
PRESS RELEASE
MAGNA ENTERTAINMENT CORP.
ANNOUNCES THE PASSAGE OF ALTERNATIVE GAMING
LEGISLATION IN PENNSYLVANIA
JULY 4, 2004, AURORA, ONTARIO, CANADA......MAGNA ENTERTAINMENT CORP. ("MEC")
(NASDAQ: MECA; TSX: MEC.A) is pleased to report that the Pennsylvania Senate and
House of Representatives have passed the Pennsylvania Gaming Act. The
legislation is expected to be signed by Governor Edward Rendell within the next
week and will become effective immediately at that time. It is contemplated
that, over the coming months, the Commonwealth of Pennsylvania will continue to
develop the associated regulations and will form the Pennsylvania Gaming Control
Board to oversee the license application process and, ultimately, slot
operations.
In making the announcement, Jim McAlpine, President and Chief Executive Officer
of MEC, stated: "The legalization of alternative gaming at racetracks will have
a significant positive impact on purses and on the Pennsylvania horse racing
industry in general. As a racetrack owner and operator, we applaud the
Pennsylvania Legislature for recognizing the importance of this industry and its
impact upon the local economy, including the many direct and indirect jobs in
Pennsylvania which it supports."
The legislation authorizes the granting of slot machine licenses to up to seven
Category 1 licensed facilities (ie, racetracks) and up to five Category 2
licensed facilities (ie, non-tracks), along with limited licenses to up to two
Category 3 licensed facilities (ie, resort hotels). There are four existing
licensed racetracks in Pennsylvania, as well as two other issued racetrack
licenses. The racetracks and non-track facilities which successfully apply for
slot machine licenses will be permitted to operate between 1,500 and 3,000 slot
machines each (subject to future expansion of up to 2,000 machines per facility,
with the approval of the Pennsylvania Gaming Control Board). The licensed resort
facilities will be permitted to operate, on a limited basis, up to 500 machines
each.
Each racetrack slot machine licensee will be required to pay 34% of its daily
gross revenues from gaming less all monetary payouts ("Gross Terminal Revenues")
to the State Gaming Fund, 4% of its Gross Terminal Revenues as a local share
assessment, 5% of its Gross Terminal Revenues to the Pennsylvania Gaming
Economic Development and Tourism Fund and a maximum of 12% of its Gross Terminal
Revenues to a pool (the "Horsemen Pool") for distribution to each racetrack's
horsemen, in the form of purses and other awards. Non-track and resort
facilities will be bound to make the same percentage distributions but, since
they do not conduct horse racing, they will contribute to the Horsemen Pool that
portion of their Gross Terminal Revenues which is equal, on a pro rata basis, to
the amount contributed to the Horsemen Pool by Category 1 licensees. The
Horsemen Pool will then be allocated among the horsemen at each of the Category
1 licensed facilities, with the intention of providing payments to the horsemen
at each racetrack which are equivalent to 18% of that track's Gross Terminal
Revenues.
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In addition, all slot machine licensees must pay an upfront license fee of $50
million, or $5 million in the case of a limited resort license, and are
responsible for their respective shares of the expenses incurred in
administering the legislation. Each racetrack licensee will be required to
commit a minimum of $5 million over a five-year period, and between $250,000 and
$1 million annually for five years thereafter, for improvement and maintenance
of its backstretch.
MEC wholly-owns and operates The Meadows, a standardbred racetrack located in
Washington County in southwestern Pennsylvania. MEC intends to pursue The
Meadows' application for a slot machine license in accordance with the
requirements of the legislation and associated regulations without delay.
MEC, North America's number one owner and operator of horse racetracks, based on
revenue, acquires, develops and operates horse racetracks and related
pari-mutuel wagering operations, including off-track betting facilities.
Additionally, MEC owns and operates XpressBet(TM), a national Internet and
telephone account wagering system, and HorseRacing TV(TM), a 24-hour horse
racing television network.
This press release may contain "forward-looking statements" within the meaning
of applicable securities legislation, including the U.S. Securities Act of 1933,
as amended, and the U.S. Securities Exchange Act of 1934, as amended. These
forward-looking statements may include, among others, statements regarding:
expectations as to operational improvements; expectations as to cost savings,
revenue growth and earnings; the time by which certain objectives will be
achieved; proposed new racetracks or other developments, products and services;
projections, predictions, expectations, estimates or forecasts as to our
financial and operating results and future economic performance; and other
matters that are not historical facts. Forward-looking statements should not be
read as guarantees of future performance or results, and will not necessarily be
accurate indications of whether or the times at or by which such performance or
results will be achieved. Forward-looking statements are based on information
available at the time and/or management's good faith belief with respect to
future events, and are subject to risks and uncertainties that could cause
actual performance or results to differ materially from those expressed in the
statements. Important factors that could cause such differences include, but are
not limited to, the factors discussed in the "Risk Factors" section of MEC's
Annual Report on Form 10-K for the year ended December 31, 2003 and our
subsequent public filings. Forward-looking statements speak only as of the date
the statement was made. We assume no obligation to update forward-looking
information to reflect actual results, changes in assumptions or changes in
other factors affecting forward-looking information. If we update one or more
forward-looking statements, no inference should be drawn that we will make
additional updates with respect thereto or with respect to other forward-looking
statements.
For more information, contact:
Brian Budden
Director, Gaming
Magna Entertainment Corp.
337 Magna Drive
Aurora, Ontario
L4G 7K1
Telephone: 416-301-9082