No Jackpot for Maryland Slots
By Karen Nitkin, Special to Stateline
In November 2008, after years of back-and-forth among politicians and the public, voters in Maryland finally got to answer the question: Do you want slot machines?
The answer was a resounding "yes," with 59 percent voting in favor of the measure. The resulting constitutional amendment specified that as many as 15,000 machines could be plugged in at five destinations scattered across the state. Maryland was expected to gain $600 million per year in revenue by 2013.
Now, a year and a half later, two of those sites are under construction, but two are stalled, and one has still not received a viable bid. And not one quarter has yet flowed from the machines to the state treasury, which had expected to take in $90 million merely from awarding the licenses.
Maryland is following national trends in its embrace of slot machines. Some 38 states now hold nearly 833,000 of the machines. According to a 2010 survey by the American Gaming Association, the national trade association for commercial casinos, 59 percent of survey participants said slot machines were their favorite casino game.
But the Gaming Association also notes that the economic downturn of the past two years has meant a loss in overall gaming revenues nationwide. And in Maryland, the downturn has hindered attempts to get new efforts off the ground. "The lack of available capital has forced many gaming companies to delay new developments, and several projects have been canceled altogether," the AGA noted in a fact sheet on the casino industry and the economy.
In the legislative session that ended in April, Maryland lawmakers took steps to strengthen the state's hand. They were able to approve changes aimed at making one of the sites more attractive to a new round of bidders. And they proposed adding table games to the venues, as surrounding states have done. But the latter idea did not get approval to appear on November ballots.
The original decision to put the question to voters was made because the issue had become so contentious. But because slots were approved via a constitutional amendment rather than legislative enactment, changes to the plan are cumbersome and time-consuming. "Maryland does have less flexibility because of that compared to other states," says Donald C. Fry, who was appointed by Gov. Martin O'Malley to head the commission in charge of issuing the licenses.
Maryland is surrounded by states that allow slot-machine gambling, including West Virginia, Delaware and Pennsylvania. For lawmakers and the public, there was a serious desire to halt the flow of gambling dollars across state lines. That was why voters in 2008 gave the state permission to award licenses for five slot destinations in four counties and in the city of Baltimore, "for the primary purpose of raising revenue for education." The law gives Maryland a higher share of the proceeds than other states get: The state keeps two-thirds and lets developers take one-third.
The state's take in Maryland is "one of the highest in the country," admits state Senator George Edwards, one of the major slot proponents. "I think that's something maybe in the future we'd have to look at." But Edwards also argues that Maryland differs from other states in that it owns the machines and leases them to the operators, so less private investment is required upfront.
So far, two licenses have been awarded, one to Penn National Gaming for 1,500 machines in Cecil County, in the rural northeast part of the state, and one to Ocean Downs for 800 machines at a racetrack in the town of Berlin, on the resort-heavy Eastern Shore. Both venues are expected to open in the fall. Ocean Downs was originally slated to open in summer, but asbestos uncovered during construction slowed the timeline. The other three sites have had bidders, but all have been rejected for failure to meet the licensing fees or requirements.
"Despite the fact that we have not had success with getting all five locations issued," Edwards insists, "the amount of revenue that is anticipated for Maryland to receive in 2011 exceeds the amount that had originally been anticipated when slots were first approved." However, he concedes, if the last three venues don't come online quickly, revenue in the coming years will likely slump below projections.
While all this has been going on, states surrounding Maryland have been upping the ante. Delaware lawmakers recently approved table games, such as blackjack and roulette, which could lure gamblers from Maryland machines and are said to bring higher-wage jobs.
A state legislator from Howard County, Frank Turner, proposed a table-game measure for Maryland in this year's legislative session, but it didn't make it to the November ballot, meaning the next opportunity won't be until 2012. Turner says adding the table games would make Maryland competitive with surrounding states. He is frustrated with the speed bumps that go along with a constitutional amendment, saying he would have preferred "just to let the delegates and the senators decide. That's why we were elected."
Still, he says, though the process has been "slower than I anticipated," it is moving forward. "If we get two on board this year, maybe two by the end of the next year and the fifth one by the following year, I'll be satisfied that we moved it ahead."