ANNAPOLIS -- Off-track betting survived its first legislative test yesterday, but not before a Senate committee slapped a graduated tax on the increased revenues that could be expected at the betting windows.
After two days of wrangling over everything from tax rates to the quality of carpet on the betting parlor floors, the Senate Finance Committee approved the bill by a 10-1 margin and sent it to the Senate floor. The only dissenter was Sen. George W. Della, D-Baltimore, who tried to ban OTB from the city.
In a major change of philosophy, the panel voted to raise from 0.5 percent to 1.5 percent the tax on the money wagered (the so-called daily handle) above $500 million for Maryland's two thoroughbred tracks and $175 million for the two harness tracks.
Beyond that, the tax would increase by another percentage point each time the handle grew another $50 million, to a maximum of 4.5 percent.
"At least the state is getting something out of it," said Sen. James C. Simpson, who had pressed for higher taxes on what critics call a windfall for the racing industry.
"I know the tracks are going to be crying and whining about the higher taxes, but they border on greedy," Senator Simpson said.
But Sen. Vernon F. Boozer, R-Baltimore County, disagreed. "We're going to have smaller purses. In the long run, you'll hurt yourselves," he said. He voted against the higher tax.
The legislature in 1985 reduced the tax on track revenues from just over 4 percent to 0.5 percent. The industry has strongly opposed any increase since then, saying it needs the money to stay competitive with tracks in other states.
With 1991 revenues of $403 million, the thoroughbred tracks would have to see a 25 percent increase in betting with OTB for the higher rate to kick in. Should the annual betting handle jump to $550 million, the higher tax would bring the state $500,000.
The bill, sponsored by Senate President Thomas V. Mike Miller Jr., D-Prince George's, and supported by all segments of the racing industry, is expected to clear the Senate. The legislation also has strong support in the House of Delegates and has been endorsed by Gov. William Donald Schaefer.
Industry officials say off-track betting is necessary for the state and the tracks to pull in more income. Virginia this week became the latest state to approve off-track betting.
Under the bill, off-track parlors could be set up across the state with the approval of the Maryland Racing Commission.
Fans would be able to go to parlors and bet on telecast races without going to the track.
Worried that the parlors could become seedy storefront hangouts, the Finance Committee specified in the bill that the parlors would have to feature high-quality dining facilities.
But crafting the appropriate language wasn't easy. For example, one discarded proposal would have required that the restaurants have "plush carpet or natural floors."
The panel discussed at length the bill's preamble, a largely ceremonial passage that spells out the bill's goals. The panel even appointed a special "preamble subcommittee" to hash out the wording, a move that may have been a first in Annapolis history.
"How about an amendment that says, all jockeys believe in God and don't cheat on their wives?" suggested Sen. Michael J. Wagner, D-Anne Arundel, during the discussion of the flowery preamble language.
"The preamble gives some of them the courage to vote for the bill," Senator Simpson said later. "And I think it's to make a show for the public."
The panel rejected a proposal to give local governments veto power over OTB facilities in their counties, and Senator Della found no support for his effort to keep OTB out of Baltimore, particularly at the Inner Harbor.
The committee also discarded a proposal to allow the state to install an off-track betting parlor at Baltimore-Washington International Airport. Other legislators pointed out that nothing in the bill would prohibit the state from doing just that.