Schaefer targets Shore slots Bill outlines fees, regulation STATE HOUSE REPORT

January 21, 1993|By Thomas W. Waldron | Thomas W. Waldron,Staff Writer Staff writer Tom Bowman contributed to this article.

Elks, Moose and veterans on the Eastern Shore who have reaped millions of dollars from slot machines would have to pay higher licensing fees, keep better records and submit to surprise audits under a bill being drafted by the Schaefer administration.

The bill would hand supervision of the machines to the state Department of Licensing and Regulation and the state police, taking it away from local sheriffs, who have been accused of being too chummy with the fraternal clubs in their counties.

The bill is already prompting opposition on the Shore, where Gov. William Donald Schaefer's popularity has suffered for several years.

"It's just something else that the governor wants to get a hold of and get the revenues," said Dorchester County Sheriff Philip H. McKelvey.

Mr. McKelvey and others on the Shore said there have been no problems with the slots, which attracted almost $30 million in players' money last year. The bill, they say, is unnecessary intrusion from Annapolis.

"It's all right just the way it is. Everything is legal and above board," said Andy Holland, commander of the Chesapeake City Veterans of Foreign Wars post in Cecil County. "Why in the world should we change anything? I think the state police certainly have enough to do."

Under current law, the clubs file annual reports with the state comptroller detailing how much money they take in through their slot machines and what they have done with it. But the law does not require the comptroller's office to review the records, and officials there have said they do nothing more than file the reports.

The Schaefer bill would require the clubs to keep more detailed records, including daily accounts of the money wagered in the machines.

The clubs also would have to pay a state licensing fee expected to be higher than the current $50 per machine fee they now pay locally, as well as the cost of any audits the state might perform. The bill would require the clubs and slot machine vendors to keep written records of all machines they buy and sell.

Sheriffs provide no supervision except to license the slot machines. In several cases, sheriffs have accepted contributions from the clubs' slot revenues for crime-prevention programs -- a practice that several elected officials have criticized as creating a conflict of interest.

Worried about the lack of oversight, the state attorney general's office last summer launched a grand jury investigation of slot machine revenue, which included sweeping subpoenas for club records.

Grand jury action is "not imminent," Assistant Attorney General Carolyn H. Henneman said this week.

That probe and the governor's bill were sparked, in part, by the concerns of state police officials, who say they have lost track of some 50 machines that were bought and then sold by clubs on the Shore. The machines sometimes end up illegally in bars or other private facilities, state police officials have said.

The state police have also criticized the spotty records kept by some clubs, saying the lack of documentation could lead to abuse.

Players last year plunked almost $30 million into the machines, which for the past six years have been legal in fraternal clubs on the Shore except in Worcester County, where officials say the machines don't fit in with Ocean City's family atmosphere.

After winners are paid, half of the machine's proceeds by law must go to charity. The clubs get to keep the other half, money they have used to build additions, refurbish bars and pay club operating expenses.

Sherriff McKelvey in Dorchester County said oversight is almost unnecessary because the clubs police themselves.

"They don't want to take the chance of losing that revenue," Mr. McKelvey said. "They're not willing to jeopardize that by doing something foolish."

But another Shore sheriff, Rodney Kennedy in Cecil County, said the slot machine law is "very loose."

"You can see that the law needs to be shored up some," he said.

The bill is just one of several gambling-related measures expected to be introduced in this session of the General Assembly.

House Speaker R. Clayton Mitchell Jr. wants to establish a state commission to regulate many forms of gambling, including slot machines. The governor has said he supports Mr. Mitchell's proposal, which is expected to be drafted next week.

Meanwhile, a coalition of fraternal clubs will introduce a bill to allow slot machines in clubs in five Western Shore counties: Anne Arundel, Harford, Montgomery, Prince George's and Baltimore County.

Governor Schaefer is expected to oppose any expansion of the slots, as he has in the past.

State prosecutors recently examined thousands of dollars in charitable donations given by Talbot County fraternal clubs to a crime- prevention program run by Talbot Sheriff John J. Ellerbusch Jr.

Mr. Ellerbusch was subsequently indicted for misconduct, perjury and theft of $71,000 in departmental funds, although prosecutors could not determine if any of the money allegedly stolen included slot machine revenue.

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