Md. casinos would be a gamble with profits Games would create thousands of jobs, state report says

September 29, 1995|By FRANK LANGFITT | FRANK LANGFITT,SUN STAFF

In their first assessment of the potential impact of casino gambling, state fiscal analysts predicted yesterday that casinos would create thousands of jobs and tens of millions of dollars in tax revenue for Maryland.

Whether located in Baltimore, the Washington suburbs or Western Maryland, casinos also would bring throngs of new tourists to the state while encouraging Marylanders who gamble in Atlantic City to spend more of their money here, according to a preliminary report by the state Department of Fiscal Services.

But when it came to estimating some of the potential economic losses due to casino gambling, the draft report was largely silent. It did not calculate the cost of compulsive gamblers who turn to crime, the expense of public infrastructure to serve casinos or the money it would take to regulate the new industry.

The omission drew the attention of at least one member of the state's gambling task force, which was given the report during a meeting yesterday at the University of Maryland College Park. Task force member Robert C. Embry Jr. questioned why the analysis did not estimate the cost of problem gamblers.

"Is nobody doing that? Or is that not part of your charge?" asked Mr. Embry, president of the Baltimore-based Abell Foundation.

"The social cost is a very difficult thing to quantify," answered William S. Ratchford II, the director of fiscal services.

In estimating the potential benefits of casino gambling, the report offered some impressive numbers. For instance, if a single casino were located in Western Maryland, it could draw 825,000 new tourists a year, create 5,255 jobs and bring $178 million to the area economy, the report said.

And if a single casino were placed in Baltimore's Inner Harbor, it could create 7,124 jobs, $38 million in tax revenues and add $227 million to the local economy, according to the report.

However, a fiscal analyst said that some of the new money -- in the case of Baltimore more than half -- would come from Marylanders, who might otherwise do their spending elsewhere in the state economy.

The report also noted that a Baltimore casino could have a significant impact on Maryland's horse racing industry. The economic impact of the race tracks, including food sales, parking, admission and motel room rentals, could be reduced by $152 million, the report estimated. Likewise, a Baltimore casino could reduce state lottery revenues by $8.9 million, it said.

The Department of Fiscal Services is an agency of the Maryland legislature and analyses the fiscal costs of proposed legislation. In the debate over casino gambling -- which is expected to be a major issue in Annapolis next year -- the preliminary report marks the first economic analysis that has not come from the gaming industry.

The fiscal services report, however, will not be the final word from state government analysts. Other Maryland agencies, including the Department of Business and Economic Development and the state lottery, will be providing their assessments to the task force in October.

The governor and legislative leaders created the nine-member casino commission to provide guidance on what has become one of the most talked-about issues in Maryland political circles. The panel, chaired by former U.S. Sen. Joseph D. Tydings, is holding hearings around the state to gauge public opinion on casino proposals.

The 140-page report to the commission did not estimate regulatory costs in Maryland, but offered some examples from other states. In fiscal year 1994, New Jersey spent $53 million regulating its casinos in Atlantic City. Illinois, which has 10 riverboat casinos, spent about $8 million on regulation the same year, the report said.

As for infrastructure, it said, "Aside from the potential capital costs, increased road congestion and accelerated wear and tear will impose hidden infrastructure costs. Ultimately, these costs will be borne by the state and local governments of Maryland."

The report cited estimates that the social costs associated with one compulsive gambler would be at least $56,000. But it did not predict how many there would be.

Mr. Embry noted that a recent study by the state of Florida estimated that the social costs of casinos would far outweigh the tax revenues if casinos were legalized there.

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