Ehrlich's slots plan is viable, some say

But gambling experts note possible pitfalls in details

50% tax concerns industry

October 28, 2002|By Greg Garland | Greg Garland,SUN STAFF

Republican Robert L. Ehrlich Jr.'s estimate that slot machines could generate $800 million a year for the Maryland treasury isn't unreasonable, gambling experts say.

But raising that much money would require at least 2,500 slot machines at each of four horse tracks -- in spaces roughly the size of Wal-Mart stores. And it would require traffic planning and enough parking to accommodate thousands of patrons at each location every day.

Ehrlich's proposal also assumes that 50 percent of the money generated by slots would go to the state, leaving less for the horse racing industry than is typical elsewhere.

Such details are raising concerns among racing interests and people who live near the tracks. Some neighbors say they fear that slots will transform the tracks into round-the-clock casinos and destroy the quality of life in their communities.

"I don't want this in my neighborhood," said Michele Oseroff, who lives in Mount Washington near Pimlico Race Course. "You can go to Las Vegas if you want to do that."

And some in the racing industry say that earmarking 50 percent of the revenue for the state may not leave enough for their businesses. West Virginia and Delaware collect about 35 percent.

"If what they are proposing is a tax rate of 50 percent, then that's extremely high," said Joseph A. De Francis, president and chief executive officer of the Maryland Jockey Club. "You have to be careful not to kill the goose that lays the golden egg by setting the tax too high."

Revenue from slot machine gambling is the centerpiece of Ehrlich's budget proposal in his campaign for governor -- money he says he would use to fund education. His Democratic opponent, Kathleen Kennedy Townsend, is opposed to legalizing slots.

Ehrlich's plan calls for slots at Pimlico, Laurel Park in Anne Arundel County, Rosecroft in Prince George's County and at a track planned near Cumberland in Allegany County.

A spokesman for Ehrlich, Paul E. Schurick, said the $800 million revenue estimate assumes state government would get 50 percent of the "take" from slots, which is the money left after winnings are paid to players.

He said the estimate also assumes each machine would generate, on average, a take of $300 a day -- about the same as machines in Delaware. Schurick said slots in Maryland could do even better.

Overall, Schurick said, "in excess of 10,000" slot machines would be required among the four sites. Based on a take of $300 a day and a tax of 50 percent, just less than 15,000 slot machines would be needed to generate $800 million.

That's the equivalent of about 3,500 slot machines at each site -- the same number found at the MGM Grand in Las Vegas.

Schurick noted that details of how slot machines would become legal in Maryland would be subject to the approval of the General Assembly.

`It's reasonable'

Ehrlich's estimate of how much money the state could get from slots is realistic, given the population in the Baltimore-Washington area, said William Thompson, a professor of public administration at the University of Nevada, Las Vegas. "It's a heck of a lot of money, but it's reasonable," said Thompson, who studies gambling.

The numbers assume that Maryland's slot machines would yield a higher take than those in Atlantic City, Thompson noted. Slots there yield about $250 a machine each day.

Delaware limits the number of slot machines allowed at its tracks to 2,000. Delaware Park, near Wilmington, and Dover Downs each have the maximum, while Harrington Raceway has 1,600. The machines produce an average daily take of just less than $300, officials said.

The number of slots that Ehrlich envisions for each Maryland track is comparable to Charles Town Races & Slots in West Virginia, which has 2,500 machines and is expanding to 3,500.

The 2,500 machines now in place occupy 100,000 square feet of gaming space, a typical size for a slots operation of that magnitude. Charles Town draws about 25,000 customers Saturdays and half that on weekdays, according to track officials. Urban slots facilities tend to attract more people, gambling experts say.

Mixed reactions

In Maryland, reaction to Ehrlich's proposal is mixed among those who live near the tracks.

"The concept of slots is not as frightening to me as is the possible sale of that property for something else," said Jeanne F. Mignon, who lives in Russett near Laurel Park. "They have over 300 acres of land, and nobody wants to see it sold and something abhorrent put in there, like more multifamily housing or a NASCAR track."

But others are unsettled by the prospect of a huge gambling operation in their back yard.

"I think this entire part of southern Prince George's County is really at risk if it comes to fruition," said Donna F. Edwards, who lives in Fort Washington, near Rosecroft. She said she thinks a slots casino would increase crime, add to traffic problems and cause other social ills.

The prospect of legalizing slot machines has attracted keen interest in Maryland's tracks from out-of-state gaming companies.

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