Slots plan doesn't slight racetracks

Ehrlich proposal offers ample profits, study says

February 11, 2003|By Michael Dresser | Michael Dresser,SUN STAFF

Gov. Robert L. Ehrlich Jr.'s plan to allow slot machines at four Maryland racetracks in return for stiff upfront fees and a 64 percent gambling tax will provide handsome profits for track owners, according to a study to be released today.

The study, which contradicts the contention of track owners that the governor's plan shortchanges the industry, was conducted by Chevy Chase investment banker Jeff Hooke on behalf of the Maryland Tax Education Foundation.

The report comes at a time when the Ehrlich administration is considering pleas to make substantial revisions in its proposed legislation in response to complaints by the horse racing industry and local governments that the bill gives them too small a share of the profits.

Hooke said yesterday that his study shows the industry's claims are "patently untrue."

"Obviously, they have an incentive to low-ball the earnings they're going to get under the governor's plan," he said.

Thomas Bowman, president of the Maryland Horse Breeders Association, said Hooke's estimates diverge widely from other studies he has seen. "I can't see how his figures are even close to being right," he said.

Ehrlich's plan calls for 3,000 slot machines each at three Central Maryland tracks -- Pimlico, Laurel Park and Rosecroft. Another 1,500 would be installed at a new track to be built in Allegany County.

The racetrack industry would receive 25 percent of the net profits, and local governments affected by the tracks would receive 3 percent. The balance, after the state's 64 percent share and $500,000 for treating gambling addiction, would go to purses and other sectors of the racing industry.

The Ehrlich plan calls for up-front licensing fees of $100 million for the three Central Maryland tracks and $50 million for the facility in Allegany.

Hooke's study assumes far greater profits per day from each of the 10,500 slot machines than most other estimates. He projects earnings of $600, compared with the Ehrlich administration's figure of about $350, noting returns from slot machines in Chicago and Detroit.

Bowman disputed the higher figure. "No one in the United States has even come close to that," he said.

The Ehrlich administration, which has come under heavy criticism for its initial slots proposal, welcomed the validation of its efforts.

"Governor Ehrlich believes this is the appropriate formula for allocating slots revenues," said spokesman Henry Fawell.

The Maryland Tax Education Foundation says that while it does not endorse the introduction of slots, it wants to see that Maryland gets the best possible deal if it does go that route.

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