Slots backers see jackpot in Va., D.C. gamblers

One-quarter of revenue expected from out of state

February 13, 2003|By Michael Dresser | Michael Dresser,SUN STAFF

Supporters of Gov. Robert L. Ehrlich Jr.'s plan to allow slot machines say they have been watching Maryland's wealth migrate to racetrack casinos in neighboring states long enough.

They aim to keep those dollars in the state, but they also plan to do to Virginia and the District of Columbia what Delaware and West Virginia have done to Maryland.

"We've been milked for the last five years. Maybe we'll be able to milk Virginia and Washington, D.C., like we've been milked," said Sen. Robert H. Kittleman.

The Howard County Republican's comments - coming from a former opponent of gambling expansion - reflect the dog-eat-dog competition for gambling dollars among the states.

Ehrlich frequently casts his proposal to install 10,500 slot machines at four Maryland racetracks as a defensive move to stop the drain of Maryland tax revenue to neighboring states. But the sports-minded governor is playing offense when it comes to Virginia and the district, which do not permit slots.

The two jurisdictions are seen as ripe targets for marketing by Maryland racetrack casinos. The administration is projecting that one-quarter of the $1.4 billion in gross revenue it expects from slots would come from out-of-state gamblers.

An industry-backed study by the Innovation Group of New Orleans estimates that a plan similar to Ehrlich's would rake in more than $3 in new out-of-state money for every $1 in Marylanders' money "recaptured" from states that now permit slots.

Maryland legislators who support slots are not shy about making that point.

House Minority Leader Alfred W. Redmer Jr. said Northern Virginia and Washington, D.C., would be a "great market" for Maryland slots.

"For years, Maryland dollars have been educating Delaware kids. I hope we create the opportunity to have Virginia dollars educate Maryland kids," the Baltimore County Republican said.

Ehrlich administration officials make a similar point.

"Clearly the Virginia and district markets are going to be targeted heavily," said Ehrlich spokesman Paul Schurick.

The Rev. Thomas A. Grey, executive director of National Coalition Against Gambling Expansion, said the argument for having slots would be more palatable if supporters were simply looking to keep money in the state.

"Now the greed has gotten so great that they are trying to take advantage of a state that does not have casino gambling," Grey said. "In Virginia, they'll use all the same arguments they used in Maryland to put their own slot machines in."

Del. Howard P. Rawlings, a leading slots proponent, said he saw nothing wrong with locating slots near a neighboring state - comparing it with offering incentives to the Marriott Corp. to keep it from moving to Virginia.

"It's a competitive world we live in," the Baltimore Democrat said.

The governor of Virginia and mayor of Washington appear unconcerned about the possibility of large gambling halls on their borders.

A spokeswoman for Virginia Gov. Mark R. Warner said Maryland slots are "not an issue we've discussed." A spokesman for Mayor Anthony A. Williams, said Washington had no stake in the outcome of the legislative struggle in Maryland.

Gambling industry experts agree that two of the Maryland racetracks where Ehrlich would install slots - Laurel Park and Rosecroft - are poised to capture hundreds of millions of dollars from out-of-state residents.

Ehrlich's plan calls for the owners of Rosecroft, Pimlico and Laurel to pay a $100 million up-front fee for a license.

That could be a particularly good deal at Rosecroft, which is strategically situated to attract gamblers from Virginia, Washington and even parts of North Carolina.

Rosecroft, which sits about five miles from the district line in Oxon Hill, is right across the Woodrow Wilson Bridge from Alexandria, Va. The District of Columbia and many populous Northern Virginia suburbs lie within a 25-mile radius, and Richmond, Va., is a short day trip away.

Sebastian Sinclair, a gambling industry analyst, said Rosecroft could end up drawing more than 60 percent of its business from out of state. It's a big reason that Sinclair, president of Christiansen Capital Advisors, is projecting annual earnings of more than $503 million at Rosecroft, compared with $305 million at Laurel and $314 million at Pimlico.

One big question that would hang over Rosecroft is whether Virginia or the district would respond by expanding their gambling options.

House Majority Leader Kumar P. Barve, a key ally of House Speaker Michael E. Busch, said any expansion of slots by Maryland is likely to set off an "arms race" in which competing states will be forced to move toward full-scale casino gambling.

That race could be slow to develop, however. Political resistance to gambling is strong in Virginia and the district.

Jack Evans, who heads the Washington City Council's budget committee, said the city is "very anti-gambling" - seeing it as a regressive form of taxation.

"We will not be doing that kind of thing in the district," Evans said. He predicted that any revenue loss to the city would be minimal.

Ellen Qualls, Warner's spokeswoman, said the Virginia governor opposes casino gambling.

Kittleman said he expects both jurisdictions will eventually allow slots. His hope is that "it'll take them a while."

In Annapolis

Today's highlights

11:30 a.m.Senate meets, Senate chamber.

11:45 a.m.House of Delegates meets, House chamber.

Noon Robert M. Bell, chief judge of the Maryland Court of Appeals, delivers State of the Judiciary address, House chamber.

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