Study predicts high social cost for slots

Report for business groups estimates creation of 37,000 problem gamblers

General Assembly

February 21, 2004|By Howard Libit | Howard Libit,SUN STAFF

A study released yesterday by a research firm that also has done paid work for racetrack owners confirms that the addition of slot machines would bring new jobs to their communities, but at the cost of substantial social turmoil.

The report, commissioned by business groups in Baltimore and Prince George's County, came as the once fast-moving slots legislation was stalled in the state Senate over the issue of whether to permit expanded gambling at Ocean Downs.

Democratic senators said they believe putting slots at the harness-racing track near Ocean City makes economic sense, though some privately acknowledge that the site is likely to be eventually removed from the list of eligible gambling locations under intense pressure from Gov. Robert L. Ehrlich Jr. and Republican senators.

The study released yesterday found that while slots at Pimlico Race Course in Baltimore and Rosecroft in Prince George's County would bring significant economic benefits, there would also be major social costs in the neighborhoods of those tracks.

"Proximity matters," said Mark D. Turner of Optimal Solutions Group, the Baltimore-based economic and policy analysis firm that prepared the report. "People who live close by are more likely to gamble than people who live farther away."

The report was paid for by the Presidents' RoundTable Inc. a Baltimore-based group of black business leaders, and the Greater Prince George's Business Roundtable, a nonprofit group of county business executives. Neither group has taken a position on the legalization of slots, though the Presidents' RoundTable is likely to do so within several weeks.

The study estimates that putting slots at the racetracks would add 17,000 problem and pathological gamblers in Baltimore and another 20,000 in Prince George's County. Other social costs related to problem gambling include increased bankruptcies, embezzlements, divorces and lost work days, Turner said at an Annapolis news conference.

Those problems are more likely to afflict African-Americans and Hispanics, according to the study, because those populations have a statistically higher tendency toward gambling addictions.

But more than 2,000 new jobs in Baltimore and almost 3,900 new jobs in Prince George's County would be created, and hundreds of millions of dollars would be generated for state public schools funding, according to the report.

The study, which largely examined the effects around Pimlico and Rosecroft, was based on the slots proposal approved by the Senate in 2003 and subsequently killed in a House committee.

Anirban Basu, the chief executive officer and founder of Optimal Solutions, acknowledged that this year's slots proposals are different, but said the study is relevant to local impacts from gambling facilities.

Basu also said there is no conflict between this study and work his firm did for Magna Entertainment Corp., owner of Pimlico and Laurel Park. Late last year, Optimal Solutions released a report arguing that if Maryland lawmakers were to locate slots exclusively at locations other than the racetracks, the state would lose at least $150 million in annual tax revenue.

Basu said the study illustrates the importance of earmarking significant revenues from slots for the communities near the slots facilities and for treatment of gambling additions.

While Senate President Thomas V. Mike Miller had been pushing to have the slots measure before the full Senate by early next week, the process stalled Thursday over where to locate the machines.

The governor's initial plan called for 15,500 slot machines to be permitted at four racetracks - Pimlico, Laurel, Rosecroft and one to be built in Allegany County - as well as two nontrack locations along the Interstate 95 corridor.

But the Senate Budget and Taxation Committee rewrote the bill this week to add two more sites - Ocean Downs and a third nontrack location - while keeping the total number of slot machines constant.

Republican senators and Ehrlich are fighting the inclusion of Ocean Downs, with the GOP caucus vowing to vote against the legislation should the harness track near Ocean City remain eligible for slots.

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