Giveaway

March 01, 2004

LAST WEEK WAS JUST ducky for those first in line to cash in on legalizing slot machines in Maryland -- not the state's schoolchildren but those positioned to be handed cut-rate licenses to profit from the parlors.

First, William Rickman Jr.'s racetrack in Ocean City was in the state Senate's slots bill; then it wasn't. Dorchester County, where he owns an off-track betting house, was in, then out. Finally, the Senate passed a bill Friday guaranteeing slots at a new Allegany County racetrack -- owned by guess who? Not incidentally, Mr. Rickman and related entities are the top gambling contributors to state politicians -- more than $210,000 in such gifts over the last five years, according to records cited by Sun reporter Howard Libit.

The Senate bill -- now headed to the House, where we hope this blatant display of political fixing is buried -- also of course virtually hands slots franchises to the Magna Entertainment Corp. at the Pimlico and Laurel tracks, to the benefit of former owner Joseph A. De Francis, whose companies' $225,000 in donations to a national political committee led by state Senate President Thomas V. Mike Miller is under FBI probe.

If you thought the main point of bringing slots to Maryland was to drum up more money for education, think again. The Senate debate on slots boiled down to how to ensure that the well-connected receive a big cut of the take. Any attempts to steer slots to state-owned facilities -- where the cut going to schools might be much more -- were immediately squashed.

The Senate's final giveaway -- er, slots bill -- earmarks parlors for Mr. Rickman's Allegany track and virtually does the same for Pimlico and Laurel, Baltimore's Inner Harbor, the National Harbor project in Prince George's County, and by I-95 in Cecil County. This makes false the bill's mandate for competitive bidding for the licenses.

Jeffrey C. Hooke, of the Maryland Tax Education Foundation, points out that a recent state auction of a slots license for suburban Chicago drew a $375 million bid. He pegs the combined value of the Pimlico and Laurel licenses at perhaps $400 million.

But if certain track owners know they've got a lock on a license -- as in the Senate's slots bill -- why would they pay anything remotely close to that? That's money lost to the state -- and to the state's students.

In the Senate bill, license holders would receive either 30 percent or 36 percent of the take. That could total $600 million a year, netting at least $200 million in pretax profits after expenses. (Mr. Hooke calculates Mr. De Francis alone will end up with $8 million to $12 million a year from his Magna deal, about the same pretax profit as Mr. Rickman's.) If the state owned these casinos, that $200 million a year in profits would add to the roughly $800 million anticipated as the state's share under the Senate bill.

But, hey, the state of Maryland doesn't need that additional money, does it? Isn't it far better to give it to a handful of cronies and out-of-state casino companies? Slots to fund education is lousy public policy; this Senate bill makes it a lie.

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