Agency's slots role clouded by audit

Legislators wonder if Stadium Authority should run emporiums

General Assembly

March 12, 2004|By Greg Garland, Howard Libit and June Arney | Greg Garland, Howard Libit and June Arney,SUN STAFF

A scathing audit of the Maryland Stadium Authority could have broader repercussions as the debate over legalizing casino-style gambling shifts to the House of Delegates, some legislators say.

The issue: Whether the state agency that built and manages Oriole Park at Camden Yards, M&T Bank Stadium and other major public facilities should be entrusted with building and overseeing huge slot machine emporiums with thousands of the gambling devices.

The audit criticized the Stadium Authority for taking shortcuts in competitive bidding, conflicts of interest and other problems -- including the discovery of backdated, apparently fraudulent memos to explain a $15,000 bonus awarded to Stadium Authority Executive Director Richard W. Slosson.

As legislators press for answers -- one House subcommittee chair this week asked the agency for more information, including a list of guests that used its skyboxes over the past three years -- Stadium Authority Chairman Carl A.J. Wright said yesterday that an internal review continues.

"The board is trying to respond to all the questions in the audit," Wright said. "Obviously there were issues with regard to the executive director that need to be investigated. We're still in that process."

The audit revelations come at a critical juncture in the debate over legalizing slots. Gov. Robert L. Ehrlich Jr.'s administration has suggested the Stadium Authority could be asked to play a role in helping oversee construction of gambling facilities.

House Speaker Michael E. Busch has floated the idea of state ownership as an alternative to awarding exclusive slots licenses to casino companies and racetrack owners.

The concept, based on a model used in Canada, was barely discussed in the Senate but is expected to get more attention in the House, given Busch's interest and the recommendations of a six-month study by the chamber's Ways and Means Committee.

The Senate passed a bill calling for 15,500 slot machines at three racetracks and three non-racetrack sites that would all be privately built and managed.

Busch, an Anne Arundel County Democrat, says slots could generate far more for the state treasury if the Stadium Authority builds slots halls and then hires casino companies to run them. He noted that even the governor's slots plan calls for the state to actually own the machines at the private locations and operate a central computer to oversee the distribution of gambling revenues.

The speaker said he has already worked out a formula for distributing the money under a state-ownership model. If five or six state-owned facilities took in a total of $1.5 billion in slots revenues after winners were paid, he said 5 percent -- or $75 million -- could go to the state lottery for its costs in running the operation, 5 percent could go to help the racing industry through purses and breeding funds, 5 percent could go to local governments where the facilities are located, and 5 percent could go to the Stadium Authority for five to eight years to repay the construction costs.

Busch said the state could hire outside companies, through competitive bids, for no more than about $200 million, leaving more than 60 percent of the revenues for education.

"This is removing the middleman, and this is the only way to get all of the money that the state should be getting," Busch said.

The Senate bill designated about 51 percent of revenues for public schools -- in part because track owners and others reject Busch's operating cost estimates as unrealistically low.

Busch said he is troubled by the findings in the audit, which was released by state auditors last month, but said he continues to have confidence in the agency's ability to produce quality projects.

But the findings could make lining up political support for the state-ownership concept a more difficult task for Busch, some say.

"Certainly it raises questions about state ownership for some people," said Del. Clarence Davis, a Baltimore Democrat.

Davis said he has always felt that slots should be a private enterprise and the state should only be involved in "its proper role of oversight."

Del. Peter Franchot, a Montgomery County Democrat and leading slots critic, said slots are bad for the state regardless of whether they are in publicly or privately owned establishments.

"In a different way, we may have as many problems with corruption with public ownership as with private ownership," Franchot said. "That's the implication of the audit of the Stadium Authority."

Wright conceded that the audit findings could be used by those who oppose state-owned slots facilities to argue against using that approach.

"There are obviously forces that would prefer the state not to own the slots facilities," Wright said.

Some legislators said they expect the audit report to have little bearing on the political debate about state ownership of slots facilities.

"I think there are many other reasons why we don't need the state owning slots facilities," said Senate President Thomas V. Mike Miller.

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