Franchot warns against slots

Comptroller says `predatory' industry will expand through state

October 05, 2007|By James Drew and Greg Garland | James Drew and Greg Garland,Sun reporters

Maryland Comptroller Peter Franchot warned yesterday that if the General Assembly legalizes slot machine gambling, casinos in downtown Baltimore and "slots in a neighborhood near you" will follow.

"This predatory gambling industry goes where the money is," Franchot said at a news conference at Harborplace in Baltimore. "Let's be honest. There is no such thing as limited slots. In state after state where slots have been legalized, the debate about expanding them begins before the first slot machine is turned on."

The shot from a fellow Democratic officeholder further complicates Gov. Martin O'Malley's push to legalize slots as a way of closing a $1.7 billion budget shortfall. House Speaker Michael E. Busch opposes slots, and Senate Republican leaders said this week they do not support holding a special session of the General Assembly to consider O'Malley's tax and slots plan. Republicans were key to Senate passage of a slots bill in 2005.

Reached for comment on Franchot's remarks, Stephen J. Kearney, O'Malley's communications director, said the governor's office "would welcome any constructive ideas" from Franchot on how to close the projected shortfall.

"Maybe some ideas about collecting unpaid taxes, which is - after all - his job," Kearney said in a written statement.

Earlier, Franchot explained his outspokenness on slots: "As the state's chief fiscal officer, I feel duty-bound to speak out when Maryland's financial future is threatened."

At yesterday's news conference, Franchot noted a private study that circulated among Maryland legislators in 2005 that found that the place with the highest revenue potential for slots, based on population density and other factors, was Silver Spring, followed by Landover, and Laurel/Jessup. He later held an event in Silver Spring.

The private study was done by Penn National Gaming, a large gambling corporation that owns and operates casinos and racetracks with slots in nine states. Its properties generated $2.2 billion in revenue last year, according to financial reports filed with the U.S. Securities and Exchange Commission.

The racetrack casinos that Penn National Gaming owns include Charles Town Races & Slots in West Virginia, which has 5,000 slot machines and generated $448 million in gross revenues in 2006 - more than any other racetrack slots venue in the country.

Penn National Gaming recently struck a deal to buy the struggling Rosecroft Raceway harness track in Prince George's County, and the report it did in 2005 indicates it sees Maryland as a lucrative potential market for slots.

The report said Penn National Gaming assumes "each individual over the age of 24 will generate revenue of $550 annually" - roughly $2 billion for a slots casino in downtown Baltimore or one in Prince George's County at Rosecroft, just off the Capital Beltway in Oxon Hill.

Eric Schippers, a spokesman for Penn National Gaming, said the report was prepared at the request of legislators who asked for information about various prospects if the state owned the slots facilities. Penn National Gaming manages an Indian casino in Ontario, Canada, and Charles Town Races & Slots is overseen by the West Virginia Lottery Commission, among other properties.

"As a racetrack owner, we are not looking for gaming in Baltimore. ... Today, we stand as a racetrack owner, hopeful that Rosecroft will be included in the bill," Schippers said.

At yesterday's news conference in Baltimore, Franchot said the state can resolve the projected $1.7 billion shortfall in the state budget without slots.

"Two weeks ago, the conventional wisdom said slots was a done deal. Well, the conventional wisdom was wrong. Slots are in jeopardy," said Franchot, who spoke a day after Senate Republican leaders said they would not vote for the governor's slots proposal during a special session.

O'Malley, who met with Busch yesterday, has said he would use a slots bill that the House of Delegates approved in 2005 as his model. That plan called for 9,500 state-owned machines at four locations - one each in Anne Arundel, Harford, Frederick and Allegany counties. It would have allowed for slots at the Laurel Park racetrack but not at Pimlico in Baltimore. O'Malley has said he opposes placing slot machines at the Inner Harbor.

The Democratic governor has estimated that his legalizing slot machines would generate about $550 million per year when implemented for school construction, education and other needs.

Franchot said he is also looking at ways to close the budget gap. He said in an interview that he has approached the governor with a proposal to add more auditors and take other steps "so we can get extra tax revenues."

Christine Duray, a Franchot spokeswoman, said the comptroller will not release a "point-by-point plan" on how the budget hole should be filled.

"He wants to be sure all the right folks are brought to the table and the pertinent, critical information is available," she said.

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