There are two major reasons to expand state gaming. One is the irrefutable evidence that Maryland is bleeding more than $400 million annually as our residents travel across state lines to gamble. The other is that most Marylanders simply want it. To that end, in creating a responsible gaming policy, we need to consider six factors:
First, as disposable income is fixed, increased gambling by Marylanders will offset state sales tax revenue by a respective amount. For example, if Gov. Martin O'Malley's proposal to increase the sales tax to 6 percent passes, the state's take on slots revenue - about 4 percent - means Maryland loses money by converting in-state sales transactions to slots revenue. Therefore, the policy ought to be based on attracting out-of-state revenue and recapturing slots seekers who go to West Virginia and Delaware. Placement of the facilities near state lines is critical.
Second, if not managed adequately, the social and economic costs of expanded gaming could outweigh the benefits by a ratio of 3-to-1, as suggested by former state Attorney General J. Joseph Curran Jr. Adequate addiction services and community impact organizations would need to be created and funded, with annual reporting to the legislature.
Third, track owners would do well to make their facilities family- and community-friendly, featuring nightclubs, restaurants, sports bars and attractions for children. The models of Detroit's Comerica Park and Kentucky's Churchill Downs (both absent slots) come to mind, but Maryland's track owners have refused to make these changes without the introduction of slots. (The Virgin Festival at Pimlico Race Course is a step in the right direction.) There is no evidence from other states that slots increase the revenue at racetracks; they only increase purses for the winning horses. This means that more people are coming to the tracks to play slots, not to bet on horses. With little nexus between slots and racetracks, owners have no intrinsic right to windfalls from expanded gaming.
Fourth, providing subsidies for prize money and to benefit race winners bred in Maryland makes the state competitive and is good policy. While horse racing may never be self-sufficient, it deserves investment for historical, economic and environmental reasons. We cannot allow developers to pave over our rural legacy.
Fifth, for those who are in favor of slots: Would you put them in your neighborhood? If the answer is no, be patient as we draft a policy that attends to the needs of communities where slots would be located. I am not a fan of expanded gaming and fear its impact on communities and small businesses. At the same time, with our potential as a biotech hub, a lucrative port and the most educated state in the union, our real opportunities go far beyond gambling. A modest expansion can be responsible; it will not be a panacea.
Finally, the impact of the poker machines in bars and restaurants that illegally pay out to customers but escape taxes and regulation and the more than $100 million statewide charitable gaming industry should be studied. We must quell the powerful lobbyists who defeat legislation on this issue out of fear that exposure would reveal the depth of this unregulated gambling.
Maryland's gambling policy should focus on recapturing lost money, bringing in new money, controlling state profits, minimizing social ills, keeping tight oversight of all in-state gaming and capitalizing on small business development. Only then will expanded gaming be a responsible piece of the solution to our budget woes.
Del. Jon S. Cardin is a member of the House Ways and Means Committee. His e-mail is email@example.com.