The gamble with slots

November 01, 2007

For more than a decade, legalizing slot machine gambling has been rejected as a bad bet for Maryland. But a combination of politics and perseverance has put the long-simmering issue back on the front burner. Now it's up to Gov. Martin O'Malley to prove that the problems inherent in such a highly addictive form of gambling - from the economic costs to the various social harms - can either be adequately alleviated or are somehow justified given the state's projected $1.7 billion deficit.

This much is certain: Mr. O'Malley's willingness to let voters have veto power over the issue (by authorizing it through a constitutional amendment that must be ratified at the ballot box) shouldn't make it a fait accompli. The shortcomings of state-owned slots are just as real today as they were when Robert L. Ehrlich Jr. or Parris N. Glendening was governor.

Mr. O'Malley would allow 15,000 machines at five locations. All are bound to draw strong local opposition. The slots facilities would have three purposes: Raise money for the state (specifically for education), aid the struggling horse racing industry and "recapture" all of the dollars spent by Marylanders who travel to neighboring Pennsylvania, West Virginia and Delaware to play slots.

The ability of slot machines to fulfill any of these goals is questionable. Studies have found that while slots can generate plenty of revenue, the costs to communities in terms of crime and addiction are substantial. Mr. O'Malley's own father-in-law, former Maryland Attorney General J. Joseph Curran Jr., has spoken out strongly against them, noting as recently as 2005 that "the enormous costs of slot machine gambling would, in the long run, outweigh the benefits to the state."

Much of the revenue raised by slots would come from people who have become addicted to gambling - at least that's been the experience elsewhere. And Maryland also could expect an accompanying increase in crime, bankruptcy, divorce, child abuse and suicide. All that, too, comes with slots.

The governor's plan calls for more than half of slots profits to be spent on education, but that is blatantly misleading because such spending is fungible within the general fund budget. Naturally, if slot machines produce $550 million annually, as projected, all state programs, education included, would benefit to some extent.

On the other hand, slots parlors likely would cannibalize private industry. Mr. O'Malley's bill may ban free drinks or low-priced food, but nearby restaurants and other entertainment venues would be bound to lose patrons nonetheless. As Atlantic City, N.J., has long demonstrated, one-armed bandits are no road to urban renewal.

Who benefits? The owners of Ocean Downs and Laurel Park, probable slots venues, likely would hit the jackpot. Magna Entertainment Corp., owner of Laurel, could win the license and then immediately sell that right for $200 million or more with none of it going to the state. Certainly nothing in the bill prevents it, and that's essentially what Magna did two years ago with a western Pennsylvania track.

Horse racing may get propped up by the addition of slots (thanks to $100 million more for purses and $40 million more for track improvements), but they hardly add luster to a sport destined to become an extraneous appendage to slots gambling.

Big-time gaming is a corrupting influence. Annapolis is already buzzing over the preferred bidders and backroom deals. Two months after Mr. O'Malley's election, companies tied to William Rickman, owner of Ocean Downs, gave the governor's campaign nearly $50,000.

Now, it appears Ocean Downs will get 3,200 slot machines, making it as big as any slots facility in neighboring Delaware.

Mr. O'Malley has cannily put all kinds of sweeteners in his legislation, and he's threatened to dump popular initiatives, including expanded health care coverage and higher-education funding, if slots are not approved. Meanwhile, Mayor Sheila Dixon is touting a Gateway South slots emporium as a way to reduce property taxes. But such promises only ensure that government will become ever more dependent on gambling.

In a speech before the legislature Monday night, Mr. O'Malley recognized the deficit as a threat to the state's quality of life. He's right, but it's hard not to see legalized slot machines as a potential threat, too. Is this really the best way to finance government? So far, the case is not convincing.

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