Maryland lawmakers are grappling with a $1.7 million deficit, and the debate over slot machines has once again begun to stir emotions in Annapolis. Those opposed to slot machines will not sit down without a fight - and they shouldn't. At the heart of all good government is robust, healthy debate.
This past summer, Gov. Martin O'Malley dispatched me to racetracks in Delaware, West Virginia and Pennsylvania to examine how slots have affected horse racing. My goal was to evaluate the situation firsthand, and to separate fact from fiction.
FOR THE RECORD - A Commentary article yesterday gave an incorrect figure for Maryland's budget deficit. The shortfall is $1.7 billion. The Sun regrets the error.
One major misconception about slot machines is that revenues from slots are overblown. Pennsylvania has had slots for less than a year, yet the state's cut of revenue from licensing fees and 10,000 slot machines recently topped $1 billion. For the past decade, Delaware and West Virginia have used slots revenue to subsidize schools, roads and other needs. In 2006, Marylanders playing slots contributed about $150 million to the budgets of those states.
Opponents argue that slots are a regressive tax on the poor. Unlike the lottery, which is available at any neighborhood store, slots parlors are typically destination locations. Visitors to Delaware Park get an immediate sense of the target market and the typical customer. The site includes restaurants, a golf course and a banquet facility. The predominant demographic I encountered at each location was middle-class, white retirees.
At Charles Town Races and Slots in West Virginia, more than a quarter of the revenue comes from visitors from two of the nation's wealthiest counties: Montgomery in Maryland and Fairfax in Virginia. Slots parlors succeed because people with disposable income visit them to eat a meal, see a show, play the slots and shop. Retirees from around Maryland board buses regularly to travel to slots locations.
Some opponents have argued that slots would create menial, low-wage jobs. Of the approximately 3,000 employees at three racetrack slots sites in Delaware, the vast majority earn between $10 and $20 per hour, plus benefits. Many are union jobs.
Officials at slots locations and in the jurisdictions that host them believe this job creation is one reason that, despite initial concerns, crime has not increased. In Jefferson County, W.Va., home to Charles Town, the crime rate has dropped significantly since slots were introduced, the West Virginia State Police Web site shows. Dover County, Del., home to Dover Downs, saw a drop in the violent crime rate following slots. Concerns about crime should not be ignored, but the experiences of our neighbors show it is possible to introduce slots without increasing crime.
Concerns have been raised that if slots are approved, they will eventually spread to all corners of the state. However, after more than a decade, Delaware still allows slots only at racetracks. Governor O'Malley's proposal, a constitutional referendum that must receive voter approval, addresses this concern by strictly limiting slots locations and requiring any expansion to be authorized by the voters. New Jersey and Florida, two other states that have authorized slots through constitutional amendments, have not seen gaming expand.
A 2004 report estimated that the economic impact of Maryland's horse industry is three times that of the state's college and professional sports franchises combined. The racing industry supports thousands of jobs. Garrett County farmers provide hay to breeders in Howard and Baltimore counties. Breeders occupy land that might otherwise succumb to development. Our neighbors have used slots to boost their racing industries, leaving Maryland at a competitive disadvantage.
Slots are not the perfect solution. There are people at slots parlors with no business being there, just as some people who drink alcohol or play the lottery should not. The governor's proposal sets aside funds to address gambling addiction.
It is appropriate to ask tough questions. But Maryland is not the first state to wrestle with these concerns. Slots are not the panacea; they are one piece of a comprehensive package to address the state's fiscal challenge. Other states have implemented well-managed plans that mitigate the ill effects while creating jobs, helping the horse industry and providing state revenue. We have ample history to draw upon in our effort to forge a workable solution.
Thomas Perez is secretary of the Maryland Department of Labor, Licensing and Regulation. His e-mail is firstname.lastname@example.org.