Maryland's slots legislation imposes one of the highest tax rates in the country. So if Magna could not renegotiate DeFrancis' share of slots proceeds, the company would be left with a slim profit margin - if any. "It's common knowledge that that agreement needed to be reworked; it was a significant impediment," Foreman said, adding that Magna Chairman Frank "Stronach wasn't going to do a deal that made DeFrancis a rich man and left nothing for him."
DeFrancis did not return phone calls last week.
Meanwhile, Magna officials - like other prospective bidders - were worried that the upfront application fees wouldn't be refunded under various circumstances. Magna, in particular, was worried about a potential zoning battle in Anne Arundel.
The state's lottery commission, which is overseeing the slots program, answered the refundability question in mid-January, saying it "may consider such requests under extraordinary circumstances."
That response was small comfort, said Miller, the Senate president, to a company that has lost money every year since 2002 and has been kept afloat through more than $200 million loans from a parent corporation.
'Game of chicken'
Miller said he understood that the company consulted with "three different sets of lawyers" about the matter. Miller has reacted angrily to Magna's failure to pay the fee, likening the company's decisions to a "game of chicken" that "appears to have backfired."
On Tuesday, a day after the application deadline, Magna asked a procurement official to change requirements regarding the fee after the deadline. Donald C. Fry, chairman of a slots commission that will award the licenses, said Magna was told that the deadline had passed. The next day, Magna released a statement saying the money had been placed in an escrow account.
In its incomplete application delivered Monday, Magna explained that it was not including the $28.5 million fee because the company "protested, objected" and took exception to "improprieties" in the state's procurement process. The protest, which lays the groundwork for a potential court fight, was detailed in a letter sent Friday night by Magna attorneys to the Maryland Lottery.
A state commission charged with awarding slots licenses isn't expected to rule on the viability of the Laurel bid until later this week at the earliest.
