A Hopeful Prognosis Emerges On Slots Revenue

April 29, 2009|By Gadi Dechter | Gadi Dechter,gadi.dechter@baltsun.com

The chairman of a commission charged with awarding Maryland's five casino licenses said Tuesday that "there's more optimism" these days for a gambling-related windfall to state coffers despite a recession and lackluster initial interest from the private sector.

Donald C. Fry, a former Harford County delegate who heads the politically appointed panel, said he based his hopeful prognosis on new expectations that a full-scale casino will come to downtown Baltimore and on preliminary feedback from consultants hired to advise the commission.

In February, prospects for a slots-funded bailout of Maryland's structural budget deficit fizzled when officials acknowledged that two of just six bidders for five gambling licenses failed to submit millions of dollars in legally required fees and that Baltimore's applicant proposed a small, 500-machine parlor. That bidder, Baltimore Casino Entertainment Group LP, pledged to the city this month that it now intends to build a 3,750-machine casino, the maximum size allowed under the law.

At a commission meeting in Annapolis on Tuesday, consultants with PricewaterhouseCoopers told panelists that the recession-wracked gambling economy should recover "in the latter part of 2010" and that regional markets with monopoly-like licenses - as in Maryland - would better withstand the economic downturn than "destination" areas such as Las Vegas or Atlantic City.

Though the bids in Maryland were few, Michael French, the lead consultant, said the state had the "good fortune" of being courted by experienced operators, such as Pennsylvania-based Penn National Gaming Inc.

In a March 6 letter to the commission, Penn National, the sole bidder for the Cecil County slots license, said it intends to construct a 1,500-machine casino in Perryville - three times the size of the 500-machine parlor it proposed in February. The largest proposed casino would be a 4,750-machine slots parlor at Arundel Mills mall, though that project faces a zoning fight in the County Council.

Gov. Martin O'Malley and the Democratic leadership in Annapolis are counting on about $600 million in annual slots-related tax revenue to partly fix a structural deficit within three years.

Despite the generally upbeat tone of Tuesday's meeting, two members of the seven-person slots commission voiced misgivings.

Thomas P. Barbera, a retired health care executive, said he worried that having only one viable bid per site lessened the commission's "leverage" on the bidders. And D. Bruce Poole, a Hagerstown attorney and former lawmaker, said he wanted the consultants to look into whether the state's 67 percent tax rate on gambling operators - among the highest in the country - was dampening interest, thereby preventing the state from getting "the best deal for the taxpayers."

French told Poole he believed the anemic bidding was largely the result of the economy and "bad timing," not the state's tax structure.

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