Slots revisionism

Our view: Despite Ehrlich's carping, Md. gambling program moves ahead

May 26, 2010

The announcement that Maryland's first slots parlor, the Hollywood Casino in Cecil County, will open in October, sooner than expected, is good news for the local economy, which will be boosted by new jobs, and for the state's treasury, which will eventually see nearly $80 million a year in taxes from the site. But somehow this development has done nothing to quash the talk that Maryland's slots program is a slow-moving disaster that has been bungled by Gov. Martin O'Malley and the Democrat-run General Assembly. In the politics-makes-strange-bedfellows department, the naysayers are led by the former chief cheerleader for slots in Maryland, former Gov. Robert L. Ehrlich Jr., who has decried the "political negligence" in the expansion of gambling and has heavily implied that, if he were still governor, things would be moving much faster.

But the truth is, Maryland's slots program is not moving particularly slowly, is similar in key ways to Mr. Ehrlich's proposals when he was governor, and is nearly identical to slots deals he rejected.

If construction schedules hold, the first coins will drop in Hollywood Casino Perryville slots some 23 months after voters approved a constitutional amendment authorizing slot machines. Another casino near Ocean City is expected to begin operation two months later. That compares favorably to the rollout of slots in Pennsylvania. Gov. Ed Rendell signed a slots bill into law on July 5, 2004, but litigation and other delays held off the award of the first slots licenses until September 2006 and the opening of the first slots facility until November of that year. That's a span of 28 months. Another slots parlor opened in December of that year, four came online in 2007, one in 2008 and three in 2009. Another three slots licenses have yet to be awarded.

The highest-profile delay for a Maryland slots parlor is in Anne Arundel County, where what is expected to be the state's most lucrative casino was held up for months as the County Council decided whether to enact slots zoning and is now being held up by a voter drive (supported by the horse racing industry) to overturn that zoning. Whether that exact scenario would have played itself out under an Ehrlich gambling bill is impossible to know, but he only briefly flirted with the idea of allowing the state to supersede local zoning control before backing legislation that would have given local governments the same effective veto power they have over slots parlors now.

The strongest case Mr. Ehrlich has to criticize the slots legislation is in Baltimore, where only one entity — and a financially weak and inexperienced one at that — bid for a slots license. Mr. Ehrlich argues that the state's high tax rate (67 percent, one of the highest in the nation) discouraged competition for the licenses, and in Baltimore, requirements for additional compensation for the city may well have had a dampening effect. Governor O'Malley argues that it was the tight credit markets that hindered competition for the licenses when they were put up for bid in early 2009, and he may be right, too. We'll find out when the state slots commission rebids that license.

But the notion that the 67 percent tax rate (in contrast to the 61 percent that Mr. Ehrlich proposed) makes Maryland not worth the trouble for slots bidders is belied by the fight going on in Anne Arundel County. The Maryland Jockey Club spent untold amounts of money to bankroll the slots referendum petition drive on the slight chance that overturning the zoning might, years down the road, lead to slots at Laurel Park. The Cordish Cos., which won the Arundel license for its planned casino at Arundel Mills Mall, has been hiring handwriting analysts and racking up plenty of legal fees in its lawsuit to stop the referendum, and if that fails, both sides could wind up spending millions to try to influence the vote in November. If the tax rate was truly confiscatory, why would they bother?

Finally, if the failure to enact slots during Mr. Ehrlich's term has in fact cost the state billions in tax revenues, as he contends, at least some of the blame must fall to him. In the summer of 2004, House Speaker Michael E. Busch, who had stymied Mr. Ehrlich's previous efforts to legalize slots, offered him the same idea for a statewide vote on a constitutional amendment legalizing slots that Maryland eventually adopted in 2007. But that deal collapsed, partially a victim of the bad blood between the two men and partially of Mr. Ehrlich's inability to deliver enough Republican votes.

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