State to spend $32M more for slot machines at Ocean Downs

Purchase made over objections by comptroller

August 11, 2010|By Julie Bykowicz, The Baltimore Sun

The state's spending panel voted Wednesday to approve a $32.7 million contract for slot machines for the planned Eastern Shore casino, again over the objections of Comptroller Peter Franchot.

Gov. Martin O'Malley and Treasurer Nancy K. Kopp outvoted Franchot at the Board of Public Works meeting. Franchot, who opposes slot machine gambling, has questioned the amount of money the state is spending on its nascent program. Though approved by voters two years ago, none of the five planned casinos is up and running.

"I had to put my hand up again and ask why more taxpayer money is being paid out before getting any revenue from slots," Franchot said in an interview after the meeting. "For some reason, the state has agreed to pay for machines with public money, when in almost every other state, the gambling companies absorb that cost. It gives the impression that the state has streets paved in gold."

Stephen Martino, director of the Maryland Lottery Agency, which oversees the slots program, said the decision to have the state rather than private companies purchase the machines was made by the legislature and affirmed by voters.

"We are just implementing the law," he said.

The casino at Ocean Downs, a horse track just outside Ocean City, is scheduled to open in late December. The state Board of Public Works approved Wednesday the purchase of 592 machines and the lease of 158 more, Martino said.

The track is licensed for up to 800 machines, but the operator is seeking just 750, Martino said.

Ocean Downs is expected to be the second site to open. The Hollywood Casino in Cecil County is slated to launch next month with 1,500 slot machines that cost the state $65.3 million.

The cost of the machines includes installation and maintenance, Martino said. Still, the expenditure has raised concerns. The investment firm Stifel Nicolaus has said that the market rate for slot machines is $13,000 to $21,000. Maryland is paying about $20,000 to $25,000 per machine, without maintenance and installation costs factored in, the firm estimated, using figures provided by the lottery.

Franchot questioned why two of the eight slot machine companies given contracts Wednesday did not meet the state's minority business participation goals. Martino said the companies are "working hard to find ways to maximize minority participation, and they've maximized where they can."

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