Legislators planning big changes to slots law

Senate president calls slots as part of constitution "crippling"

November 12, 2010|By Nicole Fuller, The Baltimore Sun

Lawmakers will soon consider changes to Maryland's gambling laws, as leaders scramble to entice qualified bidders for the stalled slots parlors in Baltimore and Western Maryland.

Senate President Thomas V. Mike Miller Jr. said many aspects of the program will be on the table when the General Assembly convenes in January. He will push to ease restrictions preventing casino owners from controlling more than one of the state's five licenses. Other legislators say the tax rate on slots proceeds should be reduced.

"We're six years behind the times here in Maryland," said Miller, a Calvert County Democrat, suggesting that allowing a company to hold more than one license would make sites more attractive. "It's just a restriction that curtails bidders that might be willing to come to the state."

Maryland's slots program was approved in a 2008 referendum, and it was expected to bring in $1.5 billion annually in sorely needed state revenue by 2015. But until all five approved sites begin operating, the state won't receive all the money it is anticipating.

The gambling program has shown signs of progress with the recent opening of the state's first casino in Cecil County, along with zoning approval by Anne Arundel County voters this month for what could be the state's most lucrative slots parlor at Arundel Mills mall.

Still, many remain concerned that there are not enough companies willing to agree to Maryland's stringent casino rules — and those worries have been amplified by the repeated failure of the state-financed Rocky Gap Resort and Lodge in Allegany County to attract qualified casino bidders.

Increasing competition from surrounding states, including the introduction of table games like poker, blackjack and roulette, is also motivating lawmakers.

Maryland's 67 percent tax rate for slots is among the highest in the nation and above that of its nearest competitors, critics note. The rate in Pennsylvania is 55 percent, for example.

Lawmakers are limited in what they can do by the fact that voters approved slots as a constitutional amendment. Many changes — such as the addition of new types of gambling — would require voter approval. Miller derided that restriction. "The law is so crippling. … No business can be run like that."

The state has tried to increase interest in the more remote Rocky Gap site through a slight tax break passed this year. But recently, state officials have expressed interest in more changes that would spur the more lucrative, large-scale slots parlor planned for Baltimore. Another site, at Ocean Downs in Worcester County, is expected to open by the end of this year.

Gov. Martin O'Malley has acknowledged that some changes will be necessary to get the two languishing sites up and running, but he has not offered details about his preferences.

Spokesman Shaun Adamec said in an e-mail that he'd "hesitate to provide comment on specific options."

The state Video Lottery Terminal Location Commission, which awards slots licenses, is prepared to make recommendations to lawmakers on how to sweeten the pot for potential bidders, its leaders say.

A spokeswoman for Michael E. Busch said the House speaker will consider recommendations made by the commission.

Accomplishing any change will likely require consensus among the governor and the General Assembly's presiding officers.

Further complicating matters for the planned Baltimore casino, which is slated to house a 3,750-slot machine parlor at an undeveloped, city-owned site on Russell Street, is a continuing legal battle. Baltimore City Entertainment Group, which bid on the site but failed to make millions of dollars in payments, ultimately sued the city for $100 million in damages, claiming the city failed to uphold its deal. The city countersued; both lawsuits are pending.

The group also filed an appeal with the Maryland Board of Contract Appeals after the commission that awards the state's slots license threw out its proposal. The appeal is also pending and both issues must be decided before the Baltimore license is rebid. The owner of the Maryland Jockey Club., which failed in its bid to bring slots to Laurel Park race course in Anne Arundel County, has also filed an appeal to the board.

Ryan O'Doherty, a spokesman for Baltimore Mayor Stephanie Rawlings-Blake, said there is a sharp contrast between the Rocky Gap and Baltimore sites.

"Baltimore has the potential to be the premier gaming site in the Mid-Atlantic region because of the proximity to the downtown area," he said.

Once the legal battle with the former bidder is resolved, the city will issue a new request for proposals for the site. The site drew interest from developers when the original request for proposals was made in the fall of 2009, despite the difficult economic climate at that time, O'Doherty said. Officials expect even more interest in the site now that the economy has improved.

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