Don't give up on Rocky Gap

Our view: Failure to find a developer willing to bring slot machines to the Western Maryland resort suggests more tinkering is required

November 14, 2010

For much of the year, overnight guests at Rocky Gap Lodge & Golf Resort can roam the empty hallways without fear of disturbing a lot of neighbors. Indeed, occupancy is so low in the winter that guests might worry they'd accidentally wandered into a remake of "The Shining."

How Maryland taxpayers and private investors got on the hook for the tens of millions of dollars it cost to develop the hotel and adjoining Jack Nicklaus signature golf course on one of Western Maryland's most scenic public parks a dozen years ago is no mystery. Allegany County's Casper R. "Cas" Taylor Jr., then speaker of the Maryland House of Delegates, used his considerable clout to negotiate that arrangement.

But with last week's failed attempt to find a developer willing to build a slots parlor at the resort (the second time the site has failed to attract a single qualified bid since slots were approved by Maryland voters two years ago), precisely how to get everyone off this deep-set hook is proving even more daunting.

If there's a lesson to be learned from the second unsuccessful round of bidding, it is not to give up quite yet. Between Rounds 1 and 2, the terms of slots at Rocky Gap were amended slightly to sweeten the deal. What's needed is a bit more sugar.

That may not appeal to the companies that hold slots licenses at Perryville, Ocean Downs or Arundel Mills Mall under less flexible terms, but Rocky Gap is a different cup of tea. From Day 1, analysts pointed out that slot machines at Rocky Gap were unlikely to be nearly as profitable as elsewhere because rural Western Maryland is a long way from the lucrative Baltimore-Washington corridor.

Meanwhile, the sweetener lawmakers agreed to for the second round was no truckload of Domino's finest. The revision allowed machines to be installed in the lodge for up to 30 months while a facility was built and lowered the state's cut on slot machine profits temporarily. In all, supporters estimate it would have saved a developer only about $2.5 million on a $40 million investment.

Clearly, that wasn't helpful enough. But there are any number of alternatives to amp up the cotton candy factor. Slots could be allowed in the lodge permanently (if the developer is willing to replace the lost meeting space). The state's take from the machines could be lowered further or permanently. Or perhaps the legislature could agree to table games — already allowed in West Virginia and Pennsylvania, both a mere stone's throw from Cumberland.

Any of those alternatives is better than keeping a non-productive Rocky Gap on the state's books. Right now, the facility meets its operating costs but little else — and hasn't made payments on its debt in years. Investors (primarily a hedge fund) would stand to benefit, but so would taxpayers. The first dollar generated by Rocky Gap slots is a dollar toward education funding the state wouldn't otherwise see.

That's not to suggest lawmakers should give away the proverbial store, but there's not much downside to amending the terms a second time — aside from underscoring what a questionable investment Rocky Gap has proven to be. It might have promoted tourism and generated 100 direct jobs for a county with an above-average unemployment rate of 8.7 percent in September, the seventh highest in the state, but at a cost of about $55 million (not counting the free lakefront land) those were some kind of pricey positions.

Keep in mind, too, that Rocky Gap's location as one of five sites for slots is now written into the state constitution. Moving the 1,500 machines permitted there to some other location would take considerable political muscle — and approval by voters. As the last eight years have demonstrated, getting such changes through the General Assembly is never any easy task. For that matter, it's not clear where, other than Rocky Gap, a fifth slots parlor could go. Other locations would either be redundant or blocked by community opposition.

The dream of a wholly privately-owned Rocky Gap resort that actually earns money for the state and boosts the local economy is not necessarily that far away. Unloading this particular white elephant (with apologies to pachyderms everywhere) was never going to be easy, but that makes the effort — and another round of bidding under terms more attractive to potential buyers — no less worthwhile.

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