Will the promise of Baltimore slots be fulfilled this time?

Our view: We've seen glitzy artist renderings of downtown casinos before, but this time the developer — Caesars Entertainment Corp. — inspires more confidence

November 15, 2011

If we've learned anything so far in the effort to bring slot machine gambling to Maryland — and especially to downtown Baltimore — it's not to get too excited by early promises and glitzy artist's renderings. The gap between promise and reality seems to have a tendency to stretch on in unexpected ways. That said, the proposal by the head of Caesars Entertainment Corp. to the state's slots licensing commission for a Harrah's casino on Russell Street just south of M&T Bank Stadium is clearly more promising than anything we've seen thus far for the Baltimore site and stands a chance to give the Cordish Cos. casino under construction at Arundel Mills mall competition for the state's top slots site.

The failure of the first group that bid on the city's slots license — the Baltimore City Entertainment Group made some grand promises but was unable to put together financing for its license application fee, much less actual construction — creates natural wariness about this casino plan. Moreover, the recent troubles of the group that put on the similarly hyped Baltimore Grand Prix are bound to make city residents and officials somewhat jaded. We won't know for sure whether the Caesars group, which includes some well-known local businessmen, can pull this off until the casino opens.

And given the state's experience with the two casinos that are already open, there's good reason to be skeptical about the group's projected revenues for the site, which call for an initial per-machine take that is 56 percent higher than what Penn National Gaming is getting at its casino in Perryville and double what the new Ocean Downs casino is producing. Certainly, Baltimore is a much better location than either of those two, but given the competition from the Arundel Mills casino and a weak economy, we shouldn't be surprised if the group's estimate of $306 per machine, per day proves overly optimistic.

That said, there is a lot to like about this proposal. For starters, it comes from the largest casino operator in the world and will carry a recognized brand, Harrah's, that already has a devoted following. The opportunity to market a new casino in Baltimore to 43 million members of the company's rewards program is a reminder of the value of having such an established player in the market. This is a far cry from the Baltimore City Entertainment Group, which had no previous casino experience (or, for that matter, the group that put on the grand prix, which also had never put on a race before).

The design and amenities of the proposal also appear well thought out to maximize the ability of the casino not only to generate revenue for itself but also to enliven a stretch of the city that has never reached its potential. Despite the huge draws of Oriole Park and M&T Bank stadium, the city's southern gateway on Russell Street has mainly been a collection of budget hotels, warehouses and gas stations. The Harrah's plan would be far better than the slots warehouse that critics feared would be the result of the city's financial demands on a casino operator — essentially, an extra 3 percent tax on top of the 67 percent the state is already taking. The first of the casino's two floors would have street-facing retail and restaurants, which could encourage a nice pedestrian flow before and after Ravens or Orioles games or other events at the stadiums. It could also serve as a bridge to the proposed Westport development to the south.

A key question posed by the Caesars plan is whether the site can really live up to its billing as a slots-only casino. Company officials talked of making it a high-end destination for the jet set, but that's hard to imagine without table games, and Caesars President, Chairman and CEO Gary Loveman suggested that the company will push for Maryland to allow them. Such a legal change would require approval both by the General Assembly and by voters in a referendum. Perhaps allowing table games, as most neighboring states have done, will one day be appropriate. But any discussion of the issue now is premature. Maryland should get its slots operation fully off the ground — and Caesars should show it can make its vision for Baltimore a reality — before we talk about expanding gambling again.

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