Dividing up the casino winnings

Program lives up to many promises, but skeptics remain

June 07, 2014|By Arthur Hirsch, The Baltimore Sun

Tens of billions of dollars have been wagered in the state's casinos since the state legalized slot machines and table games — spinning off funds for schools, the horse racing industry and local programs that have financed everything from paving and police to iPads and small business loans.

But even with all the money coming to the state — $975 million though the end of May, according to state data — some Marylanders say the bonanza expected from casinos has not materialized.

Education advocates note that the money from casinos has mainly supplanted other state funding and has not been the windfall many felt was promised — in the political rhetoric if not in the letter of the law. Statewide casino revenue also falls short of overall projections made before Marylanders voted to approve the slots program and before the recession hit.

"Obviously, the revenue coming in is good for the state," said Del. Curt Anderson, a Baltimore City Democrat who opposed legalizing casinos. Still, "there were a lot of promises made as to where the money was going to go. I don't think it's fulfilled the promises that were made."

Casino supporters, including Gov. Martin O'Malley, say the revenue is an important source of funding for the state. The governor declined to comment on the program as a whole, but his office released a statement saying that casino contributions enabled the state to maintain school budgets during the recession.

Casino funds "have certainly provided the stability for the state to weather the storm and to continue to keep its promises for education and teacher pensions," added Sen. Richard Madaleno, a Montgomery County Democrat. "There haven't been the sort of gut-wrenching reductions in K-to-12 spending that you've seen in so many parts of the country."

Maryland meanwhile has emerged as a major gambling destination, driven largely by the success of Maryland Live, which generates the lion's share of the state's casino revenue and celebrated its second anniversary Friday.

The casino, located at the back of Arundel Mills mall in Hanover, takes in $1 billion a month in bets. It is without peer in Maryland for now and nearly without peer east of the Mississippi River. It has surpassed the performance of the top casinos in Atlantic City and Connecticut; the only one larger is the slots-only Resorts World Casino New York City at Aqueduct Racetrack.

Baltimore developer David S. Cordish, chairman and CEO of the Cordish Cos., an affiliate of which owns Maryland Live, said he figured his casino would succeed, but not like this.

"A billion a month? No," Cordish said.

He credited the location — next to a shopping and entertainment complex that drew 14.5 million visitors a year before the casino opened — and unforeseen events.

Five months after the casino opened on June 6, 2012, state voters adopted a referendum that expanded gambling, including a sixth casino in Prince George's County. While that location at National Harbor — along with the nearby Horseshoe Casino Baltimore opening in late summer — will rival Maryland Live and siphon some business away, the expansion also allowed table games.

Maryland Live has generated more than $1 billion of revenue after paying off winners in its first two years. The state's next-largest casino, Hollywood Casino in Perryville, has produced about $353 million since it opened in September 2010, according to data from the Maryland Lottery and Gaming Control Commission.

Maryland Live's share of that revenue is about $476 million, which analysts estimate might translate to a profit ranging from $80 million to $119 million for the Cordish affiliate.

While declining to discuss the casino's profit, Cordish said the casino hands the state about $875,000 a day in state taxes, helps its neighbors and created more than 3,000 jobs.

"What's wrong with this picture?" he asked of critics.

Money for education

Casino gambling revenues across Maryland are split according to a detailed formula dictated by state law.

Most of the wagered money is returned to gamblers in the form of winnings, but the house keeps between a nickel and a dime of every dollar bet — $1.67 billion so far, what the state gaming agency calls casino revenue — to be divided between the casino owners and the state.

Despite the state's hefty share, the casino revenue picture is not as rosy as it was painted before Marylanders voted to approve casinos with slot machines in 2008.

Projections made by General Assembly policy analysts in 2007, before the recession, assumed that all five Maryland casinos would be operating by July 1, 2013, and overestimated how many slot machines they would operate.

The analysts estimated that 15,000 machines would be operating in five casinos by the summer of 2013, while the actual number was 6,830 machines in four casinos. And one of those casinos, at Rocky Gap in Western Maryland, only opened in late May 2013.

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