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By Dan Genz
Capital News Service
Thursday, January 30, 2003

ANNAPOLIS - The slot machine proposal released by Gov. Robert Ehrlich Thursday will directly funnel all the state's take into a dedicated fund for education.

Maryland will receive 64 percent of the net proceeds from slot machines, a very high rate when compared to other states.

Modeled in part after Delaware's 1994 plan, Ehrlich's legislation would allow a maximum of 10,500 slot machines. The bill calls for license fees of $100 million at the Rosecroft, Pimlico and Laurel tracks for 3,000 machines each, and $50 million in license fees for 1,500 slots at the track under construction in Cumberland.

Ehrlich's Cabinet members called the plan "fair" and "crucial to funding Education." They noted the plan evolved over the last few months, and even changed in the last 24 hours. The bill was introduced in both the House and Senate Thursday afternoon.

Ehrlich did not appear at his press conference, forcing Budget Secretary James "Chip" DiPaula to defend his absence by saying it had "absolutely nothing" to do with the governor's commitment to slots in Maryland.

Slots can be up and running in time to generate the $45 million to hit revenue targets in Ehrlich's budget, said Ken Masters, Ehrlich's legislative director.

Of the nine states with approved plans for non-casino gambling, only Oregon receives more money than the percentage Ehrlich proposed.

New York recently approved a plan giving the state 60 percent of its slot machine take, however only the Saratoga track can afford that rate, Legislative Services analysts told lawmakers at a joint committee briefing Wednesday.

Once Maryland's slot machine industry matures, it's expected to produce $800 million to $1 billion annually, and the state will rake in 64 percent of that, according to Legislative Services analyst reports released Wednesday.

The rest of the pot will be split several ways:

Track owners will receive a little under 25 percent; the track purse will get about 8 percent; another 1 percent will go to two tracks not included in the slots deal; jurisdictions around the tracks will take 3 percent; and $500,000 will go to gambling addiction services.

"All I can say now is, 'Wow,'" said Tom Bowman, President of Maryland's Horsebreeders Association. He asked for time to mull the details of Ehrlich's bill before commenting on it.

The $100 million license fees are not exorbitant, Masters said, considering the revenue stream dedicated to the horse racing association.

Racetracks would not be reimbursed for any part of their license fees, said Joseph Getty, Ehrlich's policy director.

Some groups will likely oppose the funding breakdown.

"The locals will be quick to say (their 3 percent share) is not enough," Masters said.

Gambling addiction services will receive the same $500,000 as West Virginia allots from its slot machine revenue to preventive education and addiction help lines. The figure is "very low," legislative analysts said. Education funding will be one key to passing the legislation, said House Ways and Means Committee Chairwoman Sheila Hixson, D-Montgomery. "I don't think it could have passed any other way."

After originally earmarking slots revenue to education, Ehrlich considered dumping it into the general fund, before finally directing it to education.

Even with the dedicated funding, any slots bill will be tough to pass.

Democrats say they have mounted the necessary votes to halt slots legislation for one year, with 71 sponsors and another 20 anonymous GOP supporters who would defend the moratorium on the floor.

Those votes might vanish when it comes to the floor, said slots advocate and House Appropriations Chairman Howard P. Rawlings, D-Baltimore. His bill provides for 2,500 slot machines at each of the four tracks with much higher license fee and the state receiving a slightly lower percentage of the take.

Things are different in the Senate.

"We're going to try to pass a slots bill," said Senate President Thomas V. Mike Miller Jr., D-Calvert. "So it doesn't make any sense to have a moratorium on slots."

The budget would have to be badly slashed without slots, Miller said. "We're moving full speed ahead working with the governor . . . to try and fund public education."

Ehrlich's bill disbands both the Maryland Lottery Commission and the Maryland Racing Commission to form a new nine-member panel called the Maryland State Lottery and Racing Agency and Commission.
The new board will contain four members of the horseracing industry and five at-large members.

 

Copyright © 2003 University of Maryland Philip Merrill College of Journalism