Questions Remain as Maryland Officials Take Next Step Toward Slots
|Video Lottery Facility Location Commission Chairman Donald C. Fry says a decision on licenses should be made soon. (Capital News Service Photo by Bobby McMahon)
Special Report Main Page
By Bobby McMahon
Capital News Service
Friday, Sept. 18, 2009
ANNAPOLIS - After a summer of site visits and public hearings, state officials are preparing to take the next step toward choosing which locations around the state will get slot machines, a decision that has millions of dollars in tax revenue and thousands of jobs riding on it.
Yet, as the Video Lottery Facility Location Commission starts deliberations next week, significant questions remain as to where those slots will be and how many will be at each location. There's also concern among some officials and observers of a bait and switch -- namely, that citizens voted for slots in support of horse racing and received something else entirely.
One question before the commission involves both the Baltimore and Cecil County bidders trying to increase the number of machines in their respective casinos. Both sites submitted bids for 500 slot machines, but representatives from Penn National Gaming, the company backing the Cecil County bid in Perryville, and Baltimore City Entertainment Group have said publicly that they want to open their casinos with more slots -- 1,500 total in Perryville and 3,750 in Baltimore.
But, according to Commission Chairman Donald C. Fry, neither bidder has requested changes. They have also not deposited the additional licensing fees for the increased number of slots, which would cost Penn National $6 million and BCEG $19.5 million.
"We cannot consider a proposal for 3,750 if we don't have the licensing fee for that number of machines," Fry said of the Baltimore site, adding that both groups said they planned to submit changes this month.
"In theory, you could build a facility for more machines and come back at a later time, but we have to make a decision about what we have before us," Fry said. Representatives from both groups have said publicly that they are working with officials to resolve the matter.
Another major sticking point in the march toward slots lies in Anne Arundel County, where the county council must approve a necessary zoning change for the casino to be built. A package of bills to make these changes was withdrawn in early July by County Executive John Leopold.
"I would have preferred this been done months ago, but the reality is that the council wants to wait until the state commission acts," Leopold said.
Given this delay and the fact that Anne Arundel is the only county to still have unresolved zoning issues, state officials have expressed frustration with the lack of progress. Fry called the situation "extremely problematic," and commission member Robert Neall called it "an absurdity" to decide on the license without the zoning in place.
But Cathleen M. Vitale, chairman of the County Council, expressed frustration with the pressure by state officials. She said the council has tried to address fully the myriad issues involved in the project, including citizen concerns, potential traffic backups around the already gridlocked Arundel Mills and how much of the revenue will be left once the county addresses the increased infrastructure needs created by the casino.
"I think the council has been very prudent in trying to explore all those avenues," Vitale said. "It took the state 13 years [to make a decision on slots] -- they're taking issue with 6 months?"
Vitale also refuted the notion that the council was "sitting on [its] hands." She reiterated that council members did not currently have a bill before them and that state officials have in the past said the zoning change does not need to happen before a license decision is made.
The Anne Arundel site, which is located just steps from the food court of the Arundel Mills shopping mall, has caused a contentious debate among area residents, many of whom voted for the ballot referendum thinking slots would go at the Laurel Park race track.
Among them is Philip Van der Vossen, a Hanover resident who lives roughly a quarter mile from the proposed site. Concerned about lower property values and the casino's impact on the community, he took the afternoon off from work to attend the site visit meeting.
"[Arundel Mills] is not developed to be a casino," Van der Vossen said. "It's developed to be a family place."
This sense of "bait-and-switch" is bigger than just Anne Arundel county, Vitale said. One of the central arguments for slots, she said, had been to support and save the horse racing industry in the state, and yet three of the four proposals (the Worcester County proposal at Ocean Downs being the exception) will bring no one new to the track.
"It's as if the purpose of slots has been lost," Vitale said. "If you're playing slots in downtown Baltimore, you're not at Pimlico. If you're playing slots at Arundel Mills, you're not at Laurel Park. Nobody talks about that anymore."
Regardless of location, the state has designated almost 10 percent of expected slots revenue for the horse racing industry.
The four slots sites could mean hundreds of millions of dollars in new tax revenue as well as thousands of construction and casino jobs. For Baltimore residents, tax revenue from the slots parlor will enable the city to decrease the property tax rate 8 cents within five years, said Ryan O'Doherty, spokesman for Baltimore City Council President Stephanie Rawlings-Blake.
"We're paving the way for the largest property tax reduction in modern history," O'Doherty said.
Despite such projections, some elected officials and observers have expressed disappointment with the meager interest slots have received from developers.
While expectations were high that the state would receive multiple bids for each of the five areas, only four developers offered qualified bids, with no bid at a potential site in Rocky Gap State Park.
What's more, even though Maryland voters approved 15,000 slots statewide in a referendum last year, a significant number of available slot machines are left to be allocated. Even if developers in Baltimore and Perryville revise their bids, almost one-third of machines available under law will remain unclaimed.
Eric Schippers, a spokesman for Penn National Gaming, attributed the relative lack of interest to the ongoing economic recession as well as the 67 percent tax rate on casinos in Maryland, which he said is higher than any of the 19 other states in which his company operates.
"I think the softness of the economy and the high tax rate scared off some bidders," Schippers said.
The Video Lottery Facility Location Commission will consider these and other issues in a series of meetings that will start next week, with scheduled work sessions continuing into October and November. Fry said that the commission will first consider the Worcester County proposal at Ocean Downs, and it's possible that a decision to award the site a license could be made as early as Wednesday.
"I can't guarantee that we'll have a vote," Fry said, "but we're getting close to being in a position to making a decision very soon."