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Slots Estimates Much Lower Than Initially Projected

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By Erich Wagner
Capital News Service
Tuesday, Feb. 3, 2009

ANNAPOLIS - Companies that submitted proposals to operate slot machines at five locations designated by the General Assembly only requested a total of 6,550 machines, as opposed to the 10,550 initially estimated Monday, Donald Fry, head of the commission that oversees the implementation of slots, said Tuesday.

The 4,000 terminal discrepancy stems mostly from a misunderstanding with the Baltimore bidder, Baltimore City Entertainment Group.

Fry said the group bid on only 500 terminals, down from the 3,750 he thought the bid contained Monday night.

Only six companies submitted proposals to the slots committee by Monday's deadline. Of those, only four paid the required licensing fee of $3 million for every 500 machines.

Magna Entertainment submitted a proposal through the Laurel Racing Association and the Maryland Jockey Club to build 3,000 slot machines at the Laurel Park race track in Anne Arundel County, but did not pay the $18 million fee, Fry said.

Magna said in a press release Monday night that its proposal was for 4,750 machines.

Empire Resorts proposed 750 initial machines at the Rocky Gap location, and indicated that it would eventually reach a ceiling of 1,500. But the company withheld its fee on the condition that Maryland restructures the revenue sharing formula, which the General Assembly set at 33 percent for slot owners, and negotiates the sale of the Rocky Gap resort, Fry said.

The fate of the proposals delivered without the requisite licensing fees will be discussed at the meeting of the Video Lottery Facility Location Commission on Feb. 12, Fry said.

"At this time it's not appropriate for the staff to say these are not going to be considered, and it's not appropriate for me just as one single commissioner to say they're not going to be considered," he said. "It's an issue for the entire commission to take up."

Fry said eventually there could be as many as 13,000 machines in Maryland, despite the lower projection.

"Yesterday we looked at the situation and thought there was the opportunity sometime in the future for as many as 13,000 machines," Fry said. "Today we looked at it and there's still that opportunity."

House Speaker Michael Busch, D-Anne Arundel, said earlier in the day that the short list of bidders reflects the harsh economic conditions.

"A couple of the bidders that bid in Maryland pulled out of the state of Kansas," Busch said. "You know, capital's very tough to come by."

Senate President Thomas V. Mike Miller Jr., D-Calvert, said people need to recognize that the slot machine money may not materialize.

"What I'm suggesting is that the commission revisit the whole process," Miller said.

Asked to elaborate at a press conference Tuesday, Miller declined.

Gov. Martin O'Malley remained hopeful about the bidding process, said spokeswoman Christine Hansen.

"He looks forward to learning more about the commission's evaluations," Hansen said. "There was considerable interest ... even in this tough economic climate, but this is a long-term investment."

The 6,550 machines requested represent only 44 percent of the 15,000 terminals authorized by last November's referendum passed by Maryland voters. State officials hoped the machines could bring in at least $600 million annually beginning in the 2012 fiscal year.


Copyright 2009 University of Maryland Philip Merrill College of Journalism

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