Vote on slot system is delayed 

Posted: 8:03 pm Wed, December 16, 2009
By Nicholas Sohr
Daily Record Business Writer

ANNAPOLIS — The Board of Public Works delayed on Wednesday the vote on a critical slot machine monitoring contract, a move that state lottery officials said could push back the opening of the first licensed gaming facility in Maryland.

“I’m very concerned that any delay could cause the state and the lottery not to be ready,” said Gina Smith, interim director of the Maryland State Lottery, during the board’s discussion on the contract to develop and staff the central system.

The board ultimately decided to defer a vote until its Jan. 6 meeting at the request of Comptroller Peter Franchot, and requested an attorney general’s opinion on the contract.

“My concern is we’re about to award a contract of $38.9 million without the money in hand to do it,” Franchot said. “Not to state the obvious, but we have no money in hand.”

The contract is worth $21.5 million over five years and has a $17.4 million renewal option.

Franchot cited regulations that require state agencies to have the money on hand to pay bills when they come due. The contract would be paid with revenues from the slot machines, which will not be in operation until the monitoring system is up and running.

“I just hope to take a few weeks and ask the attorney general to take another look based on the facts here,” Franchot said.

Gov. Martin O’Malley and Treasurer Nancy Kopp, the other two members of the board, obliged.

“In deference to the comptroller, ’tis the season to be jolly, we’ll defer,” O’Malley said.

The company being considered for the contract, GTECH Corp., of Providence, R.I., has a checkered past, a background check of the company found.

GTECH “has a past history of questionable business practices while operating in foreign countries,” according to the report by the state lottery. The report says some issues from its past linger, but also stated no findings of wrongdoing were discovered.

The company has the required “good character, honesty and integrity” to be awarded the contract, according to the lottery agency.

The board did not question the selection of GTECH as the candidate for the monitoring contract.

GTECH was investigated by the federal government in the 1990s after receiving a no-bid contract from the Maryland State Lottery to launch its Keno game.

GTECH would not receive payment on the contract until the first gaming facility is operation, said Smith.

Ocean Downs, a horse racetrack on the Eastern Shore, is expected to be the first slots casino to open. Its Memorial Day weekend grand opening has been pushed back, however, after issues related to asbestos and steel were discovered in its grandstand. The owner of the track, William Rickman, has discussed the possibility of installing slot machines in a temporary facility in time for its original opening date.

Paul Dorsey, director of policy and development at the lottery agency, said the three-week delay in approving the monitoring contract could push the Ocean Downs date back.

“We’re on a very strict timeline,” Dorsey said. “We need to start that immediately.”

Donald C. Fry, chairman of the state Video Lottery Facility Location Commission, said he did not believe the three-week delay would greatly affect the opening of gaming facilities.

“It’s critical to get a central system online as soon as possible,” he said. “If the delays go on for an extended period time it could put some pressure on it, but I don’t see that right now.”

The state’s five proposed slots locations have been hit with a flurry of hurdles, snags and last-second postponements.

The state commission on Thursday is scheduled to hear from a group of investors who have proposed a 3,750-machine casino in Baltimore. The group has asked for another extension on the due date for its final proposal and $19.5 million license fee.

Fry said the Baltimore license could be rebid if the commission is not convinced of the project’s viability.

In Anne Arundel County, the 4,750-machine casino planned next to the Arundel Mills shopping mall faces a key zoning vote on Monday night.