Maryland Live owner warns state leaders of ‘oversaturation’
Posted: 7:25 pm Fri, July 27, 2012
Daily Record Business Writer
ANNAPOLIS — While officials representing potential National Harbor casino developer MGM Resorts International Inc. wore smiles behind Gov. Martin O’Malley as he announced a special legislative session on gambling, the operator of Maryland’s largest casino fumed.
David S. Cordish, whose Cordish Cos. developed the Maryland Live casino at Arundel Mills mall, warned Maryland lawmakers once again Friday that allowing a sixth casino to be built would spell doom for the five already-approved facilities.
“Oversaturation is real. Maryland Live has been partially open for two months, and even in its unfinished state, it has decreased the revenue in Perryville almost 25 percent,” Cordish wrote in an email. “And Perryville is located 52 miles from Maryland Live. National Harbor is located considerably closer to Baltimore City and Maryland Live than is Perryville.”
Despite Cordish’s protests, O’Malley, Senate President Thomas V. Mike Miller Jr. and House of Delegates Speaker Michael E. Busch stood side-by-side Friday and talked of the thousands of jobs and hundreds of millions of dollars in revenue an additional casino, and the legalization of table games, would create for the state.
“There is no progress without jobs,” O’Malley said. “And by addressing these lingering issues, we have the ability to actually, together, create thousands of new construction jobs in our state as well as 2,000 additional permanent jobs.”
Though Republican leaders of the House and Senate unleashed scathing criticism of the state’s second special session this summer, O’Malley said the legislature’s gambling distraction had become an impediment to progress in the State House. That, he said, made resolving the gambling issue this fall something of an emergency.
“All of us know very, very well how divisive this issue can be for us and for our General Assembly,” O’Malley said. “And that is why I want us to resolve this issue now. … I think we had an emergency situation when we adjourned [the regular session] without a budget. I want to avoid the emergency and keep that from ever happening again.”
O’Malley was referring to a package of bills that funded the state’s fiscal 2013 operating budget. The package, which included an income tax hike and the shift of teacher pension costs from the state to local jurisdictions, did not pass before time ran out on the legislature’s annual 90-day session.
“That was kind of a low point in my service here, and I want to put those days behind us,” O’Malley said. “I want to resolve this issue so we can move forward.”
Moving forward in this way — potentially allowing a casino to be built in Prince George’s County, most likely at National Harbor — is reckless, Cordish said.
“There is one trade area and if the Maryland constitution is amended to allow for a destination casino in National Harbor, added to the already allowed Anne Arundel County, Baltimore City, and existing Charles Town, W.Va., mega casinos, the equation can’t possibly work for the State of Maryland or the casino operators,” he wrote. “It would be unprecedented in the U.S. at a tax rate remotely approaching 67 percent.”
Cordish noted that in Las Vegas and Atlantic City, the tax rates are 6.75 percent and 8 percent, respectively. O’Malley, though, said legislation to be considered in the special session would “create predictability and certainty in the marketplace,” something casino operators don’t have given the volatile issue’s instability.
Miller, meanwhile, said the potential legalization of table games — a measure that apparently would easily be approved by the legislature if separated from the thornier issue of a sixth casino — should pacify Cordish.
“I think there are benefits to this bill that Mr. Cordish likes very much,” said Miller, D-Calvert and Prince George’s.
The state’s five approved casinos will have their revenue protected, O’Malley said, whether through a reduction in their tax rate or other cost-cutting methods. That won’t be worked out unless the bill is passed and then approved by voters statewide.
Some benefits of expanded gambling would be felt almost immediately. Legalizing table games alone could bring in $100 million in revenue this fiscal year, O’Malley said, but a sixth casino would take years to build.
Both measures are subject to voter approval in a November referendum. Busch, D-Anne Arundel, said if a majority of voters in Prince George’s County do not vote for a sixth casino, that measure would not be approved, regardless of the statewide vote.
Meanwhile, Anne Arundel County and Cecil County will not see a reduction in the amount of money they receive as part of the revenue generated by Hollywood Casino Perryville and Maryland Live, Busch said.
Miller said the bill will be finished and ready for review in early August. The session will begin Aug. 9 and is expected to last about three days, he said.
Busch said he “absolutely” had the 71 votes needed to pass gambling legislation in the House.
But Curtis S. Anderson, the Democratic chairman of Baltimore’s delegation to the House, said he did not know how that could be.
“Even when we met Wednesday, he said he gave the governor his best advice as to whether the votes were there,” Anderson said. “He advised him against calling the special session.”
A Busch aide said the speaker never told House leadership that he advised the governor against calling a special session. Regardless, Anderson said pre-session predictions weren’t worth much.
“It’s like pre-season. What really is important is what happens in the game,” he said. “I think the governor has a lot of work to do. I don’t think the speaker’s going to go out on a limb to get everybody ginned up about supporting the bill.”
Anderson said the city wants the ability to borrow additional money for school construction and improvements. He also wants legislation passed that guarantees substantial minority participation in the construction of casinos in Maryland.
Without approval of those requests, the city delegation’s 18 members would not vote for expanded gambling, he said. Other delegations are expected to seek sweeteners for their jurisdictions, too.