David Cordish at The Cordish Cos. office in Baltimore. (Photo: Maximilian Franz)

A few items didn’t make it into today’s story about what developer David Cordish called an oversaturated casino market in Maryland.

Stephen L. Martino, director of the Maryland State Lottery Agency, said casino business is already starting to overlap. When Maryland Live! opens on June 6, Martino said business at Hollywood Casino Perryville is expected to lapse by 20 to 25 percent.

But Cordish doesn’t think the problem at Perryville will be a permanent one.

“I would be very surprised if, after the first three months, we have had a significant impact on Perryville,” Cordish said. During its first three months, a casino is going to attract lots of customers because it is new, he said, but eventually that levels off and stabilizes.

Cordish opposes the construction of a casino in Prince George’s County — something the legislature could discuss in a July special session — in part because it would hurt the market for his casino.

He said it’s important to give a casino time to develop a loyal customer base, an assertion backed by James Karmel, a gambling analyst and history professor at Harford Community College.

Karmel said much of the casino industry is built on establishing a loyal customer base and that process would be interrupted at Maryland Live! and at a proposed Baltimore casino if another facility was built at National Harbor before those casinos had time to settle in.

“I do think that’s a problem, especially when you add another [casino] without allowing the first two to build up a customer base,” Karmel said. “You want to give time to build up that customer base, maybe before introducing another option in the market.”

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A special legislative session to expand gambling in Maryland could take place the week of July 9 if an 11-member work group recommends convening such a session.

Gov. Martin O’Malley named the work group Monday evening, less than a week after he told reporters he expected to call a second special session of the General Assembly, where lawmakers would consider creating a sixth state slots license for use in Prince George’s County and adding table games to existing Maryland casinos.

John Morton III, a former Bank of America executive and current chairman of the Maryland Stadium Authority, will lead the work group, which includes six legislators, two members of O’Malley’s cabinet and a pair of administration staff members but no private-sector gambling experts.

“It became evident in the 2012 legislative session that the issue of gaming should be examined in more detail,” O’Malley said in a statement. “We are pleased to announce the members of this work group to consider the issue of gaming in our State. We are confident that their expertise and guidance will help us move toward consensus on this issue.”

Other members of the work group are:

• Matthew Gallagher, O’Malley’s chief of staff
• T. Eloise Foster, secretary of the Department of Budget and Management
• Jeanne Hitchcock, secretary of Appointments
• Joseph Bryce, Senior Policy and Legislative Advisor
• Sen. Edward Kasemeyer, chair of the Budget and Taxation Committee
• Sen. Nathaniel McFadden, vice chair of the Budget and Taxation Committee
• Sen. Richard Madaleno, chair of education, business & administration subcommittee
• Del. Sheila Hixson, chair of Ways and Means Committee
• Del. Peter Hammen, chair of Health and Government Operations Committee
• Del. Frank Turner, chair of finance resources subcommittee

The group intends to meet three times. The first meeting is scheduled for June 1.

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When the Maryland Live! casino opens at Arundel Mills mall on June 6, the state’s biggest gambling facility will be on line.

But that facility is likely to take a big chunk out of Hollywood Casino‘s business in Perryville.

Stephen L. Martino, director of the Maryland State Lottery Agency, said that Maryland Live! could take more than 20 percent of Perryville’s business. He couldn’t predict how long that slump would last.

“We expect Perryville’s numbers to go down,” Martino said. “I think the question is, we don’t know how long that’s going to last. I would expect an initial decline in the 20-to-25 percent range as new competition comes on line. Then we’ll have to see.”

The Perryville casino generated $10.7 million in revenue in April, according to numbers just released by the lottery agency. A 25 percent hit would reduce that total to just over $8 million.

Martino said the lottery agency expected the casino at Arundel Mills would have a greater impact on Hollywood Casino than at Worcester County’s Casino at Ocean Downs in Berlin.

Debate in the General Assembly over a potential sixth state casino — in Prince George’s County, likely at the sprawling National Harbor development — centered on how much, if any, business such a facility would take from Maryland Live! and a casino that could be built in downtown Baltimore.

The facility at Ocean Downs and a future casino at Rocky Gap State Park are considered to be far enough away from other facilities to not significantly feel the impact of the others, which all sit just off Interstate 95 up and down the central portion of the state.

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Rushern L. Baker III (Photo: Maryland State Archives)

Prince George’s County Executive Rushern L. Baker III said a billion-dollar casino at sprawling National Harbor would take some business away from the Maryland Live! facility at Arundel Mills mall but would “complement” a downtown Baltimore casino.

Baker made the comments Tuesday as a guest on Midday with Dan Rodricks on WYPR. A casino on the banks of the Potomac would draw “people from all over the world,” he said, and was far enough south to not bother a Baltimore facility.

“Will we pull some away from Arundel Mills? Sure,” Baker said. But most of the business in Prince George’s would likely come from visitors to the District, or residents of Northern Virginia, he said.

He also said developer David S. Cordish who has opposed a National Harbor casino and is is building the Anne Arundel facility, should have known additional slots licenses could be created by the state.

Baker, who just recently completed his first year in office, said a facility at National Harbor would be twice the size of the $500 million Arundel Mills facility.

“It will be much bigger … it’s a billion-dollar development,” Baker said. “Our base is what you see in Las Vegas.”

A bill that would have allowed the facility to be built at National Harbor — pending a fall voter referendum — failed in the waning hours of the 2012 General Assembly. The legislation would have created a sixth state slots license, for Prince George’s County, and allowed table games, like black jack, in all state gambling facilities.

It’s likely a special legislative session will be called in August for lawmakers to revisit the proposal. If approved, the casino would be built in 2016, Baker said, per an agreement Prince George’s County lawmakers made with the Baltimore City delegation in Annapolis.

Baker, who said he does not gamble and voted against slots when he was a member of the Maryland House of Delegates, changed his tune when his office studied the issue and decided a casino at National Harbor could raise $69 million for the county.

The county executive joked that he made Senate President Thomas V. Mike Miller Jr. mad when he did not immediately support the casino. But the study convinced Baker that the facility would be beneficial.

“It would make Maryland and Prince George’s County competitive in the Washington region,” Baker said.

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The state slots commission could decide on the licensee for the state’s fourth slots parlor this month.

The Video Lottery Terminal Location Commission will meet April 26, and could make a decision on the license for a slots parlor at Rocky Gap Lodge and Golf Resort at that time.

A major hurdle was cleared last week when the Allegany County commissioners came to agreement on a payment in lieu of taxes with Evitts Resort LLC, the lone bidder for the license. Because the resort is in Rocky Gap State Park, the county cannot collect property taxes from tenants. The agreement calls for Evitts to pay the county the equivalent of what property taxes for the site would be.

All that remains is the completion of a lease agreement between Evitts, the Maryland Economic Development Corp., which owns the resort and the Maryland Department of Natural Resource, which owns Rocky Gap State Park.

Donald C. Fry, chairman of the slots commission, said he expected that lease agreement to be completed in the next week.

“I’d still believe we’re in a position to make a decision on Rocky Gap by the end of this month,” Fry said. “I think the Allegany County commissioners, them moving forward, is a significant step.

“We need to make sure the lease is ready to go. But you’ve got a lot of different players. We’re down to a couple of issues.”

The award for a Baltimore facility could take a bit longer, Fry said, though he expected the commission would make a decision on that license before the end of June. The Maryland State Lottery Agency is still working on its background check of a group led by Caesars Entertainment.

“My target date is still the end of the fiscal year,” Fry said.

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The Senate’s presiding officer said Thursday that a bill to expand gambling in Maryland would either include a sixth casino license for a facility in Prince George’s County or there would be no gambling expansion this year.

Senate President Thomas V. Mike Miller, D-Calvert and Prince George’s, said that a bill allowing the addition of table games but not a sixth license was “not acceptable at all.”

SB 892 easily passed in the Senate last week, but won’t be voted on by a House of Delegates subcommittee until Friday or Saturday.

If the bill is amended and passed by the House, it would be subject to the Senate’s approval before moving to Gov. Martin O’Malley’s desk for signing.

Miller wants a new casino built at National Harbor, where the facility could draw from Virginia and Washington, D.C.

“It allows a site on the Potomac River, immediately adjacent to four of the richest counties in the United States,” Miller said. “They’re all in Virginia.

“It’s the most lucrative site on the East Coast. … Anyone who understands money and fiscal common sense has got to recognize this is a great site.”

Del. Frank S. Turner, D-Howard, chairman of the Finance Resources Subcommittee, said this week that the bill needed a lot of work before it can be voted out of the Ways and Means Committee.

Working in Miller’s favor is that Del. Sheila E. Hixson, D-Montgomery, chairwoman of the House panel, said the point of the bill was to create a six slots license. If the House can tinker with the Senate bill and create more revenue for the state, it could receive a favorable report from Hixson’s committee.

That would set up a debate on the House floor, where the fate of the bill is uncertain. House Speaker Michael E. Busch, D-Anne Arundel, has been reluctant to take a firm position on the bill.

“I hope it happens,” Miller said.

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The head of the state video lottery commission said table games might be a good idea in Maryland but that the commission would take no position on a potential casino in Prince George’s County.

Legislation passed by the Senate (SB 892) would allow the state to create a sixth slots license for Prince George’s County, legalizes table games — like poker and black jack — and decrease the tax rate on slots, putting more money into the pocket of casino owners.

The legislation still must be passed by the House of Delegates and signed into law by Gov. Martin O’Malley.

Donald C. Fry, chairman of the Video Lottery Location Commission, said it was not the place of the commissioners to weigh in on the creation of any new licenses.

“We haven’t taken a position, and we wouldn’t take  a position, in respect to additional facilities,” Fry said. “Those are public policy decisions for the legislature to make. We are more the implementation body.”

But Fry said the commission does occasionally weigh in on existing law when it becomes apparent the state should consider changes in order to remain competitive. Adding table games to slots parlors in Maryland was one such recommendation.

“When the legislature passed the law in Maryland [allowing slots], we weren’t surrounded by states with tables games, and now we are,” he said. “If we want to maintain an competitive edge, that’s something they need to keep an eye on. …We’re not saying do it.”

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Rocky Gap Lodge and Golf Resort, the state-owned hotel, conference center and golf course property in Western Maryland, is $66 million in the hole and that debt has played a central role in efforts to find a casino developer to take over the complex.

One of the reasons the Video Lottery Facility Location Commission tossed a bid for the Allegany County casino license is the development group never came up with a proposal that the holders of Rocky Gap debt found palatable.

The resort posted operating losses of $2.9 million in both fiscal 2008 and 2009, and in fiscal 2010, losses rose to $3.8 million, making Rocky Gap the biggest drag on the finances of the Maryland Economic Development Corporation. (Figures available here, page 9.)

The 280-acre resort — it includes 215 hotel rooms and an 18-hole Jack Nicklaus Signature golf course — generates enough cash to cover its operating expenses, but not enough to cover its debt payments, according to legislative budget analysts.

Most of the resort’s debt is in the form of MEDCO bonds issued to private entities. Four different issues carry $46.86 million in outstanding principal, and $2.82 million in interest.

The resort also has a $650,000 line of credit with MEDCO. As of June 30, it had tapped $579,692.

Rocky Gap also owes:

• $6.7 million in ground rent to the Department of Natural Resources, which owns Rocky Gap State Park.
• $482,296 in surcharges to DNR
• $306,774 in “host community fees” to Allegany County
• $3.36 million for a MEDCO service fee
• $608,145 in an advance to MEDCO
• $3.31 million to the Department of Business and Economic Development, which extended the resort a loan from the Maryland Economic Development Assistance Authority and Fund in May 1996
• $1.5 million to DBED, which also extended an interest free loan in November 2001

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Gambling is shaping up to be one of the most interesting debates of the 2012 legislative session in Maryland and, underscoring the need that many in the General Assembly feel to approve table games, it’s going to be a big issue in plenty of other states, too.

Maryland’s gamblin’ neighbors already have table games — Delaware, Pennsylvania and West Virginia legalized blackjack, poker, roulette and other casino-style games largely in response to Maryland approving slots.

And because it was slower to embrace slot machines than other states, Maryland is a relatively small fish in a pond that’s big and likely to get bigger. In fiscal 2011, there were 20 casinos operating in those four states. They brought in a total of $3.68 billion in revenue that year from their slot machines alone. Maryland’s share from its two casinos – $103 million, or 2.8 percent.

Revenue from table games totaled $783 million in fiscal 2011 in West Virginia, Pennsylvania and Delaware, according to Maryland’s Department of Legislative Services.

That share will grow as the state’s largest casinos in Anne Arundel County and Baltimore City open their doors. (The Cordish Cos. is building in Anne Arundel and a group led by Caesars in seeking a license in Baltimore). But the casino scene is getting more crowded everywhere.

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Maryland’s two casinos brought in $12.2 million in revenue in October, according to figures released Monday by the Maryland State Lottery Agency.

That’s a 5 percent drop from September, with Casino at Ocean Downs responsible for all of the decline, and more.

The Worcester County casino, just a short drive from Ocean City, has seen its number slip steadily since the end of the summer.

July was the best month by far for the casino, which has 800 slot machines. Ocean Downs had revenue of $5.3 million that month, followed by $4.6 million in August and $4.7 million in September. With the beach-going tourists mostly gone, revenue dropped to $3.8 million in October.

The casino opened in January, so there is not yet even a full’s year worth of data, much less multiple years to compare, but it appears Ocean Downs will see its bottom line rise and fall with the crowds on the beach.

Hollywood Casino Perryville, the senior Maryland casino at 14 months old, saw the slightest of revenue bumps in November, up just about $20,000 over the month before to $9.1 million in revenue.

Perryville has been relatively steady over the past three months, and that very well could have been four, if not for a pesky hurricane in August.

The casino’s 1,500 slot machines each averaged $202 in revenue per day, slightly below state expectations. About half, $4.4 million, of the slots revenue went to state education efforts and the casinos kept one-third, or $3 million.

One more note from looking back at the slots figures from earlier in the year — even though Perryville isn’t near the beach (I’m not counting the Susquehanna and the upper Chesapeake Bay here), its peak also came in July, a $10.2 million month for the Cecil County casino.

The peaks at both Maryland casinos track with surrounding states, which typically have very strong months — and weeks — around the July 4 holiday.

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