A measure being pushed by Sen. George Edwards, R-Garrett, and Sen. Nancy King, D-Montgomery, would exempt slots operators from having to pay personal property taxes for use of the machines to counties where they operate.
Although state-owned property — such as the slot machines that vendors rent from the Maryland Lottery Commission — is exempt from local taxes, operators are still subject to the local personal property tax because they are for-profit companies, according to an attorney general’s opinion obtained by The Associated Press Thursday.
“It is my view that the state-owned VLT equipment (slot machines) used by the licensees in Anne Arundel, Cecil and Worcester Counties and Baltimore City is subject to the local personal property tax,” wrote Assistant Attorney General Bonnie Kirkland in an Oct. 10, 2010, opinion sent to Donald Fry, chairman of the Video Lottery Facility Location Commission.
Three of the five locations that voters approved for slots in 2008 are either up and running or being built. The state has yet to issue licenses for two locations — in Baltimore and Western Maryland.
Edwards and King say it was never their intent when they voted for slots to have operators pay the personal property tax on the machines. They are seeking to amend Edwards’ bill — which would change how much money would go to a potential slots operator at Rocky Gap Resort — to exempt all slots operators from the local tax.
“The understanding when we passed this five years ago was that they wouldn’t have to pay (personal property) taxes, but now they’re told they have to pay taxes,” Edwards said.
King estimated the measure could save slots operators an average $350,000 a year, although that amount would vary greatly, based on the number of machines authorized for each location and how much each county assesses.
While local officials would welcome the additional money, they have not budgeted for it, said Harold Higgins, finance officer for Worcester County, where one of the state’s two slots parlors is up and running.
Eric Schippers, a spokesman for Penn National Gaming Inc., which operates the Hollywood Casino Perryville, said it is appropriate that slot operators be exempted from the local property tax. He noted that the company does pay property taxes on the slots parlor itself.
“Recall first and foremost that at 67 percent of gross revenues, Maryland has the second highest gaming tax rate in the United States,” Schippers wrote in an e-mail Thursday. “Secondly, the state owns the machines — these are not our personal property.”
Penn National is seeking an additional license to run slots at Rosecroft Raceway in Fort Washington.
Fry and the state slots commission initially determined that operators would not have to pay personal property taxes on their machines. But the October opinion overruled that determination.
A call to Bill Rickman, who runs 750 slot machines at Ocean Downs in Worcester County, was not returned Thursday.