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State slots commission eases MBE rules

ANNAPOLIS — The state slots commission eased minority business participation goals for would-be casino developers in Baltimore and Western Maryland on Wednesday.

The amendments approved by the Video Lottery Facility Location Commission remove specific minority, or MBE, benchmark figures from bid documents. The state will set “individualized goals” for each project.

“They are always subject to revision based on the work required and the MBE firms available,” said Dan Friedman, an assistant attorney general and counsel to the commission.

Minority participation arose as a major issue in the state’s fledgling gaming industry after a developer filed a reverse discrimination suit against the state last month.

In the suit, Baltimore City Entertainment Group argues that the proposal process for the city casino unfairly discriminates against white men in favor of women and minorities with MBE goals of 37 percent for the city and 35 percent for the state.

BCEG was the only bidder for the Baltimore license in February 2009, but its application was tossed later that year by the slots commission. BCEG has been engaged in appeals and legal challenges ever since.

In its reverse discrimination suit, filed July 5, the developer cited a letter from Attorney General Douglas F. Gansler urging Gov. Martin O’Malley in May not to sign the bill that imposed the minority business requirements on casino developers because there was not sufficient evidence showing the need for the carve-out.

“If you choose to sign this bill, it should not be implemented unless and until a study validates the need for such a remedy and a program narrowly tailored to reflect the results of that study is enacted,” Gansler wrote.

Friedman produced a study conducted by Nera Economic Consulting of Austin, Texas, on Wednesday that showed more than 99 percent of construction spending on the state’s first two casinos fell into categories in which Nera found evidence of discrimination. In an Aug. 11 letter to Senate President Thomas V. Mike Miller Jr. and House Speaker Michael E. Busch, Gansler wrote that the Nera findings provided sufficient justification to implement the law O’Malley signed in May.

Nera Senior Vice President Jon Wainwright wrote in an Aug. 5 letter to the state that the analysis was requested in May, before the BCEG lawsuit was filed.

“It was in the works,” Friedman said.

Friedman and commission Chairman Donald C. Fry declined to comment on the BCEG suit. The state’s response is due next month.

The minority business participation goals for each project will be set by the State Lottery Commission, which oversees gaming operations and has the final say on licensing casinos. Goals will be set based on the kind of work each individual casino needs and the availability of minority firms to do it.

The commission also approved a handful of other amendments to bid requirements after discussions with potential bidders

Fry said there are still “multiple parties” interested in both casino sites.

The Baltimore location and Rocky Gap Lodge & Resort are the last unclaimed gaming licenses in Maryland. There are casinos operating in Cecil and Worcester counties and a third is under construction in Anne Arundel.

The Baltimore license has already been put out for proposals once, and Rocky Gap, twice. New bids for both locations are due Sept. 23.

“You never know until the deadline comes, but we have seen a marked increase in interest” in both sites, Fry said.

He declined to set a goal for the number of applicants.

“What’s most important is you get [at least] one good, qualified bid,” Fry said.

Potential bidders for the Baltimore license include at least two prominent local figures. Developer Pat Turner, whose $1.2 billion Westport development is just a mile from the proposed casino site south of M&T Bank Stadium, has partnered with gaming giant MGM Resorts International. And attorney William H. “Hassan” Murphy III is leading another group.

Other interested parties include an Oklahoma Native American tribe, two holding companies with diverse gaming interests and BCEG.