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Maryland casinos short of minority business goal

Minority businesses played a larger role in building and outfitting Maryland’s two casinos than previously reported, but their participation still fell well short of the goals set by the state.

An audit released Friday by the Department of Legislative Services faulted the Governor’s Office of Minority Affairs for overlooking some and miscalculating other payments made to minority businesses, or MBEs.

At Hollywood Casino Perryville, Penn National Gaming Inc. spent 20.7 percent of its $56.3 million for construction and procurement with MBEs, according to the audit. The minority affairs office originally reported the gambling company spent 19.3 percent.

The Perryville casino operates 1,500 slot machines just off Interstate 95 and has been open since Sept. 27, 2010.

The Casino at Ocean Downs tallied 19.8 percent MBE participation on $20.1 million in spending, as opposed to the initial 18.9 percent figure, auditors said. That casino, a five-mile drive from Ocean City, holds 800 slot machines and sits beside the Ocean Downs harness track.

Both casinos had MBE goals of 25 percent.

Wayne Frazier, president of the Maryland Washington Minority Contractors Association, has been critical of the state for missing MBE goals in stocking the casinos with slot machines — Maryland owns or leases all the terminals — but said he was “pleased” with the casino owners.

“I think those institutions, Penn National and [Ocean Downs owner Bill Rickman], did a good job in reaching out to minority businesses, even though they didn’t hit the 25 percent,” he said. “It’s tough. I can’t criticize them for that.”

Indeed, auditors wrote that both casino owners “engaged in substantial activities toward achieving the minority business participation goals, including holding diversity fairs and outreach events, and employing direct phone and email solicitations.”

Criticism of minority inclusion has been consistent as the state has struggled to get its casino industry up and running. The debate could soon be rekindled as the Maryland State Lottery Agency returns to the Board of Public Works with contracts for slot machines for Maryland Live! Casino in Anne Arundel County.

Comptroller Peter Franchot has joined Frazier in criticizing the state’s purchase and lease of slots terminals and a bidder for the Baltimore license is pursuing a reverse discrimination suit against the Video Lottery Facility Location Commission over its MBE requirements.

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.

That, and Attorney General Douglas F. Gansler’s warnings of the validity of the requirements, prompted the slots commission to scrap one-size-fits-all MBE benchmarks in its bid documents. The state will instead set “individualized goals” for each project.