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Uncertainty surrounds rushed gambling report

Ten- and 12-hour days were the norm for state fiscal analysts working over the last month to put together a rushed report with PricewaterhouseCoopers on whether to expand gambling in Maryland.

The hours were long for analysts at PricewaterhouseCoopers, too, and that’ll cost the state more than a jackpots’ worth when the bill comes due.

Warren G. Deschenaux, director of the state Office of Policy Analysis, said PricewaterhouseCoopers is likely to charge the state “hundreds of thousands of dollars” for the quick turnaround of the gambling study.

And he’s not even sure the study’s projections will be correct, or that a longer-term study would have cost less.

“We’re uncertain about our uncertainty,” Deschenaux said. “We know we’re uncertain.”

After about six weeks of work — PricewaterhouseCoopers sent a letter dated May 2 saying analysis was underway — analysts think the state can handle more gambling facilities. But they also admit the analysis is something of a gamble, itself. There are too many variables, Deschenaux said, to be certain that the report with the six-figure price tag is worth more than the cost of valet parking at Arundel Mills.

Then again, if the study is correct, the state could see an additional $161 million if the General Assembly passes legislation that creates the framework for a 3,000-slot facility to be built at National Harbor and legalizes table games. Deschenaux said the state would probably, at worst, net an extra $100 million annually.

Then again, the state’s fiscal analysts have been wrong before. William Rickman, owner of The Casino at Ocean Downs in Berlin, was quick to remind them.

Rickman, operator of the state’s smallest gambling facility with just 800 slot machines at a race track on the Eastern Shore, said Ocean Downs’ slots parlor is “projecting significant losses” for the second year in a row.

The operator admits his facility has been strapped by a poor tourism economy brought on by the recession. But the state’s estimation of his market was also off by 50 percent. He says his casino will fail without a reduction of the slots tax rate.

To be fair, fiscal analysts said they hit the nail on the head when projecting the market for Hollywood Casino Perryville, after adjusting that market 10 to 15 percent to account for the recession.

But past mistakes and the uncertainty expressed by Deschenaux were enough to stoke the objections of critics. Anne Arundel County Executive John R. Leopold told the gambling panel he was “at a loss to understand why we are having a discussion right now to create a sixth casino site.”

Leopold, with a vested interest in the state’s gambling program because of the $500 million Maryland Live casino at Arundel Mills in Hanover, didn’t stand alone in opposition.

Harford County Executive David R. Craig — with no dog in the fight outside his own political future — said there was no reason for the legislature to hold a special session. If it did, the Republican wanted every county to have the opportunity to bid for a slots license, including Harford.

House of Delegates Minority Leader Anthony J. O’Donnell, R-Calvert and St. Mary’s, said House Republicans — some of whom would support a gambling expansion in regular session — would vote against any special session casino bill en masse.

He said the state need look no further than the 2007 special session, which ended with legislation authorizing the creation of five slots licenses, to see why rushing to a decision on gambling was inadvisable.

“At best, the results are an anemic slot program that has barely gotten off the ground fives year later,” O’Donnell said. “We do not need to repeat the mistakes of the past.”

O’Donnell didn’t even bring up the cost of a special session, estimated to be about $20,000 a day. It’s then, Deschenaux said, that the tab will really start to add up.

Then again, the state is already spending more money on the slots program than it’s making. Analysts said between 110 and 115 percent of the program’s revenues are being allocated, meaning money from the General Fund is filling the shortfall.

It’s up to the work group — and ultimately the General Assembly — to decide which fiscal path is best. Aside from uncertainty, there is only one certainty, Deschenaux said.

“We are on an expensive course,” he said.