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Casinos have record month; Perryville seeks to drop some slot machines

Revenue at the Maryland Live casino at Arundel Mills mall propelled the state’s casino program to its second consecutive record revenue month, but the success of the state’s largest casino continues to come at the expense of a competitor 50 miles north.

Maryland Live, with its 3,700 slot machines, generated $35.41 million in July, its first full month of operation.

Maryland’s three casinos combined to generate more than $48 million in July, according to statistics released Monday by the Maryland State Lottery Agency, but more than 74 percent of that revenue was generated at Maryland Live in Hanover. Without Maryland Live’s contribution, overall casino revenue would have dipped more than 18 percent year-over-year.

So even as the state’s newest casino prospers, its first, the almost 2-year-old Hollywood Casino Perryville, is desperate to give one-third of its slot machines back to the state.

Hollywood Casino, in Cecil County, saw its July revenue tumble 32.4 percent year-over-year. Karen Bailey, a spokeswoman for Penn National Gaming Inc., the operator of the Perryville casino, said business was down 40 percent since the casino’s peak in March 2012.

In a letter to lottery Director Stephen L. Martino, a Penn National executive said the casino wants to “unconditionally return between 400 and 500 of our machines to the state, without any expectation of a license fee refund or any right to reclaim those machines.”

The state charges an initial license fee of $3 million per 500 slot machines. Hollywood is operating 1,500 machines.

Carl Sottosanti, vice president and deputy general counsel for Penn National, wrote that shedding the machines will save the casino a little money — it pays a fee of about $425 per machine per year — and also frees up the machines for use at other state casinos.

He said empty seats in front of slot machines create a negative atmosphere because large sections of the casino are empty.

“Simply put, the higher the slot occupancy, the more appealing the facility, which in turn leads to a more positive customer experience,” Sottosanti wrote.

Hollywood wants to give back the machines before the end of the year, but “even if the machines are removed prior to [Dec. 31] … we are prepared to pay that machine fee through year end,” the letter said.

Martino was in Annapolis Monday and unavailable for comment. The General Assembly is scheduled to convene a special session Thursday to consider legislation that could allow the construction of a sixth casino, most likely at National Harbor in Prince George’s County.

The bill also could legalize table games at state casinos, if a majority of Maryland voters approve the gambling expansion in a November referendum. Bill Hayles, Hollywood Casino’s general manager, said his facility was not giving away slot machines in order to free up floor space in the event table games such as blackjack and roulette are approved.

“One really has nothing to do with the other. Our request to the lottery is simply a reaction to the current and foreseeable future of our business volumes,” Hayles said. “Based on what we’ve experienced so far and the anticipation of Baltimore’s casino, we simply have more supply than demand.”

Hollywood Casino generated $6.89 million in July, or $148.21 per machine per day. Maryland Live, with its 3,700 slot machines, generated $35.41 million — $351.54 per machine, per day — in its first full month of operation after first opening its doors on the evening of June 6.

Joe Weinberg, president of gaming for Maryland Live developer The Cordish Cos., used the disparity between Hollywood and Maryland Live to further the company’s point that any expansion of Maryland’s casino gambling program is premature.

“Prior to adding another massive casino to the Baltimore-Washington corridor, common sense dictates such a drastic change can only be made based on actual performance data after all five existing authorized facilities are open and stabilized,” Weinberg said in a statement. “Maryland casinos are paying the highest tax rate on slots in the country which … cannot be sustained with massive new capacity added to the 40-mile corridor encompassing Prince George’s, Anne Arundel and Baltimore City.

“The best and fairest approach to maximizing gaming taxes for the state is to maintain the tax rate at current levels and add table games to the five existing sites. That is the course of action that will most benefit the state of Maryland and its citizens, show Maryland is a reliable business partner, and ultimately provide the highest tax revenues to the state.”

The Casino at Ocean Downs in Berlin — which fares best during the summer vacation months — generated $5.75 million in July, a 7.6 percent increase over July 2011. Ocean Downs’ 800 machines generated $232.03 per machine per day.

Two more casinos — one at Rocky Gap Lodge and Golf Resort in Allegany County and another on Russell Street in Baltimore — have been approved. The 3,750-slot city casino, dubbed Harrah’s Baltimore, will be operated by CBAC Gaming LLC, a group led by Caesars Entertainment Corp. The casino should open in 2014.

Evitts Resort LLC, the casino licensee at Rocky Gap, has already had to scale back its initial plans to operate 850 slot machines because it could not secure financing to build a casino and hotel complex adjacent to the existing lodge. Instead, the group will install 500 slot machines in existing space, slated to open in the second quarter of 2013.

More than $23.3 million — 48.5 percent of July’s revenue — goes to the Education Trust Fund.