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Gambling protests continue

The gambling bill that lawmakers will debate, amend and debate again over the next several days is the byproduct of months of work, numerous studies and various demands made by politicians, businessmen and other interest groups.

In letters to the governor and members of the legislature, Comptroller Peter Franchot said there was little conclusive evidence that slots and poker would improve Maryland’s financial position.

Yet even after all that work, which began in earnest midway through the General Assembly’s regular 90-day session, legislators will convene Thursday in Annapolis for the third time this year, with votes to expand gambling in doubt and partisans still unhappy with the deal that will be introduced in the Senate on Thursday and House of Delegates on Friday.

As has been the case for months, the loudest protestors are the owners of Maryland’s first casino, Hollywood Casino Perryville, and the state’s largest and most profitable facility, Maryland Live at Arundel Mills mall.

In a statement, The Cordish Cos. President Joseph Weinberg said the Maryland Live owner is still unhappy with the decision of Gov. Martin O’Malley and legislative leaders, who, in Weinberg and company Chairman David S. Cordish’s view, are reneging on their deal with the Baltimore-based developer.

“We have played by the rules created by the state, and never asked for any concession or break. We delivered a world-class facility that is already generating tens of millions of dollars of taxes for the state monthly, as promised,” the statement said. “A basic premise of any potential changes to gaming laws in Maryland, especially the addition of a potential new sixth mega-casino, should be fairness to the existing licensees such as us that have made massive investments based on the state’s current rules.

“As currently drafted, the proposed legislation is patently unfair to impacted operators and not in the best interests of the state, because it will undermine the health of the industry and negatively affect state tax revenues.”

O’Malley’s bill, unveiled Tuesday night, would put a casino in Prince George’s County by 2016, allowing time for Harrah’s Baltimore, a casino that will be operated by Caesars Entertainment Corp.-led CBAC Gaming LLC, to open. A slots parlor at Rocky Gap Lodge and Golf Resort, operated by Evitts Resort LLC, is the only other casino approved by voters in 2008 that has yet to open.

The Prince George’s casino, which could be placed in an area that includes both National Harbor and Rosecroft Raceway, would have 3,000 slot machines, making it the third-largest gambling site in the state. Maryland Live is authorized to operate 4,750 machines and Harrah’s is authorized for 3,750 machines.

Those three casinos would have their slots tax rate cut to 56 percent — meaning that the operators keep 44 percent of gross revenue. The state’s three operating casinos are now taxed at a 67 percent rate.

About half of that tax break — 5 percentage points — would have to go toward capital improvements and marketing. The other 6 percentage points would be knocked off to help offset the cost of buying slot machines, a responsibility the legislation would shift to those casinos. The state currently owns or leases all slot machines, a safeguard intended to foster public confidence in the machines’ fairness, but also a costly burden on the state’s casino program.

Hollywood Casino Perryville would also have to buy its slot machines and would receive the accompanying 6 percentage point cut in its tax rate. But the nearly 2-year-old casino, with 1,500 machines, would not receive the 5 percentage point cut that the three larger casinos would.

Karen Bailey, a spokeswoman for Hollywood operator Penn National Gaming Inc., said the gambling giant was not pleased with the bill. Penn National also wants the state to seriously consider Rosecroft Raceway, which it owns, for a Prince George’s casino.

“We’ve expressed that concern since it became obvious that the location was settled for National Harbor given the manner in which the [Prince George’s] county executive has unilaterally endorsed the location and the governor has followed suit,” Bailey said. “We are also concerned about the fact that our Perryville facility was the only location to not receive a reduction in tax rates, with the exception of the machine ownership shift, especially given that some of the biggest tax breaks were given to locations nowhere near Prince George’s.”

The state’s other two approved casinos — The Casino at Ocean Downs in Worcester County and a future facility at Rocky Gap in Allegany County — would have their tax rate slashed to 57 percent. Only 2.5 percentage points of that tax break would have go toward marketing and capital improvements.

Last week, a Penn National executive sent a letter to Maryland State Lottery Agency Director Stephen L. Martino requesting to send back 400 or 500 slot machines. The bill also contains a provision that gives a new state panel, the State Lottery and Gaming Control Commission, authority to devise a process by which slot machines can be removed from gambling floors.

Hollywood Casino Perryville has seen its revenue dip more than 30 percent year-over-year, and 40 percent since March. Casino executives say the opening of Maryland Live has caused the precipitous drop in business, further fueling an oversaturation claim made by Cordish executives for months. Bill Hayles, Hollywood Casino Perryville’s general manager, declined to comment on the bill.

CBAC Gaming, the Baltimore casino licensee, ends up as the biggest winner because the legislation allows it to offer table games, a Caesars signature. In a statement, Caesars Chairman Gary Loveman said the bill had his support, and would allow Harrah’s Baltimore to hire more employees at its future casino on Russell Street.

“We recognize the importance of this casino to serve as an economic development catalyst for the city and the state, in terms of new jobs, new revenues and new ancillary development,” Loveman said. “We will recruit, hire and train more than 1,200 employees, with the prospect of an additional 500 jobs with table games.”

But the bill’s prospects remain uncertain. Many members of large delegations in the House are either apathetic toward gambling expansion or opposed to it, making the math to 71 votes difficult to compute.

The state’s chief financial officer is also opposed to expanding the state’s casino gambling program, especially with only three of the five originally approved casinos up and running.

In separate letters to Gov. Martin O’Malley and members of the General Assembly, Comptroller Peter Franchot said there was little conclusive evidence that slots and poker would improve Maryland’s financial position, despite a state analysis that estimated more than $200 million in revenue could be generated by expanding gambling.

“There is little to no evidence that this precipitant action by the General Assembly will have any meaningful effect on the current fiscal challenges facing our state,” he wrote. He added that lawmakers should divulge all campaign contributions they had received from gambling companies.

“This voluntary gesture would send a powerful message to the people we serve that Maryland’s oft-stated commitment to progressive values is matched only by our dedication to transparent government,” the letter said.