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Chesapeake Beach bar out of luck while others have kept their slots

CHESAPEAKE BEACH — Unplugged electronic bingo machines are stacked haphazardly in a corner of the Crooked I Sports Bar & Grille, which still smells new after owners spent $200,000 moving from a smaller location across the street in July.

The owners of the Crooked I Sports Bar and Grille spent $200,000 in July to move to a bigger facility across the street.

A cash-out window is unmanned. The video gambling screens on the bar’s counter are covered by sheets of 8½-by-11-inch white paper inscribed with a stark message: “Out of service.”

This is the state of the gambling business here, a once-hopping resort town mini-casino and watering hole, empty on a recent weekday but for one man drinking a pint and chewing the fat with a bartender just after noon.

Down the street, the dimly lit Rod ‘N’ Reel bingo room is half-full with eager gamblers, all of them senior citizens inserting dollar bills and pushing the “play” button on machines that, to the naked eye, are no different from Crooked I’s.

Why is one operation nearly out of business while the other thrives?

“We’re not part of the old boys of Calvert County,” Christopher L. Russell, one of Crooked I’s owners, told a state Senate committee during the legislature’s special session on gambling in August. “We’re from Montgomery County.

“Sorry,” he added, the word dripping with sarcasm and disdain.

‘Didn’t seem like good policy’

The Rod ‘N’ Reel — part of the ostentatious waterfront Chesapeake Beach Resort and Spa, owned by the family of longtime Mayor Gerald W. Donovan — is coming off a year in which it won awards from local and national publications for its amenities. The Crooked I, after laying off seven of its 20 employees last month, is fighting to stay open. Owners are trying to reposition Crooked I, with a greater emphasis on food and drink.

“The business is losing money currently,” said Ryan C.H. Hill, a Crooked I co-owner. “At some point, unless we’re able to reposition the business, we would be shut down. … The challenge is being able to compete with people who are allowed to operate slot machines right down the street.”

SB 864, legislation overwhelmingly passed by the General Assembly during its regular session this year, allowed Rod ‘N’ Reel and three operations like it in Chesapeake Beach to remain open, overriding a state law that would have shut down gambling operations in this Southern Maryland town once infamous for being a slots haven before the legislature outlawed the machines in 1968. The ’68 law eventually led to the proliferation of video bingo machines — essentially still slot machines but different enough to skirt state regulations —in Chesapeake Beach.

Some lawmakers say that Crooked I was not among those businesses protected because its machines were illegal — different from the others. It’s a view that was first claimed by Senate President Thomas V. Mike Miller Jr., the longtime presiding officer who calls this resort town home.

Sen. Brian E. Frosh, D-Montgomery, was one of the few senators to vote against SB 864. He said “it came up at the last minute” and it “didn’t seem like good policy.”

The longtime chair of the Judicial Proceedings Committee said he did not understand why some businesses were being allowed to operate the machines while others were not. Frosh, a name partner in the law firm Karp, Frosh, Wigodsky & Norwind PA, said the bill, signed into law by Gov. Martin O’Malley, sounded like an unconstitutional special law — one that applies to only one, narrow group.

“It clearly was. It applied to a limited number of locations that were already in the business,” Frosh said. “I don’t know whether they should be or not, [but] how do you say they can be and somebody down the street can’t be?”

Crooked I owners have sued the state, claiming just that: The law is special, aimed at shutting them down. The suit says Miller plotted to close the bar and electronic bingo room because of a personal belief that Crooked I was operating outside the bounds of the law, despite twice being told by the state comptroller and the Calvert County State’s Attorney’s Office that the bar’s machines were in compliance with Maryland policy.

This sign, installed on the bayside boardwalk in North Beach, Chesapeake Beach’s neighbor, describes the legalized gambling attractions that ‘brought a resurgence of tourism to the area’ in the 1940s.

Sen. James E. DeGrange Sr., D-Anne Arundel, was the bill’s actual sponsor. But an early draft of the legislation emailed to lobbyists showed it was Miller who had the legislation drafted. The draft was emailed to lobbyists by Miller’s chief of staff, Victoria L. Gruber. Miller’s name, in type, was crossed out. DeGrange’s name was handwritten in its place.

Miller has a close relationship with Donovan, who employs former Miller aide Gerard E. Evans as Rod ‘N’ Reel’s Annapolis lobbyist. Evans was the highest-earning lobbyist in Maryland — and the only one to make $1 million — in the six-month period that included the 2012 legislative session.

Without strong local ties, political connections or checks made out to Miller’s campaign — only the Crooked I among Chesapeake Beach bingo parlors has not contributed to Miller’s campaign, according to state campaign finance filings — the bar and gambling site run by out-of-towners has been reduced to a sparsely furnished pub at the far end of a strip mall.

House bill flies, then dies

Not all lawmakers in Annapolis wanted the story to follow this path. Days after SB 864 received its first hearing in the Budget and Taxation Committee, a little-noticed bill sponsored by the Calvert County delegation in the House of Delegates moved swiftly through the Ways and Means Committee to the floor.

HB 927 was similar to SB 864 in broad strokes; it sought to roll back a sunset clause in state law, allowing the mini-casinos in Chesapeake Beach to remain open until 2016 under regulations that put the machines under the purview of the Maryland State Lottery Agency and ensured that a local and state tax was collected on all gambling revenue coming from the shops.

But the bill, which the House passed 132-4, extended the same courtesy to Crooked I as it did to Rod ‘N’ Reel and the other Chesapeake Beach mini-casinos, Abner’s Crab House and Trader’s Seafood and Steakhouse.

On Feb. 3, SB 864 was introduced and heard in the Senate’s Budget and Taxation Committee. On March 19, the Senate approved the bill 42-3, with similar protections tacked on for two parlors in Anne Arundel County, Bingo World and Wayson’s Bingo, but not for Crooked I. The House, on the last day of the legislative session, approved the Senate bill 116-20.

The House bill never made it out of the Senate’s budget committee.

Miller was unavailable to comment, and his office declined to comment, except to say that the HB 927 failed in the Senate because it did not have a letter of support from the chamber’s Calvert County delegation.

Miller and Sen. Roy P. Dyson, a Democrat who also represents parts of Charles and St. Mary’s counties, are the only Calvert County senators.

Miller time

Originally, Stallings-Williams Chesapeake Beach American Legion Post No. 206 was in the same spot as Crooked I: another down-the-street operator of electronic bingo machines that was about to have its operation shut down.

That’s when the post commander, Jack Custis, wrote a letter to Miller, asking the powerful Democrat if there were some way the post could continue operating its machines.

The commander’s answer came in the form of an amendment on the floor of the Senate — offered by Dyson and Miller himself, a rare action for a presiding officer — that carved out an exception to allow the American Legion to operate a limited number of the not-quite slot machines.

Owners of the Crooked I claim to have written similar letters, which did not receive such a favorable response.

The lawsuit, tied up in the midst of motions by the state and Crooked I’s attorneys at Baldwin, Kagan & Gormley LLC in Annapolis, says the Senate legislation discriminates against the bar’s owners.

But the issue is not quite so clear. Both the American Legion and Crooked I were licensed to operate electronic bingo machines on the same day in 2008, after the legislature decided to wind down operations at such mini-casinos because state-regulated commercial casinos were ready to be legalized.

So, Crooked I owners found a slightly different machine that would not fall in the category of those banned by the legislature. The American Legion operates the identical machines, they say.

But when it came time to cut off business at the gambling sites or keep them open with increased regulation, only Crooked I found itself out of luck.

“The policy is too ad-hoc,” Frosh said. “[It says;] ‘These guys are in business; let’s keep them going. But if you own a bar and you’re down the street, you don’t get to do it.’ We ought to have a coherent policy that applies to everybody.

“We shouldn’t say: ‘We like you; we’re going to let you have slot machines.’”