Formula changes mean more casino money to city even as Horseshoe revenue declines

While Horseshoe Casino Baltimore has seen revenue fall since the December 2016 opening of MGM National Harbor in Prince George’s County, the City of Baltimore — which receives a percentage of Horseshoe’s proceeds — is actually receiving more money than before from the casino.

That’s because regulators anticipated that MGM would siphon customers and money away from its competitors, and the General Assembly tinkered with the revenue sharing formulas to compensate, according to city officials and documents.

Once MGM opened, Horseshoe and Live Casino & Hotel in Anne Arundel were permitted to keep more of their slot machine earnings. Horseshoe now pays 39 percent of its slots revenue to the state, down from 45 percent.

The legislature also gave Baltimore a greater share of local impact funding for projects in neighborhoods near Horseshoe.

In Horseshoe’s first few years, 5.5 percent of slots profits went to the city for grants for communities near the casino. The money funded street improvements, summer learning programs for young children, additional law enforcement and other programs.

Now that MGM is open, Baltimore receives 5.5 percent not from Horseshoe but from a slots fund pooled from Horseshoe, MGM and Live. The money is split among those casinos’ home counties. The city expects Baltimore’s share this year to be $12.2 million.

By law, a portion of Baltimore’s slot funds goes to community improvements around Pimlico Race Course.

In addition, the city now receives a 5 percent assessment on Horseshoe table games to be used for school construction and recreation facilities.

With the changes, the city expects to receive as much as $24 million this fiscal year — roughly double what it was getting before MGM.

That comes as Horseshoe’s revenue declined more than 16 percent in 2017 compared to the previous year.

“The legislators had the foresight — or the concern — that one [casino] would poach business from another,” said Ethan Cohen, a senior project coordinator for Mayor Catherine Pugh. “There was a desire to protect the host jurisdictions to level it out.”

Recent casino-funded grants have gone for park improvements and to dozens of groups, including Living Classrooms Foundation and Habitat for Humanity. Cohen called the grants “a unique and long-term opportunity.”

“It’s not like a one-time grant from the federal government,” he said. “We can anticipate funding in the future for when projects are more ready. It allows us to do plans.”

jebarker@baltsun.com

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