State's gambling future taking shape
Baltimore, Rocky Gap bids could complete the slots program
But now the city slots license is being sought by an eclectic — and well-heeled — group that includes a powerful mix of Baltimore entrepreneurs and national names. Headlined by Caesars Entertainment, the partnership includes NBA team owner Daniel Gilbert, Baltimore health care pioneer Michael Bronfein and former Rouse Co. executive Anthony Deering.
It also includes the Stronach Group, which owns the Pimlico Race Course and Laurel Park thoroughbred tracks, and whose chairman, Frank Stronach, has tussled with state officials, horse owners and trainers.
Their application to build a 3,750-machine casino on Russell Street south of the sports stadiums has delivered a much-needed jolt to Maryland's gambling program, a year after the first of the five proposed slots parlors produced lukewarm revenue for the state.
With casinos now operating in Cecil County and on the Eastern Shore, another under construction at Arundel Mills mall, and bidders competing to build slots parlors in Western Maryland and Baltimore, the state's venture into gambling appears to be settling into its final shape.
"It's certainly good news for Maryland and Marylanders," said James Karmel, a gaming analyst and a history professor at Harford Community College. "In the big picture, the Maryland delays aren't that extraordinary when you consider the time it takes states in general to operate from the point of legislation to the point of opening."
But with only two of the five casinos approved by voters in 2008 now operating — and revenues at the two, Hollywood Casino Perryville and Ocean Downs, coming in below state expectations — the slots program remains behind the schedule officials had envisioned. The state had expected to have all five casinos operating by last month.
And even when all casinos are open, analysts and some operators say, Maryland's nascent gambling industry still faces challenges.
The state's tax rates on slots revenues, which range from 50 percent in Rocky Gap to 70 percent in Baltimore, are among the highest in the country.
And Maryland's casinos face stiff competition from operations in Delaware, Pennsylvania and West Virginia, which offer table games such as poker and roulette in addition to slots.
"Maryland is slots-only, and people will still drive to play table games," said Steven M. Wieczynski, an analyst at the financial services firm Stifel Nicolaus in Baltimore.
The General Assembly is expected to consider legislation next year to expand the state's menu of gambling options.
In Baltimore, Caesars would manage the casino on behalf of the investors. The gambling giant already has a partnership with Gilbert's Rock Gaming LLC to develop casinos in Cleveland and Cincinnati under its Horseshoe Brand.
A spokeswoman for Rock Gaming said Baltimore fits into the company's model of building casinos in urban areas alongside existing entertainment venues and businesses.
"If you have a critical mass of people coming to the casino, you're connected to other downtown attractions and encouraging a back and forth," spokeswoman Jennifer Kulczycki said. "It's good for the whole city and good for the casino, too."
But Stifel's Wieczynski was skeptical about the prospects for Caesars in Baltimore, given the 70 percent take for the state and city.
"I don't think you'll see a lot of profitability come out of this market until they take that tax rate down or they implement table games," he said.
Caesars reserves the Caesars name for its high-end casinos. Wieczynski said he could see the company applying its Harrah's brand to the Baltimore operation.
Caesars is not revealing the group's plans for Baltimore.