By Gadi Dechter
November 6, 2008
In Anne Arundel County, officials predicted a zoning battle over slots at Laurel Park even as the track's operator, the Maryland Jockey Club, announced intentions to bid for a slots casino there.
And at the state capital, Gov. Martin O'Malley and the leaders of the General Assembly's two chambers launched a candidate search for a commission that will award five potentially lucrative slots licenses to gambling operators.
The flurry of activity underscores the complexity of enacting the constitutional amendment to legalize slots and the prospect of hurdles from anti-gambling forces undeterred by overwhelming voter support for gambling displayed in Tuesday's election.
"You don't have to speculate about whether there's going to be local opposition. You can pretty much bank on it," said Aaron Meisner, founder of Stop Slots MD. "People don't want to live near these things."
O'Malley acknowledged yesterday the potential roadblocks but expressed confidence that the state could move quickly to establish the casinos it is counting on to help solve a budget crisis.
"You cannot build a quality grocery store without ... debates over zoning with neighbors, and certainly the road systems in some of these locations will be an issue," O'Malley said. "I'm sure we'll find a way to get over those hurdles and do it in way that is respectful of community concerns."
The governor and Democratic leadership in Annapolis are counting on about $600 million in annual slots-related tax revenue to partly fix a structural deficit within three years.
Substantial delays could worsen a projected deficit that is estimated by legislative analysts to exceed $800 million even after slots are fully phased-in. And in the short term, officials need to cement plans for the new revenue stream in order to more safely dip into Maryland's rainy-day fund, minimize additional budget cuts and avoid new taxes.
By law, the governor must approve and the legislature must adopt a balanced budget, meaning revenue gaps must be filled through cuts, additional taxes or transfers.
The plan to power up as many as 15,000 slot machines in Maryland by 2011 requires new regulations, coordination between state and local governments, a formal procurement process - and the cooperation of a financial industry reeling from an historic credit crunch and, possibly, a recession.
Any one of those poses challenges.
The first major milestone for slots is a February application deadline for gambling companies that want to bid on five licenses for casinos in Baltimore and Laurel, and Cecil, Worcester and Allegany counties.
There are billions of dollars at stake for the winning bidders, so the state's actions will be scrutinized for fairness and potential conflicts.
"I would advise that this all be done very publicly, that everyone knows what's on the table, and that there there's no hint of any backroom deals or secret connections, because if that does happen or become rumored, then it could be very damaging politically," said James R. Karmel, a history professor at Harford Community College who recently started a blog on the casino industry on the East Coast. "The General Assembly and governor need to be very wary of that to make sure it's done in the most clear and transparent way."
Before meeting with aides yesterday to discuss the appointments, O'Malley pledged to "handle the bidding stuff and the licenses and all of that with professionalism and with honesty and with integrity and with openness and transparency."
Under the slots plan, the State Lottery Commission would own or lease the slot machines, which would be operated under licenses granted by the seven-member commission. O'Malley will appoint three commissioners, while House Speaker Michael E. Busch and Senate President Thomas V. Mike Miller Jr. each get to select two.
O'Malley will also appoint four additional members to the existing five-member State Lottery Commission, which will vet the gambling companies recommended for licenses by the slots panel.
To meet the February application deadline, the new slots commission should be in place by December, said Maryland Lottery director Buddy Roogow, whose agency is also handling the procurement of the slot machines and drafting new regulations. "The administration is going to be ready," Roogow said.
That is, if everything falls into place.
Anne Arundel County Executive John R. Leopold, a slots opponent, said he would not work to subvert the intent of his county voters, more than 60 percent of whom supported the referendum Tuesday. But the Republican said it was far from certain that a majority of the seven-member County Council would support a required bill changing the zoning at or near Laurel Park to permit slots.
"This is not going to be a walk in the park," Leopold said.
Councilman Jamie Benoit, who has been leading an anti-slots charge in Anne Arundel, also predicted a close and contentious vote. "And you can believe all the influence and might of the special interests will be exerted upon our council, and we're just going to have to see who has the courage to stand up to it," he said.
In Baltimore yesterday, the city Board of Estimates voted 4 to 1 to pay $4.1 million for a parking lot site the city hopes to lease to developers vying to bring slots to the city. The land, currently used for Ravens football parking, was appraised at $3.7 million, said M. Jay Brodie, the president of the Baltimore Development Corp.
Brodie defended paying the 15 percent premium, saying the city needs to control the land by Feb. 1 to offer it as part of a slots venue. Taking the land by eminent domain could result in a protracted court battle with a judge and jury deciding the price, Brodie said.
Now that it owns the land, the city's next step is to present state lottery officials with Baltimore's expectations of the type of development and how much rent it will expect from a gambling operator, said Deputy Mayor Andrew Frank. The lottery will include that information in solicitations for bidders in December.
Karmel, the Harford Community College professor, said the biggest hurdle to getting the casinos built quickly may be a dearth of capital needed to fund the huge investments required of casino operators under the law. But he also said that the Maryland smaller-scale casinos might have an easier time getting financing than bigger developments in Atlantic City, N.J., and Las Vegas that have been put on hold recently.
Local developer David S. Cordish said yesterday that the wintry economic climate hasn't cooled his company's interest in the slots licenses targeted for Baltimore, Laurel and Cecil County. By law, a gambling operator may only win one of the licenses, but it can bid on several.
"Current economic conditions have not affected our interest in Maryland slots, nor our ability to proceed," said Cordish, whose multibillion-dollar conglomerate has built Hard Rock-themed hotels and casinos in Florida.
Baltimore Sun reporters Annie Linskey and Laura Smitherman contributed to this article.
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