By Lindsey McPherson, firstname.lastname@example.org
1:06 PM EDT, June 5, 2012
When the state legislature legalized slot machine gambling in 2007 and proposed locations for five casinos, it operated under the assumption that most patrons would come from areas within a 50-mile radius of each facility.
Under that assumption, Laurel residents will fall in the market area for half of the state's casinos if the General Assembly passes legislation, and voters affirm it, allowing a sixth facility to be built at National Harbor in Prince George's County.
In addition to National Harbor, Laurel is within 50 miles of the Maryland Live casino that was scheduled to open June 6 at Arundel Mills and a casino planned for downtown Baltimore.
The proposed sixth casino and the legalization of table game gambling at all the sites was a subject of controversy in the 2012 General Assembly session. Some lawmakers have said the gambling issue is what prevented the legislature from passing a balanced budget before it adjourned April 9, prompting the need for the special session held last month.
Now, Gov.Martin O'Malleyhas impaneled an 11-member work group to consider gaming expansion. During its first meeting Friday, June 1, which lasted more than five hours, the panel received a presentation from the Department of Legislative Services and testimony from operators of the state's existing and planned slots facilities.
If the work group, which is scheduled to meet again June 12 and June 20, can reach consensus in favor of expanding gambling, O'Malley said he will call a special session the week of July 9 so the General Assembly can pass legislation in time for the issue to be placed on the November ballot.
Maryland Live closest to Laurel
Whether or not a facility is built at National Harbor, the closest casino for most Laurel residents will be Maryland Live at Arundel Mills. The $500 million facility, developed by Baltimore-based developer Cordish Co., was scheduled to open June 6 with 3,200 slot machines.
The casino is authorized to have 4,750 slot machines, a number it plans to have in operation by the end of the year. That will make Maryland Live the third-largest slots casino in the country, behind two facilities in New York.
On Friday, David Cordish, president and chairman of the Cordish Co., told the work group that he built the massive facility under the premise that there would not be another casino south of Anne Arundel County, at least in the foreseeable future.
"Adding a new gaming site has never been done in the history of the United States ... until the (state's) initial designees are open and steady," he said.
Maryland Live is the third casino to open in Maryland. Hollywood Casino in Perryville opened in September 2010 with 1,500 slot machines, followed in January 2011 by the casino at Ocean Downs racetrack on the Eastern Shore, which has 800 slot machines.
A license for a facility with 850 slots adjacent to the Rocky Gap Lodge and Resort in western Maryland was awarded in April.
Caesars Entertainment, the sole company to bid on the Baltimore location, is still awaiting approval for the license. At the work group meeting Friday, Caesars CEO Gary Loveman expressed support for gambling expansion.
While he expects the Baltimore facility would lose 20 percent of its slots revenue to a casino inPrince George's County, Loveman said that loss would be offset by revenue from table games and the lower tax rate operators would have to pay on slots, as proposed in the original Senate legislation.
"When we net that out, that's a deal we like," Loveman said.
Gambling discussed in General Assembly
Multiple versions of legislation and ideas regarding the possibility of a Prince George's County casino and legalization of table game gambling were floated during the 2012 session.
District 23 Sen.DouglasJ.J. Peters, a Democrat who represents South Laurel and is an alternate member of the work group, was the lead sponsor of the original Senate bill, which would have reduced the tax the state collects on slots revenue from 67 percent to 60 percent.
During the work group meeting, District 13 Del. Frank Turner, a Democrat who represents North Laurel and heads the House subcommittee that vets gambling-related legislation, said any reduction to the tax will hurt the areas that are earmarked to benefit from it, including public education, horse racing purses and women- and minority-owned business.
Peters' version of the bill would have authorized a casino with up to 4,750 slot machines "within 4 miles of the intersection of Bock Road and St. Barnabas Road" in Prince George's County. Both National Harbor and Rosecroft Raceway, which are about five miles apart, met that requirement.
However, as the discussion of the legislation evolved during the session, Rosecroft Raceway was all but written out of the equation. Steve Snyder, a senior vice president at Penn National Gaming, the company that owns Rosecroft, pleaded with the work group not to let that happen again.
Snyder argued that legalization of slots was first raised as an idea for how to save the struggling racing industry in Maryland
"That was one of, if not the principal, motivation for us in acquiring Rosecroft Raceway," he said.
Snyder said Penn National is prepared to invest $300 million to build a casino at Rosecroft with 2,000 to 4,000 slots at the existing 67 percent tax rate.
For that to happen, the state would have to strike down a provision in the current law that prohibits a company from operating more than one facility in the state, as Penn National owns Hollywood Casino in Perryville.
Peters' bill included the removal of that provision. However, Snyder told the working group: "If we must, then we will figure out internally a solution," noting the company has discussed restructuring as an option.
National Harbor casino would draw from D.C., Virginia
National Harbor, however, appears to be the favored location for the sixth casino as it has the backing of Prince George's County Executive Rushern Baker III and Senate President Mike Miller. Also, the state has commissioned PricewaterhouseCoopers to provide financial analysis of the impact of a casino at National Harbor, not any other location.
The proposal that has been floated is a facility with 4,750 slots and table games, the latter of which developers have said is key in their interest to build a casino at National Harbor.
"We don't want this just to be a casino," said Milton Peterson, founder and chairman of the Peterson Companies, the company that developed National Harbor. "We want this to be a destination resort that has one of its amenities, a casino."
The mix-use development, located along the waterfront of the Potomac River, "is really an extension of Washington," and as such, a casino at National Harbor would draw from the Washington market, Peterson said.
"The market place, in our estimation, is big enough to support a billion dollar casino," said Andrew Moody, a economic advisor working on the National Harbor plan.
However, to support a facility that costly, he said, the combined tax rate on slots and table games would have to be lowered to a 32 percent.
Recognizing that "32 percent won't happen," Moody said National Harbor developers are proposing to build a $750 million casino if the state sets the tax rate for slots at 52 percent and table games at 10 percent.
National Harbor plans target Washington and Virginia, where gambling is illegal — a strategy that directly conflicts with Maryland Live.
"The vast majority of our marketing dollars are being spent in the D.C. market versus the Baltimore market because of the expectation of exclusivity," said Joe Weinberg, of PPE Casino Resorts Maryland, the company which holds the license for Maryland Live.
Maryland Live, he said, would lose 40 percent of its projected slots revenue if an equally large casino were to open at National Harbor.
"The average size of a casino in this country is between 1,000 and 1,500 (slot) machines," Weinberg said. "These facilities are not (like) Starbucks that can be put on every street corner and sustained."
Moody, meanwhile, said the revenue Maryland Live would lose to a National Harbor casino would be about 10 percent, if both facilities were allowed to offer table games, or 15 to 20 percent if the facilities could only had slots.
Pricewaterhouse Coopers is expected to present its financial estimates to the work group at the June 12 meeting.