The gambling expansion bill crafted by a House panel will yield an additional $174 million in state revenue in 2016-2017, but more than three-quarters of the money comes from a reform that could have been adopted without controversy had it been considered on its own.
Table games and a new Prince George’s casino -- the gambling expansion measures that tied the General Assembly in knots this spring and prompted the rare August special session -- will account for only about $40 million of that total, according to legislative analysts.
Most of the new revenue -- $135 million -- comes from making the state's larger casinos pay for their slot machines. The state now pays.
That shift has attracted virtually no opposition in the General Assembly, but at the insistence of Senate President Thomas V. Mike Miller it was made part of legislation to allow a Prince George's casino and table games. There has been broad agreement in the legislature that table games should be allowed, in addition to the current slot machines, at the state's five existing or planned casinos. The issue that has caused months of wrangling is the Prince George's casino, which Miller supports over the opposition of some rival gambling interests.
The latest estimates by the Department of Legislative Services reflect changes made by the House Ways and Means Committee to the bill passed by the Senate last week. Those amendments would provide a more generous tax break to the casinos that would be heavily affected by competition from a Prince George's casino.
Analysts found that the bill would generate $32 million less in state revenue than the Senate version in the budget year that starts July 1, 2016. That is expected to be the first year that the Prince George's casino is in operation.
The analysts estimate that between budget years 2016 and 2017, statewide casino revenue will jump from $1.5 billion to $1.9 billion -- reflecting the new business at the Prince George's casino, offset in part by a decline in slots revenue at existing facilities. State schools' share would rise from $277 million this year to $753 million in 2017, analysts estimate.
The decrease in state revenue from the Senate to the House version is an ironic twist. When an O'Malley-appointed work group studied gambling expansion in June, House members balked at an agreement, expressing concern that the Senate and administration wanted to cut the tax rates on the casino owners too much.
The smaller revenue estimate includes tax rate cuts of 6 percentage points for the Perryville casino and a new casino in Baltimore to reflect the operators' cost of taking over the ownership of slot machines. Maryland Live at Arundel Mills was given a larger cut of 8 percentage points to reflect the fact that Cordish Cos., its owner, is not a large international casino company with the buying power of its rivals in Central Maryland. The Prince George's and Baltimore casinos would also receive cuts of 8 points and 7 points, respectively, to compensate for the new competition from Prince George's when that casino opens.
The legislature also allowed for a new gaming commission to recommend further changes to the tax rates paid by the casinos in Baltimore, Perryville and at Arundel Mills starting in 2019. Those possible changes were not accounted for in the estimates.