By Michael Dresser, The Baltimore Sun
8:04 PM EDT, June 1, 2012
The owner of the soon-to-open Maryland Live casino at Arundel Mills and proponents of a new casino in Prince George's County squared off Friday as a work group set up by the governor and legislative leaders began looking at the issue of expanding gambling in Maryland.
During a five-hour initial meeting in Annapolis, the Workgroup to Consider Gaming Expansion heard starkly different recommendations for future casino development in the state. The 11-member panel heard policy prescriptions ranging from the wait-and-see approach favored by Maryland Live owner David Cordish to a full-speed-ahead course urged by the advocates of a prospective casino at National Harbor on the Potomac River.
The panel has until June 20 to see whether it's possible to forge an agreement that has a good chance of being approved by a General Assembly that has been deeply divided on the issue. Gov. Martin O'Malley has said that if an accord can be reached between the Senate and House, he will call a special session for July 9 to place the issue on the November ballot.
Friday's meeting illustrated how difficult finding a consensus could be.
The central clash involved the owners of National Harbor, who want to build a sixth casino in addition to the five authorized by the General Assembly in 2007, and the Cordish Cos., which will open a 4,750-slot machine facility Wednesday at Arundel Mills.
Proponents of National Harbor say that by opening the state to table games and cutting the tax rate on slot machine gambling, current license holders can benefit. But Cordish emphatically disagreed, predicting that a National Harbor casino could siphon off 40 percent of his business.
Cordish insisted that any addition of a new casino to the south of Anne Arundel would be a breach of faith by the state. He said his company has invested about $550 million in the casino based on an understanding that its core market would include the Washington region, including the Virginia customers National Harbor's backers want to attract.
"In fairness, the deal ought to be left alone," he said.
Cordish noted that he and other slots-only licensees now pay a 67 percent tax on gross revenues and must pay all expenses out of the remaining 33 percent, leaving what he called a "thin" margin. He said that unlike some of his rivals, he's not seeking a cut in the tax rate.
But proponents of National Harbor said that by allowing table games and cutting tax rates, the state could both increase its revenues and protect the bottom line of all casino operators from the added competition.
Andrew Moody, an economic researcher who appeared on behalf of National Harbor, said the developers could finance and build a $750 million "destination" casino — complete with a hotel, concert hall, restaurants and spa — if lawmakers would cut the tax rate to 52 percent for slots and 10 percent for table games.
Those were the rates set in a Senate bill that died in the House at the end of the legislative session. Moody said National Harbor's developers scaled back what had been previously described as a $1 billion project to reflect the rates in the Senate plan.
Moody said that plan could cut into the gross revenue of the Arundel Mills casino and of an already approved casino in downtown Baltimore, but he contended that with the reduced tax rate, they would make more profit.
The state would take in more revenue too, Moody said. He estimated that the changes National Harbor's developers are seeking would add roughly $54 million in revenue to the $741 million the state can expect to collect each year. That does not include the economic spinoff benefits from addition construction and employment, he said.
Whether such a revenue increase, amounting to less than 10 percent, would be enough to justify the risks involved in overhauling the state's current gambling set-up is one of the questions the panel will seek to answer. Several members said afterward that they want to see the numbers developed by the state's consultant, PricewaterhouseCoopers, before making up their minds.
National Harbor's case received boost from the chief executive of Caesars Entertainment, the sole applicant for the license to operate a 3,750-slot casino off Russell Street in Baltimore.
CEO Gary Loveman said that with table games, Caesars could draw many more out-of-town visitors to a more upscale Baltimore site, while the lower tax rate would offset any losses from increased competition.
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