The panel unanimously recommended a series of sweeping changes to the state's gambling law, but split 8-3 on the critical questions of whether to allow a sixth casino in Prince George's County and whether to change the current 67 percent tax rate on slot machine revenues.
"After thorough and exhaustive discussion, it became clear that these members' reservations were insurmountable," the panel said in a letter to the governor. "Additionally, many in the majority of the work group would not support any legislation that excluded the possibility of a sixth site in Prince George's County given the potential benefit to the state."
Under the circumstances, Morton said, the panel's conclusion is that a special session would fail to result in new legislation. Gov. Martin O'Malley had said he would call a special session in July to act on a proposal to expand gambling only if he thought the measure would pass.
Any legislation to change the current structure of Maryland gambling — which is now limited to slot machines at five sites — would require the approval of both the House and Senate. It would then go before the state's voters.
After learning of the House-Senate impasse, O'Malley told reporters in Baltimore that he is "always optimistic" and would continue to work on the gambling issue. He did not categorically rule out a special session, but the panel did not achieve the goals he set last month when he formed it and announced that he would call lawmakers back to Annapolis on July 9 if the lingering gap between the House and Senate over gambling could be closed.
Differences between the two houses over gambling on the last day of the regular 90-day session helped lead to a breakdown on budget issues and prompted O'Malley to call a special session in May to pass a tax increase and other measures to avert deep cuts to his budget.
The governor, who had taken no clear stance on the central issues in the gambling debate during the regular session, put four top-ranking administration officials on the panel. By the end of the process, after the work group had received revenue projections from legislative staff and its own consultants, O'Malley's representatives came down squarely on the side of the senators.
Joseph C. Bryce, the governor's chief legislative officer and a member of the panel, said his instructions were to seek an agreement that was fair to both the taxpayers and to current casino operators.
"In the end I, thought that we arrived at a product that did that," he said. "I thought it was more than reasonable and more than protective of the taxpayers."
Proponents had hoped to win passage of legislation this summer that would have put the casino issue on the ballot in November. But if the issue can't be acted on until next year, as appears almost certain now, the voters would not have an opportunity to weigh in until November 2014.
O'Malley praised the recommendations developed by the majority of the group, which favored allowing a Prince George's casino along with a lower tax on slots and an end to the ban on table games at all of the gambling sites.
"It's a consensus that gives us the framework to resolve these issues, and to do it in a way that creates a predictable regulatory path for many years forward, for investors and the like," he said. "But for some reason suddenly the House decided they did not want to share on that consensus for reasons that don't make a whole lot of sense to me, and reasons that were not voiced, really, heretofore. And so I can't entirely explain it to you. I'm looking forward to hearing back from the speaker of the House sometime."
House Speaker Michael E. Busch, who had emphasized all through the work group deliberations that reaching a consensus would be a challenge, was not available to comment Wednesday. Nor was Senate President Thomas V. Mike Miller, a vocal proponent of a Prince George's casino.
Sen. Rob Garagiola, a Montgomery County Democrat who participated in the work group, expressed regret that the panel couldn't reach unanimous agreement.
"I'm disappointed because I feel there's a lot being left on the table," he said.
According to analysts from the Department of Legislative Services, the recommendations supported by the majority could have yielded $223 million a year in increased revenue for the state Education Trust Fund, along with a one-time fee of $18 million for 3,000 slot machines at the Prince George's casino.
Del. Peter Hammen, a Baltimore Democrat, emphasized the recommendations on which the House members joined in the consensus recommendation. He said the House members supported the recommendations to allow table games such as blackjack and poker, to set up an independent gambling commission to oversee casino operations, to transfer the ownership of slots from the state to the operators and to end restrictions on the casinos' hours of operation.
Hammen said the House members could have even supported a sixth casino, but only if its operators would accept the current tax rate of 67 percent. The owners of National Harbor, the location favored by the leading proponents of a Prince George's site, had stated that with the rate that high, they could not have built the "destination" casino they envisioned. Along with their prospective casino operator, MGM Resorts, National Harbor's owners said such a rate would let them build nothing more than a "slots barn" — a facility they insisted would be out of place in the luxury riverside complex.
According to the analysts' projections, supported by consultants from PricewaterhouseCoopers, none of the existing operators would have lost money if the new casino were accompanied by the right for all casinos to offer table games. But David Cordish, chief executive of the newly opened Maryland Live Casino at Arundel Mills, never accepted those projections and fought the sixth casino all the way, emerging as the big winner in the short term.
Cordish Cos. released a statement saying the casino owner appreciates the "seriousness with which the work group approached its duties."
"Any expansion of gaming facilities in Maryland before the five designated sites are open and performing is premature and not in the best interest of the State," Cordish spokesman Joe Weinberg said. "In fact, no state in the country has added casino sites prior to their initial facilities being open, stabilized, and actual performance data available to analyze."
After the announcement, National Harbor and MGM released statements reaffirming their interest in a Maryland casino.
"MGM Resorts is committed to Maryland and our interest in National Harbor is unabated. With our partners at Peterson Companies, MGM Resorts remains keenly interested in building a world-class destination resort at National Harbor; a project that will bring significant investment, tax revenue, and much-needed jobs to the state," said MGM CEO Jim Murren.
The majority of the work group favored a plan that would have given Rosecroft Raceway and other Prince George's sites the opportunity to compete for the right to open a Prince George's casino with 3,000 slots machines that could not open before July 2016 — an effort to let Arundel Mills and other casinos establish a customer base before facing competition.
The senators and administration appointees proposed a system under which applicants for the Prince George's casino license could receive a slots tax rate as low as 62 percent. They also wanted to give that rate to Cordish and a planned Baltimore site. Under the proposal all of the casinos would have been free to seek further reductions from the proposed Gaming Commission.
The announcement of the failure to reach consensus came as the work group assembled at 4 p.m. for a public meeting that was scheduled at 1 p.m. Much of the Annapolis lobbying corps waited nearby as the members continued to meet behind closed doors in what proved to be a futile effort to resolve their differences.
"It is our recommendation that a special session not be called until a consensus can truly be reached," Morton said.
House Minority Leader Anthony J. O'Donnell, a Calvert County Republican, welcomed the outcome.
"It's evidence of why a special session would be ill-advised to ram something through that is very complicated and may not be in the best interests of the citizens of Maryland," he said.
But Del. Frank Turner, a Howard County Democrat who served on the work group, predicted that the gambling issue will come back.
"Is this going to go away? Never. If we don't do it now, we can do it in the future," he said.
In his Baltimore interview, O'Malley revealed some of his long-standing ambivalence over the issue.
"There are issues that I care about far more than the gaming issue," he said. " I mean, I've never been one that believes that gaming's ever going to replace the important and essential role that individual citizens play when it comes to educating our children, protecting public safety, and protecting our environment."