The agreement would potentially bolster the Baltimore City Entertainment Group's bid for a slots license, which seemed to be faltering because the source of its financing had been unclear. The deal came on the eve of a state slots commission meeting this afternoon at which members are scheduled to assess the group's progress given that it had failed to produce millions of dollars in licensing fees or to update its proposal.
Under the terms of the deal, a source said, York Capital Management, a $9 billion investment firm, will inject the Baltimore group with needed funds, but the Baltimore group's leadership structure would not be significantly altered. Michael Cryor, a spokesman for the group, did not immediately return a call for comment. York could not be reached Wednesday night.
Earlier Wednesday, state officials postponed consideration of a $21.5 million contract to manage Maryland's slot-machine operations after the chief tax collector raised concerns that the contractor is to be paid with gambling proceeds that haven't yet materialized.
"Not to state the obvious, but we have no proceeds in hand," Comptroller Peter Franchot said at a meeting of the state Board of Public Works in Annapolis. "So how can this be a legal contract?"
The three-member board, which also includes Gov. Martin O'Malley and Treasurer Nancy K. Kopp, plans to review the legality of the contract and take up the matter again at its Jan. 6 meeting. The five-year contract with GTECH Corp., which could be extended for another five years for $17.4 million, provides for a centralized computer system that would connect to slot machines around the state.
Lottery officials said the state is not liable for any payment to GTECH until the first slots casino becomes operational. They insisted the contract is legal and that postponement of its approval could cause a delay in casinos opening here.
The Ocean Downs racetrack on the Eastern Shore might open a temporary slots operation in the coming months while it addresses asbestos and structural problems that pushed back construction on a permanent facility, officials said.
Another slots parlor is expected to open in Cecil County in October, while a proposed casino in Anne Arundel County has been stalled by local zoning issues.
"Time is of the essence because of the time frame it takes to get a program like this up and running," said Gina M. Smith, interim director of the state lottery agency.
Franchot, who took a lead role in opposing a 2008 voter referendum that legalized slot machines, said his objections had nothing to do with his personal position on slots or any concerns about GTECH.
The board didn't discuss the company's history, which includes allegations of bribery and kickbacks in other states and countries. A background investigation by lottery staff concluded the company had reformed its business practices.
"Some of GTECH's past actions remain under scrutiny, but it appears that no conclusions have been reached as to any alleged wrongdoing," according to an executive summary of the investigation.