Industry analysts said yesterday that Gov. Robert L. Ehrlich, Jr.'s latest slots proposal could generate $500 million for the state's coffers, and possibly more, depending on where the devices are located.
This estimate falls short of what the administration has figured slots would raise for the state and would not cover costs of the $1.3 billion public school improvement program in Maryland, known as Thornton.
"Money from slots alone would not fund the Thornton commission," said Del. Sheila E. Hixson, a Montgomery County Democrat who is chairwoman of the House Ways and Means Committee. She said other sources of revenue will be required to fund the program.
Although the administration declined to reveal specific estimates of Ehrlich's new slots plan, the governor estimated last year that 11,500 slot machines at four racetracks would generate $1.6 billion -- slightly less than half of which would have gone to the state treasury for education.
Del. Jon S. Cardin, a Baltimore County Democrat, said that, based on those figures, the addition of 4,000 machines at two more sites would increase the total to at least $2 billion.
"I don't think that's realistic," Cardin said. "The bottom line is I am concerned that the governor's people are overestimating potential gross revenue."
Ehrlich spokesman Paul E. Schurick said it is a "safe assumption" that adding 4,000 slot machines would increase the total beyond the $1.6 billion estimate for last year. However, he declined to give a more specific estimate of slots revenue.
The amount of money that the machines generate will depend, in part, on competing proposals that are made for slots emporiums at the two non-racetrack venues along the Interstate 95 corridor between Prince George's and Cecil counties, he noted.
Gambling industry analysts say it is unlikely slots in Maryland could generate $2 billion a year in gross gambling revenue, the amount left after players are paid winnings.
"Some of the numbers I've heard around the $2 billion range are high under almost any realistic scenario," said Eugene M. Christiansen, chief executive of New York-based Christiansen Capital Advisors.
However, he said 15,500 machines could generate more than $1.3 billion a year depending on their location and the types of facilities that house them.
Lawrence Klatzkin, an investment analyst with New York-based Jefferies & Co., offered a similar assessment.
He said a $2 billion estimate is "a bit of a stretch" despite the dense population of the Baltimore-Washington region. Reaching that number would require that each slot machine take in, on average, $350 a day after payouts to winning players, he said.
"I have no doubt that it will get over $1 billion, but $2 billion seems a little high," Klatzkin said.
Four states with full-scale casinos, including table games, had gross gambling revenues that exceeded $2 billion in 2002: Nevada, Mississippi, Louisiana and New Jersey.
However, Klatzkin noted that they each have more locations, different varieties of games and a lower tax rate than is proposed for slots emporiums in Maryland. Because they pay a lower tax rate, he said, they are able to spend more on amenities and marketing.