On the first day of legislative hearings on O'Malley's proposal for a November 2008 referendum on the issue, lawmakers heard from both sides on an emotional issue that has roiled the legislature for years.
Racing officials, who have long pushed for slots to rescue Pimlico and Laurel racetracks, voiced a cautionary note about the dire straits of their industry.
"In all candor, we are at the point where we cannot continue to maintain and operate three racetracks to support the thoroughbred racing industry in Maryland," said Michael V. Johansen, a lobbyist for the Maryland Jockey Club, which operates both tracks and a horse facility at Bowie.
"Without an alternative revenue source and the same opportunities as our competitors in surrounding states, we believe it will be unsustainable."
Del. Justin D. Ross, a Prince George's Democrat, asked why a license should go to Magna Entertainment Corp., which owns Laurel and Pimlico, when Racing Commission Chairman John Franzone expressed little confidence recently in the company's ability to manage a slots facility.
"The bill clearly contemplates that when evaluating a bid proposal, you look at the financial stability, integrity and responsibility of the applicant," Joseph Bryce, O'Malley's legislative director, told a joint hearing of the House Ways and Means and Senate Budget and Taxation committees. "We did the best we could with things that we had to work off of to try and build those protections in."
The slots hearing came on a day when lawmakers continued to weigh O'Malley's proposal to close a $1.7 billion budget gap.
An amended version of O'Malley's tax and gambling plans could be ready for debate in the state Senate by early next week, Senate President Thomas V. Mike Miller said.
Speaking after a meeting yesterday afternoon, Miller, O'Malley and House Speaker Michael E. Busch said the special session is on schedule and moving toward consensus.
Busch said the House is looking for more cuts in the budget - perhaps as much as $500 million - and Miller said he expects there might be significant changes to some aspects of O'Malley's proposal.
But both said they anticipate that the general outlines of the governor's plan will pass within the next two or three weeks.
"Hopefully, we can go around the clock as much as possible all week until we can get the entire, that's entire, package passed," Miller said.
The day began with both sides of the slots issue staging rallies outside the State House.
"The tide is turning in our favor," said Maryland Comptroller Peter Franchot, leading about 40 anti-slots crusaders in front of his office. "The forces of evil are on the defensive."
Just a short walk away, more than a hundred horsemen, breeders, farmers and union members cast slots as the salvation of Maryland's thoroughbred racing industry, as well as of education and other state funding priorities.
Frank Stronach, Magna's chairman and CEO, said in a conference call yesterday that the company might consider closing Pimlico.
"If it comes down to a point when you make more money selling the real estate than in racing, this is what you've got to do," Stronach said, before saying he hoped the legislature would come up with something that would provide "a little more of a level playing field."
Under O'Malley's proposal, a commission would award slots licenses at five locations - one each in Anne Arundel, Allegany, Cecil and Worcester counties and Baltimore City. The measure would allow slots at Laurel Park in Anne Arundel County and Ocean Downs in Worcester County, but not at Pimlico in Baltimore. The city is eyeing a slots parlor off Interstate 95 near Route 295.
Slots operators would get to keep 30 percent of gross revenues, while up to $140 million a year would be set aside for helping breeders, enhancing purses and making track improvements.
The governor campaigned last year on a pledge of "limited slots" at Maryland tracks.
"His preference was to focus at the tracks, but there was a history in several of the track areas of that being a non-starter in the General Assembly," Bryce said. "What we tried to do was take into consideration what we knew about sites from the past and put together a geographic and economic plan that made the best sense."
Legislators wanted to know why sites were chosen in areas that opposed them, how bidding for slots franchise licenses could be competitive when the bill singled out specific areas, and whether there was any wiggle room to allow tracks in Timonium or Prince George's counties, or at non-track locations in Frederick and Harford counties.
Bryce said nothing was "set in stone" and offered to negotiate on bill language that some said was directed too much at existing property holders, but he said he did not support taking the geographic boundaries for sites out of the bill.
The proposed slots site in Baltimore - an 11-acre warehouse district south of the city's sports stadiums - took Timonium and Harford County out of the running because of a desire for a limited number of areas, he said.
Baltimore Mayor Sheila Dixon spoke in favor of the proposed city site - a shift from her past position.
She said that her perspective on slot machines had changed as she came to understand the state's fiscal crisis and the opportunity for reducing property taxes in the city, one of her top priorities as mayor.
Several speakers expressed concern that state voters would decide what would happen in individual jurisdictions where officials might oppose slots, such as areas near Ocean City. Bryce said a referendum was the only way to get a slots measure passed.
Sun reporters James Drew, Andrew Green and Phillip McGowan contributed to this article.