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House panel approves gambling bill; debate could come today

Measure would guarantee deeper tax cuts for some casinos

By Annie Linskey, The Baltimore Sun

10:19 PM EDT, August 13, 2012

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A key House committee voted Monday night to guarantee deeper tax breaks for some Maryland casino operators, the most significant change so far to Gov.Martin O'Malley's gambling bill.

The gambling expansion measure, as amended by the Ways and Means Committee, was expected to move to the floor of the House of Delegates for debate Tuesday.

Among other changes, the Maryland Live casino at Arundel Mills would see its tax rate cut from the current 67 percent to 51 percent over the next couple of years — with an option to bring it down to 49 percent if an independent commission agreed.

That's a larger guaranteed cut than under O'Malley's bill, which would reduce the rate to 56 percent, with the option to go to 51 percent. The casino would have to take over the cost of buying slot machines and spend about half of the tax break on marketing, promotion and capital investment.

The panel made a similar tax change for the planned casino in Baltimore.

House leaders said they were optimistic they have the 71 votes needed for passage in their chamber — though individual lawmakers were being pulled aside for private meetings with leadership throughout the day.

"If we didn't think we had the votes, we wouldn't be here," House SpeakerMichael E. Buschsaid Monday night.

Getting a bill through the House has been seen as the biggest challenge for supporters of expanded gambling. Should the General Assembly approve legislation in its current special session, Maryland voters would get the final say in November.

O'Malley's proposal seeks to rewrite Maryland's fledgling gambling program to allow a sixth casino, to be located inPrince George's County, and to permit table games like poker at all six. To compensate existing casino license holders for the competition from the additional casino, the measure would reduce tax rates.

A gambling expansion bill sailed through the Senate last week, but the House has been more skeptical. Some delegates said they didn't see how they could reduce the tax rate on casino owners in a year when the General Assembly increased income taxes for some Maryland families.

On Monday, however, the Ways and Means Committee moved away from that position — and approved a bill, 13-7, that would guarantee deeper cuts than even the Senate had permitted. "We had to do some adjustment," said Del. Frank Turner, a Howard County Democrat who chairs a gambling subcommittee.

Turner said lawmakers examined financial impact studies commissioned by a work group on gambling expansion and concluded that the casinos needed the additional help. "We looked at the venues and how they'd be affected," he said.

Not all agreed. "I think we are shooting in the dark," said Del. Andrew Serafini, a Washington County Republican. He said he was "uncomfortable" voting on changes to a bill that he only had a few minutes to read through and understand.

"This is really a moving target here," he said.

It was unclear Monday night how the additional tax breaks would affect the state's bottom line. O'Malley's bill was projected to bring an additional $200 million a year in tax revenues, with about $70 million of that from the new Prince George's casino.

Under the House bill, the planned Baltimore casino, to be operated by a group led by by Caesars Entertainment, would see its tax rate go from 67 percent to 54 percent — with the option to ask the commission to cut it to 51 percent. O'Malley's draft had reduced the rate to 56 percent, with the option of going to 51 percent.

Caesars, which runs many other casinos, would get a smaller break because it can buy slot machines at discounted rates and because its Baltimore casino is further away from the plannedPrince George's Countysite, Turner said.

The House committee also agreed to let the Hollywood Casino Perryville make a case to the commission to have 5 percentage points cut from its tax rate. Under O'Malley's proposal, that casino's tax rate would drop from the current 67 percent to 61 percent to compensate for a new requirement that the company take over the cost of buying slot machines. Under the House changes, the rate could drop to 56 percent if the commission agreed.

The House panel did not change the proposed tax rates in O'Malley's bill for the state's other casinos.

The committee also approved a measure that would prohibit thePrince George's Countycasino from operating a temporary table games-only facility in advance of opening a full casino. That change was one of a handful that the Baltimore City delegation requested.

As the bill came to a final vote in the committee, it became apparent that members of House leadership were falling in line behind Busch.

Turner, who had expressed concern about a Prince George's County casino, nonetheless voted yes. "I'm chairman of the subcommittee," Turner said. "It's not just about me."

He said he believes the Senate will find the House changes acceptable.

In other changes to the bill, the committee moved to tighten a prohibition on political donations from casino owners. Under a provision added by Del. Jon Cardin, a Baltimore County lawmaker, gambling "entities," including limited liability corporations, would be barred from making gifts.

Cardin also added a provision that would require gambling interests to disclose contributions over $10,000 to influence a ballot initiative.

Baltimore Sun reporter Michael Dresser contributed to this article.

annie.linskey@baltsun.com

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