www.baltimoresun.com/news/opinion/editorial/bs-ed-gambling-20120603,0,2391560.story

baltimoresun.com

Gambling's most taxing issue

Our view: Are Maryland lawmakers seriously contemplating giving out-of-state casino operators a major tax break just weeks after raising the state's income tax?

June 3, 2012

Advertisement

This Wednesday's planned opening of the half-billion-dollar Maryland Live! Casino at Arundel Mills marks a red-letter day in Maryland gaming history. The scale of the enormous, 330,000-square-foot facility is stunning: It will eventually house 4,750 slot machines (far more than any other Maryland facility) in addition to restaurants and entertainment.

No doubt the opening will be a particularly satisfying moment for developer David Cordish and others at the Cordish Cos.who overcame a considerable number of obstacles, not least a 2010 voter referendum. Even winning the bid to build the casino that many had expected to wind up at Laurel Park race track was quite a feat — and a surprise to many.

Visitors are bound to be intrigued by the casino's many dining options (Baltimore's Prime Rib and Iron Chef Bobby Flay will have places) as well as the coming-soon Rams Head concert venue. But here's what makes the destination gambling facility equivalent in size to three football fields truly amazing: Maryland's 67 percent tax rate.

That's right. No matter how customers fare on the slot machines — whether those made to simulate a backgammon or poker game or the more traditional spinning reels or any other — the state wins big, taking two-thirds of the revenue generated by each machine.

Some have argued that the rate is too high. Surrounding states maintain lower tax rates on slots revenue, with most hovering around 55 percent. But the Cordish project seems likely to prove that criticism misguided. Even with the modest one-third split and bills to pay, projected slots earnings are apparently high enough to justify a $500 million investment and create what's been billed as the third-largest commercial casino in the nation.

In downtown Baltimore, Caesars Entertainment is expected to move forward with its plan for a casino, shops, parking garage and restaurant complex not only with the burden of a 67 percent state tax rate but with an added 3 percent Baltimore tax on top of it.

Yet those who want to create a casino at National Harbor inPrince George's County are pushing for a much lower gaming tax, perhaps as low as 42.5 percent. They say their $1 billion project can't be built without a lower tax, particularly if they are to create an upscale facility to attract out-of-state gamblers. They would also expect to see table games made legal.

Legalizing table games at all Maryland slots facilities may make some sense. It's less lucrative for the state, but it does tend to attract upscale gamblers, overnight lodgers and jobs. But lowering the tax rate must surely be a nonstarter, particularly in light of what Mr. Cordish has created with Maryland Live! and the clearly unfair competition from a Prince George's casino not envisioned by the original legislation authorizing the state's casinos.

Worse yet, are Maryland lawmakers really prepared to give a huge tax break to casino operators (all of the license holders under one plan) on the heels of raising income taxes to balance the budget? Have they already forgotten how much criticism they endured for approving their tax package just weeks ago in special session?

This may be the essential question before Gov.Martin O'Malley, Senate President Thomas V. Mike Miller and House SpeakerMichael E. Buschif they insist on holding a special session in five weeks to consider expanded gaming in the state.

We've said it before and we'll say it again: The ramifications of authorizing a sixth casino are enormous, and there isn't time between now and the July 9 special session to seriously consider all of them, let alone reach a political consensus. That lawmakers could even contemplate lowering the casino tax rate after raising the income tax suggests their priorities are seriously amiss.