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O'Malley's special mistake

Casino and Gambling IndustryElectionsNational GovernmentJustice System

Gov. Martin O'Malleyis expected to announce by the end of the week that he will call lawmakers back to Annapolis for a special legislative session next month to decide whether to expand the state's gambling program. He has backed a plan to add a sixth casino, at National Harbor in Prince George's County, and to add table games statewide. But it is increasingly becoming apparent that if he wants to move forward with gambling expansion legislation in time to get it on the November ballot, he will need to agree to a Rube Goldberg of a bill — a complicated mess of concessions to appease various interested parties, with uncertain effects on the future success of the state's gambling program.

House leaders say the legislation would likely need to meet four conditions if it has a chance at attracting the 71 votes needed for passage in their chamber. They are:

•Prince George's County voters must signal at the ballot box their approval of a casino at National Harbor.

•The Baltimore City and Anne Arundel County governments (and any others that are affected) must be held harmless from the possibility that competition from a Prince George's casino would diminish the local aid they receive.

•The operators of the Maryland Live and as-yet unbuilt Baltimore casino would be held harmless from the effects of competition so they remain viable.

•The state's education trust fund would see a net benefit from the gambling expansion.

That sounds simple enough, but the mechanism to achieve it isn't.

Legally, the state can't make the effect of the gambling referendum contingent on a separate local ballot issue, so the mechanism for determining whether Prince George's voters want a National Harbor casino would be whether a majority of them support the broader measure. The legislation would say that it is the will of the General Assembly that the state slots commission not issue a license for the Prince George's site unless a majority of that county's voters approve the ballot measure. But the ballot measure would deal with more than just the question of a National Harbor casino. It would also ask the question of whether voters want table games, so such a mechanism would be, at best, an imperfect measure of local will.

It would also be an open invitation for expensive, aggressive and concentrated campaign spending by gambling companies intent on protecting their own interests, not those of the state or Prince George's County. The entrenched gambling interests in the state would no doubt spend millions to see the referendum passes statewide so they get table games but not in Prince George's so they don't get competition.

Holding the Baltimore and Anne Arundel governments (and potentially those that host the state's smaller slots venues) harmless would require establishing a baseline for the amount of local aid they receive from gambling once table games are phased in. If those revenues dip after the Prince George's casino comes on line, the governments would be made whole by taking a piece of Prince George's take. Since the Baltimore casino will not open until at least summer 2014, that leaves little time to get reliable data about what the true baseline is before the state gets into the business of redistributing the wealth.

Figuring out how to hold the existing casino owners harmless is complicated, too. The principal mechanism for accomplishing that would be to lower the tax rates on slot machines. Some leaders in Annapolis have suggested handing the business of setting the tax rates over to an appointed commission that could make professional judgments about such matters, but the casino operators appear no more interested in that than lawmakers are. Instead, the legislature would have to make a judgment in a few weeks about what tax rate would be fair to Maryland Live, a Baltimore casino that won't open for two years, and a National Harbor casino that may or may not ever come into existence.

The fourth condition — that the state come out ahead — should be the easiest to meet. Even if the state accepts a lower tax rate on slots, the increased volume provided by a Prince George's casino and the advent of table games should make sure of that.

But if increased state revenue is really what we're after, there are much easier ways to get it. The legislature could change state law so that casino operators, not the state, are responsible for buying the slot machines. Even allowing for reasonable compensation to the casinos in the form of lower taxes, the state would stand to come out ahead by $80 million a year — no constitutional amendment or special session required. The state could also see more revenue by loosening or eliminating restrictions on the casinos' hours of operation and their ability to offer free food and drinks, entertainment and other perks. And if the governor is really intent on expanding gambling, adding table games to the state's existing five casinos would yield another $51 million a year.

But Senate President Thomas V. Mike Miller doesn't want a straight table games bill, since allowing it would diminish the support for adding a Prince George's casino. And it appears that a majority of delegates won't accept a Prince George's casino without attaching convoluted restrictions to the bill. The state would be better served to wait until leaders can develop a consensus around a well-thought out approach to enhancing Maryland's gambling program. Pushing to do something now might only make matters worse.

Copyright © 2014, The Baltimore Sun
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