The state busts: How Maryland is losing money on table games

In November, voters approved a major expansion of Maryland's gambling program on the promise that allowing table games and eventually building a sixth casino would ensure that the gambling dollars state residents spend would go toward funding education here and not in states like West Virginia, Delaware and Pennsylvania. This week, we got the first preliminary snapshot of how that bargain is working out, and it should give us some pause.

The Maryland Lottery and Gaming Control Commission reported its first set of figures since the Maryland Live Casino in Anne Arundel County added table games. On April 11, that facility, which by many measures is the dominant casino not just in Maryland but in the entire Mid-Atlantic, added 122 table games to the 4,217 slot machines it operates, and it made for a slight boost in overall state gaming revenue. The statewide total from slots and table games was up by more than $900,000. The true picture might be substantially better than that; last year, April was a much worse month for Maryland casinos than March, so considering seasonal variations in the casino business, last month looks pretty great.

Great from the perspective of overall revenue, that is. Not so great when we consider the reason Maryland got into the gambling business in the first place, which was to generate money to support K-12 education. In March, before Maryland Live added table games, the state's casinos sent more than $28.2 million to the Education Trust Fund. In April, with 19 days of table games at Maryland Live, the ETF got $26.1 million. Meanwhile, Maryland Live's share of gambling revenue jumped from $14.7 million in March to $19.3 million in April. And that's only based on a partial month of table games.

It's yet more confirmation that Maryland's gambling market is not infinite and that after a certain point, we are doing less to add to the pie and more to shuffle the pieces around. We saw it last year when Maryland Live opened and sucked away much of the business from Hollywood Casino in Perryville, and we saw it again with the addition of table games at Maryland Live. That development produced some increase in the overall amount gambled in the state's casinos. But mostly, we have substituted one kind of gambling for another, and the switch from slots to table games, from the Education Trust Fund's perspective, is a lousy deal.

The ETF gets 49.25 percent of every dollar spent in slot machines but only 20 percent of the money gamblers lose on table games. (The deal is even worse for the ancillary beneficiaries of the casino program: horse racing purse subsidies and track improvement funds, local impact grants and a fund for small and minority-owned businesses. Collectively, they get 15.75 percent of slots revenue but nothing from table games.) Casinos get 33 percent of the money gamblers lose in slot machines but 80 percent of the take from table games.

That's not pure profit, of course. Table games are much more expensive to operate than slots. Consider: Maryland Live added 1,200 new employees to staff 122 table games, effectively doubling its workforce. And as part of the deal, the casinos will eventually be required to purchase their own slot machines. Although they will get an increased share of the proceeds to compensate them, the deal is expected to be a net positive for the ETF.

The state surely benefits in other ways. The new permanent and construction jobs from the addition of table games are an improvement over the slots-only scheme. Theoretically, the presence of blackjack, poker, roulette and the like will make the state's casinos a more appealing tourist destination, particularly when new casinos open in Baltimore and just across the border from Washington in Prince George's County. Spin-off economic activity at restaurants, music venues, shops and hotels benefits the public in ways that are difficult to measure.

But this latest report is just one more reason to doubt whether the massive expansion of gambling Maryland will see in the next few years will come close to making good on its promise to help schoolchildren. If and when a casino opens in Prince George's County, the share of slots revenue kept by the casino owners in Baltimore and Anne Arundel County will go up even more to compensate them for additional competition, and the share the ETF gets from table games will go down even more. Unless the Prince George's facility prompts a significant expansion of the regional casino market, we may find ourselves with more gambling but less direct benefit to the state.

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