Interview: Stephen Martino

Behind the glitz and bright lights of slot machines at the Hollywood Casino Perryville, Maryland's first slots parlor in decades, the Maryland State Lottery is enforcing the state's gambling laws.

As head of the state lottery, Stephen Martino oversees the operations of Hollywood Casino, which opened late last month, and other proposed slots parlors in the state.

Martino spent five years as head of the Kansas Racing and Gaming Commission, where he led efforts to open that state's first owned and operated casino in December 2009.

A lawyer by trade, Martino joined the state agency in April. Longtime director Buddy Roogow left last November to take a job as executive director of the D.C. Lottery.

Martino spoke with The Baltimore Sun about his previous experience as a gaming regulator, the Maryland Lottery's job in overseeing casino operations and the opening of Hollywood Casino Perryville.

Question: What was your job before taking over as the head of the Maryland State Lottery?

Answer: For five years, I was executive director of the Kansas Racing and Gaming Commission, and during my tenure, Kansas passed a law authorizing casinos in the state. I was responsible for putting together the regulatory framework, the casino selection process, and in December of last year, the nation's first state-owned and -operated casino opened in Dodge City. The racing and gaming commission was the regulator and responsible for the oversight of that facility.

Q: How did that job prepare you to head the Maryland Lottery?

A: There are many similar issues in Maryland that we encountered in Kansas, such as making sure that the state has a casino regulatory environment that promotes integrity and transparency and ensures that the facilities are safe, secure and promote fair play.

I think many of the issues and questions we dealt with in Kansas are in every state that is expanding gambling. That was true in Maryland. Having the benefit of working through these issues was what was helpful in coming in and ensuring that the first casino in Maryland opened ahead of schedule and in an appropriate matter.

Q: Can you provide an example of one of those issues?

A: The first thing that comes to mind is the area of licensing. Who gets to come in and do business. Every state law is different.

I know in Kansas, we were challenged because of the strict law of dealing with who could come in to the state and provide slot machines. Here, I don't think we've encountered the issues to the extreme that we did in Kansas.

Maryland law is probably more straightforward. There are always challenges … when there is a new jurisdiction that opens casinos. Both vendors and employees want to come. Navigating that could be tricky.

Q: What are the lottery's responsibilities in overseeing the state's gaming operations?

A: Our responsibilities as the lottery are not different than most gaming regulatory agencies. The Maryland Lottery is ultimately responsible for safety, security, surveillance, auditing and accounting of money, internal control and responsible gambling programs.

In coming in, my job and my challenge were to make sure that each of these areas was given appropriate attention, that our regulatory framework was in place, that our employees were hired and trained and knowledgeable about what their responsibilities are so that when a facility is ready to open and in the case of Perryville, it was able to open a month ahead of schedule.

We were prepared to facilitate that opening, creating 350 new jobs and generating revenue the state needs.

Q: Tell us how the day-to-day oversight works at the Perryville casino.

A: We make a daily assessment of the gaming activity and bill the casino on a daily basis for the money that they owe the state. We have an auditing team that goes in and does targeted audits on all functions in the casino, including making sure they're adhering to internal controls, and the staff are handling money according to our procedures. We audit activities in the restaurant and retail areas to make sure all the financial activities of the casino are appropriate.

We are required by the gaming law to have a 24-hour, seven-day a week presence at the casino, ensuring compliance of laws and state regulations.

Q: Based on what you've seen so far from Perryville, how are they doing?

A: We've decided that we're going to release actual revenue numbers on a monthly basis. I don't think we've released the September one. We're getting close to doing that.

So far, revenue has been very strong at the casino. I don't think it's surprising. Whenever you have a new casino opening, there's demand and interest. It's a nice facility. Penn National did a nice job in developing it. They have good staff, and obviously working together with them, the lottery has made sure that they have a robust variety of slot machines that people are interested in playing.

Q: Speaking of slot machines, there was some controversy over the cost of the equipment. It was widely reported the state paid $46,542 per slot machine. Could you clarify the issue?

A: It's not an accurate reflection of the cost of the machines. We were able to demonstrate to the satisfaction of the [Maryland] Board of Public Works that the cost of the machines was consistent with what private casino operators in other states were paying for the newest technology.

But what's included in the cost is maintenance over a five-year period. Over the next five years, what was being included … was the cost of the machines and five years of daily maintenance on these machines, including provisions that are required in state law such as making manufacturers pay for lost revenue if a machine is down for an extended period of time and making sure the machine manufacturers were responsible if there is a machine not working. They need to have someone in the facility within 90 minutes.

In the first year, we could require a slots machine manufacturer to change the theme of a game if it is not meeting revenue projections.

Q: So how much did the machines cost?

A: In the case of Hollywood in Cecil County, we bought from six manufacturers. The actual cost of the machines ranged from $18,000 to $25,000. For Ocean Downs, it ranged from $17,200 to $22,600.

Q: What is the latest update for the casino at Ocean Downs in the Eastern Shore?

A: We remain hopeful the facility will open by the end of the year. They have a very aggressive construction schedule and that schedule doesn't have much forgiveness in it, caused by weather and other issues.

If it gets behind, it may be hard to meet an end-of-December opening date. We're working with them to make sure all the pieces are in place to open as quickly as possible.

Q: How is the state's lottery program faring?

A: We're proud of the fact that for the 13th straight [fiscal] year, we hit another sales record of $1.7 billion. That's a new sales record for the lottery.

Prizes to players were over $1 billion for the second time in the history of the lottery.

In fiscal year 2010, the lottery sent $510 million to the state. That's the second highest in the history of the Maryland Lottery.

hanah.cho@baltsun.com

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