Rocky Gap casino license awarded

An aerial view of Rocky Gap Lodge and Golf Resort.
An aerial view of Rocky Gap Lodge and Golf Resort. (Kim Hairston/Baltimore Sun)

Hoping to turn around the struggling resort, Maryland's slots location committee awarded a license Thursday for a casino at Rocky Gap Lodge and Golf Resort in Allegany County.

The Video Lottery Facility Location Commission voted unanimously to issue the license to Evitts Resort LLC, the sole remaining applicant after the panel eliminated a group led by former Democratic Party Chairman Nathan Landow in January. The license is contingent on Evitts getting construction financing, but company officials do not expect that to be a problem.

The commission's action came the same day the Cordish Cos. announced that the Maryland Live! Casino at Arundel Mills will open to the public at 10 p.m. June 6, bringing the number of operating slots facilities in the state to three.

The Rocky Gap decision now goes to the state Board of Public Works — made up of Gov. Martin O'Malley, Comptroller Peter Franchot and Treasurer Nancy K. Kopp — for final review because it would be located on state property. The board overturns agency decisions only on rare occasions.

The license would allow Evitts, a subsidiary of Lakes Entertainment of Minnetonka, Minn., to operate up to 850 slot machines at the resort in Rocky Gap State Park near Cumberland. Evitts' $62 million plan calls for a 50,000-square-foot casino and 300-room lakefront hotel in addition to the existing 215-room lodge. The group has said it also would bring in two new restaurants and build a 25,000-square-foot theater.

The casino is expected to open within 24 months of board action, expected by late June.

The award of Maryland's fourth casino license had been expected several weeks ago, but Donald C. Fry, the commission chairman, said legal issues such as ground rent and payments to Allegany County needed more time to be ironed out. Fry, president of the Greater Baltimore Committee, said those issues have been resolved.

State leaders hope a casino at Rocky Gap will put the resort on a path to self-sufficiency and yield modest tax revenue for Maryland.

The decision comes as state leaders discuss the possibility of taking up a gambling expansion plan during a special General Assembly session this summer to consider a proposal that failed during the regular session that ended April 9. That proposal would allow a sixth casino in Maryland at National Harbor in Prince George's County and also permit table games such as blackjack there and at the five locations now approved for slots.

The two slots-only gambling sites now in operation are the Hollywood Casino in Perryville and the Casino at Ocean Downs near Ocean City. The Arundel Mills site, with 3,200 slot machines initially and a plan to increase to 4,750, will be the largest by far. Its opening plan is subject to approval by the Maryland Lottery, which will oversee a trial run before that date.

Fry said Thursday that a license for a location in downtown Baltimore could come in late June. The required background checks on top executives of the sole applicant, Caesars Entertainment, are expected to be complete next month, he said.

Rocky Gap was one of the sites targeted for slot machine gambling in the 2007 legislation that Maryland voters ratified in 2008. But the resort, located far from population centers and faced with competition from West Virginia, failed to attract investor interest under the legislation's original terms.

It was not until the legislature cut the state's share of the Rocky Gap proceeds to 50 percent and made further concessions last year that bidders emerged. Originally, the Rocky Gap facility had been expected to pay the same 67 percent tax as the other four locations — all of which are located in more populous, highly traveled areas.

The Rocky Gap resort has had a troubled history since it was conceived under the administration of Gov. William Donald Schaefer, who left office in 1995. Its prime backer was then-House Speaker Casper R. Taylor Jr., a Cumberland Democrat and close Schaefer ally.

Taylor, a relentless advocate for Western Maryland, promoted the resort to bring jobs to Allegany County, historically an area of high unemployment.

Construction of the $54 million facility was financed by $16 million in taxpayer funds plus high-interest bonds issued by the state-created, nonprofit Maryland Economic Development Corp. The resort — complete with a 215-room hotel, conference center and Jack Nicklaus-designed golf course on the shores of a scenic lake — opened in 1998.

Boosters described it as Maryland's answer to West Virginia's famous Greenbrier resort. "Rocky Gap will redefine what Western Maryland is all about," Taylor said as it was about to open.

The resort got off to a good start, and Taylor touted it as a potential magnet for other ventures, including a theme park and film production facility. It became popular for organizations with business before state government, mindful of Taylor's support of the resort, to hold gatherings there. But it soon began falling short of projections, particularly in winter when the golf course wasn't a draw. With no ski facilities, it couldn't compete with winter destinations such as Wisp in Garrett County. In summer, Deep Creek Lake remained the most popular destination in the Maryland mountains.

By 2007, gambling was seen as the only hope to stem losses at the resort, which has consistently missed payments to bondholders. In recent years, Rocky Gap posted annual operating losses — as much as $3.8 million in fiscal 2010 — and depended on subsidies in the form of loans from MEDCO to keep its doors open.

Enticing a qualified bidder proved far more time-consuming than casino advocates expected.

"This has gone on so long the black bears who were here at the start of this process are gray," quipped commission member D. Bruce Poole of Western Maryland.

Fry expressed confidence that Evitts (pronounced E-vitts) will be able to achieve the state's goals for Rocky Gap. "The addition of slots at that facility will add a lot of destination travel," he said.

The state's consultants have projected that the slots operation would produce about $40 million in revenue its first year — half of which would go to the state — and increasing amounts in subsequent years, Fry said.

The company paid a license fee of $2.1 million for 350 slot machines. Fees on the first 500 were waived by the legislature to help attract a bidder for the site.

Ivan V. Lanier, a spokesman for Evitts, said the company expects Rocky Gap to be very profitable. He said Lakes Entertainment has had success with similar operations in other small markets.

"This is our core. This is what we do — to come in and work with smaller, more boutique resorts," Lanier said.

He said he expects the first phase to open in spring or summer of 2014 and that subsequent phases, including the new restaurants and theater, would be added over the next six years.

Rocky Gap's bond holders, who stood to lose out if the operation had to shut its doors, have signed off on the deal, Fry said.

At Arundel Mills, several well-known restaurants will join the $500 million casino when it opens, including Bobby's Burger Place from Food Network celebrity chef Bobby Flay, The Cheesecake Factory and Phillips Seafood, Cordish announced. Between July and October, the casino will open Rams Head Center Stage, featuring live entertainment and The Prime Rib.

Once the casino is at full capacity, it will be the third-largest commercial casino in the country, said Joe Weinberg, managing partner of Cordish.

So far, the casino has hired two-thirds of the 900 workers needed for its phrase one opening, he said. The casino will add 600 employees over the summer.

The 10 p.m. opening was scheduled because Cordish is hosting invitation-only receptions earlier in the evening, said Carmen Gonzales, a spokeswoman for the Arundel Mills casino. A trial run, supervised by the Maryland Lottery, is scheduled for June 2.

On Thursday, Maryland Live! also launched a free online "play for fun" casino at Myliveonlinecasino.com, which officials said was a first in the gaming industry. Gamblers can log on and play slots games — some of which will be available at the bricks-and-mortar facility — and win "virtual" credits to play additional games as well as sign up for a casino rewards card. The online games are not played for money.