State's top court rules that referendum on Arundel Mills slots is legal

Anne Arundel County voters will decide in November whether to allow Maryland's most lucrative slots casino to be built at Arundel Mills mall, after the state's highest court ruled Tuesday that a referendum challenging zoning for the project should be placed on the ballot.

Supporters and opponents likely will mount vigorous campaigns leading up to the fall election, and observers say higher turnout in Anne Arundel could have an impact on the races for governor and county executive.

Questions over the 4,750-machine casino, proposed by the Baltimore-based Cordish Cos., extend the uncertainty over Maryland's struggling slots program. Anne Arundel slots were supposed to provide a key chunk of the hundreds of millions of dollars in gambling revenue that Maryland is depending on over the next several years.

Proponents of the referendum heralded Tuesday's ruling as protecting a public right to petition their government, while the project's developer argued that further delays would cost the state crucial tax revenue.

Cordish has been wrangling with the Maryland Jockey Club and community groups for months — since the Anne Arundel County Council passed a zoning change that cleared the way for the Arundel Mills project. The Jockey Club wants to build a slots parlor at its Laurel Park race track instead, and many nearby residents don't want the project near Arundel Mills.

"The Cordish company owes the people of Anne Arundel County an apology for what they've put us through," said Rob Annicelli, president of Stop Slots at Arundel Mills, one of the groups in a coalition that led a petition drive — financed by the Jockey Club — for the referendum.

The referendum question was rejected by a lower court last month, before the Court of Appeals revived it Tuesday.

The state has already granted Cordish a license for its proposed casino, but it's unclear what that will mean if zoning for the project is rejected. Voters approved five locations for Maryland's slots program in November 2008, but no casinos are operating yet, and the two largest — in Arundel and Baltimore City — have been mired in delay.

Donald C. Fry, chairman of the state's Video Lottery Facility Location Commission, which granted Cordish its license, said if the zoning gets voted down, Anne Arundel would be "back at square one" with no land in the county zoned for slots.

Fry said Cordish is required under the license to show that it complies with county laws, but the commission has latitude to grant extensions under extenuating circumstances, which would apply under the referendum. Fry said he would not speculate whether the Cordish license would be in danger if the referendum passes.

"Slots is going to have to be in the county. The state Constitution says that there will be slots in that area," he said. "The voters will have the opportunity to determine whether they agree or disagree with the County Council's zoning decision. Depending on which way they go, our members will sit down and figure out what we want to do."

Many in the county thought slots would come to Laurel Park and were surprised when Cordish applied to build a casino at the mall.

In a statement, Gov. Martin O'Malley, a Democrat, said he agreed with the court's decision — and hinted that he would not object if slots wound up in Laurel instead.

"Today, the Maryland Court of Appeals affirmed the right for the people of Anne Arundel County to have their voices heard on whether slots should be located at Arundel Mills Shopping Mall, and I support that decision," O'Malley said. "I have always preferred that these slots locations be limited to race tracks, but this is a local zoning issue that should be decided by the people of Anne Arundel County, just as Marylanders overwhelmingly approved the slots referendum in 2008."

Former Gov. Robert L. Ehrlich Jr., a Republican challenging O'Malley in the fall, said in a statement that the state legislature's failure to approve slots during his tenure as governor has put the state in a "perilous fiscal situation."

"By repeatedly opposing my slots legislation, the General Assembly declined upwards of $800 million in annual revenue and exacerbated the structural budget deficit the state currently faces," Ehrlich said. "The court has now rendered its decision. Now it is time for the voters to be heard."

Circuit Court Judge Ronald A. Silkworth ruled in June that the referendum was illegal because the zoning legislation to authorize the billion-dollar casino was part of an appropriation package. According to state law, appropriations — or spending allowances — cannot be decided upon by voters at the ballot box.

The Court of Appeals apparently disagreed with that reasoning, though the judges' full explanation was not available Tuesday; the decision came in a two-page document and will be expanded later.

County Attorney Jonathan A. Hodgson said his office has already drafted a ballot question and will move "expeditiously" to put the question, in the form of a resolution, before the County Council for approval, as required by law. Once it is approved by the council, Hodgson will send the question, which will ask voters to either approve or disapprove the zoning bill allowing slots at the mall, to the state Board of Elections for inclusion on the November ballot.

In a statement, Cordish president David S. Cordish called the decision a "tremendous loss" and its repercussions for taxpayers a "travesty," but he said he was encouraged by Anne Arundel County's overwhelming approval in the statewide referendum to allow slots.

"Today's Court of Appeals decision is a tremendous loss for the taxpayers of Maryland, the State Education Trust Fund, the horse racing industry and the economic well-being of the state," Cordish said. "Each day the Mills casino is delayed costs the state in excess of $1.1 million, more than $400 million per year. In addition, 4,000 excellent-paying new jobs are being delayed at a time when these jobs are desperately needed. It is a travesty that billions of dollars are leaving the state each year to be spent in casinos in West Virginia, Delaware and Pennsylvania, with no benefit to the state of Maryland."

Alan M. Rifkin, an attorney for the Maryland Jockey Club, commended the court's decision.

"We're pleased and grateful [for] the court's decision, which correctly enforced the rights that were provided to them when they adopted the slots constitutional amendment," said Rifkin. "The right to referendum is perhaps the most basic right in this country. It goes to the very core of our democracy and today it was preserved, protected and ensured by the Court of Appeals."

The court decision came just hours after a hearing in the case, in which judges foreshadowed the ruling by asking pointed questions about the legal reasoning behind the lower court decision.

Michael D. Berman, an attorney for the Maryland Jockey Club and the citizens group Citizens Against Slots at the Mall, argued before the court Tuesday morning that the right to referendum was a "critical check and balance" and that the county zoning bill was "not an appropriation."

"Invalidating the people's right to referendum would only serve to erode confidence in the government," Berman said.

Questioning Cordish attorney Anthony Herman, Chief Judge Robert M. Bell pointed out that the state slots laws called for slots to comply with "all applicable planning and zoning laws."

"Part of that process also includes referendum," Bell said. "How do you cut that out?"

Herman repeated his previous argument that the county zoning bill shares an "inextricable link" with the state law, which was "expressly designed to raise revenue" for public education.

Judge Lynne Battaglia also questioned Herman, asking, "What would not be related to an appropriation? What type of legislation, because one can always identify a funding source?"

Herman said laws "expressly designed to raise revenue" should be considered appropriations.

A previous version of this story incorrectly identified the judge who asked Anthony Herman about legislation that is not related to appropriations. Her name is Lynne Battaglia.

Anne Arundel slots timeline:

November 2008: Maryland voters approve 15,000 slot machines in five counties, including Anne Arundel, with about 60 percent in favor.

February 2009: Magna Corp., the bankrupt owner of Laurel Park race track, bids for the Arundel slots license, but does not submit a required $28.5 million deposit. Cordish also applies for the license.

December 2009: The state's Video Lottery Facility Location Commission grants Cordish a license, followed by a long-delayed zoning approval by a divided Anne Arundel County Council. Opponents begin a petition drive for a ballot referendum on the county zoning bill.

February 2010: A Cordish subsidiary sues the Anne Arundel County election board, claiming it ignored "fraud" in the signature-gathering process for the referendum.

April 2010: The county election board certifies about 24,000 signatures, well above the approximately 19,000 signatures required for a ballot referendum.

June 2010: After a seven-day trial, Circuit Court Judge Ronald A. Silkworth rules that the referendum is illegal because it is part of an appropriations package. The judge only invalidates 399 signatures.

Tuesday: The Court of Appeals reverses the lower court's ruling, making way for county voters to decide on the zoning law this fall.