Penn National opens checkbook in ballot campaign

Gambling giant Penn National Gaming Inc. has spent $5.5 million to limit gambling in Maryland — the latest move in a casino-vs.-casino battle that could saturate the airwaves and overwhelm other ballot initiatives this fall.

The Penn National spending came days after MGM Resorts Inc. put $2.4 million into a campaign to support an expansion of gambling. MGM plans to debut its second pro-gambling television commercial Wednesday.


The spending brings the total committed on both sides to $7.9 million, a stunning figure given that referendum campaigns are just beginning. The funds reported so far were committed in late August — even though most campaigns hold back until later in the fall, when more voters are paying close attention to the issues.

"That is a ridiculous amount of money to have three weeks into a campaign," said Derek McCoy, executive director of the Maryland Marriage Alliance, a group organizing a ballot campaign against the state's same-sex marriage law. "They are putting in some heavy numbers on this issue. Probably it will be one of the most expensive Maryland has ever seen. By far."


McCoy's group, by comparison, has reserved television ad time in October. "I wish we had some of that Penn National money," he joked.

In 2008, $8.1 million was spent on the state's gambling referendum campaign, according to the National Institute on Money in State Politics, which tracks spending on ballot questions. Most of that money, $7.1 million, came from casino companies that supported the law.

More big companies could be joining the gambling fray soon, providing even more money: A spokesman for the Caesars Entertainment-led casino in Baltimore said the company will "support" passage of the gambling expansion. A spokeswoman for the developer Peterson Companies, a strong backer of a new casino at National Harbor in Prince George's County, said it, too, would be "supporting" the measure.

There are no spending limits on issue campaigns in Maryland, unlike campaigns for political candidates, which can raise only $4,000 per donor in a four-year election cycle.

In mid-August, the General Assembly passed legislation authorizing a sixth casino — to be built in Prince George's County — and allowing Las Vegas-style table games such as poker at all the state's gambling locations. The measure also slashes the tax rates for most casino operators to compensate them for the increased competition from a sixth casino.

The law must be ratified by voters in the November election to take effect. It is one of four high-profile issues on the ballot, an usual situation for Maryland, which rarely has statewide issue campaigns. Marylanders will also vote on laws legalizing same-sex marriage, easing access to higher education for some illegal immigrants, and redrawing congressional districts.

Gambling interests "are going to bring real money to the table," said Travis Tazelaar, the campaign manager for the measure lowering the cost of higher education for some illegal immigrants. "They will be a part of crowding out the message."

Casino companies, which are highly regulated, have some of the fattest wallets of any industry and have shown considerable enthusiasm for spending here.


That's why state legislators added a special provision to the gambling law requiring an extra level of disclosure: Campaign committees must report donations and spending every 48 hours. Other referendum campaigns disclose funding twice before the election — in mid- and late October.

MGM Resorts formed its ballot committee — For Maryland Jobs and Schools — first, and aired a commercial about a week before Labor Day. The ad pushed a largely positive message: that expanding gambling would mean more jobs and about $100 million in additional tax revenue for education.

Penn National countered with a commercial saying that key decisions about the casino law were hammered out behind closed doors, and that the law would cut taxes for "billionaire special interests." The ad also said that estimates about job creation at the new casino were "empty claims," and noted that the additional tax revenue would not necessarily be spent on education.

On Wednesday, MGM Resorts will unleash its reply, calling Penn's commercials "dishonest" and painting the company as merely interested in protecting a profitable West Virginia casino, according to a preview of the ad.

Penn National is no stranger to Maryland's ad market. It spent $2 million to support the creation of Maryland's gambling program in 2008. Two years later, it turned around and spent $7.4 million trying, unsuccessfully, to prevent the Maryland Live Casino from opening in Anne Arundel County.

But this time Penn National argues that it was treated unfairly by the recent General Assembly measure. Its casino in Cecil County is the only site in Maryland that does not get a guaranteed reduction from the current 67 percent tax rate on slot machine revenues. It could qualify for a lower rate if an independent commission agrees to it.


The General Assembly gave Penn National the opportunity to bid for the sixth casino when crafting the law, adding the racetrack it owns in Prince George's County to the area where gambling would be permitted. But the company believes it is unlikely to win — Prince George's County Executive Rushern L. Baker III has publicly backed the proposed casino at National Harbor, which has a business agreement with MGM.

Penn National might have another business reason to oppose the law: The proposed sixth casino could take gamblers from its racetrack in West Virginia. The company has denied that is a reason for its opposition, but it also reported in SEC filings that profits at the Charles Town casino would be "adversely affected" by the new competition.

Another question mark is the role of Maryland Live Casino owner David Cordish. He opposed the gambling expansion law when it was before the General Assembly, claiming it would oversaturate the market in Maryland. Cordish and officials from his firm did not reply to an e-mail seeking comment on plans for referendum spending.