A powerful Baltimore legislator outlined his version of legislation permitting slot machines at Maryland racetracks yesterday, dropping his previous insistence on taking the question to voters in 2004.
Del. Howard P. Rawlings, chairman of the House Appropriations Committee, circulated a summary of his proposed bill allowing 10,000 slot machines and a letter to House members seeking their support.
The proposal is similar to a plan backed by Gov.-elect Robert L. Ehrlich Jr. but differs in critical details. Like the Ehrlich plan, it is more limited in scope than a proposal offered last week by state horse racing interests. It is also significantly less generous in allocating a share of the profits to the industry, including tracks and breeders.
An industry spokesman said the numbers in Rawlings' proposal aren't workable. "I don't think the horse industry can do it within these parameters," said Thomas Bowman, president of the Maryland Horse Breeders Association. "I don't even think they can come close."
Rawlings, a key member of the House Democratic leadership, said the bill would take effect June 1. In previous years, he had proposed a constitutional amendment allowing slots - a route that would have required voters' approval in a referendum.
"The issue of slot machines was at the forefront of the gubernatorial campaign, and I believe the voters of Maryland have spoken," Rawlings said in a letter to delegates seeking co-sponsors.
Rawlings' proposal is similar to Ehrlich's in that it would limit the number of slot machines to 10,000 at four racetracks. The industry plan calls for 18,000 at five tracks, including huge facilities with 4,500 slots each at Pimlico, Laurel and Rosecroft.
The Rawlings legislation departs from Ehrlich's proposal to limit slots to those three tracks and one that William Rickman Jr., owner of Delaware Park, plans to build in Allegany County. Rawlings would allow Ocean Downs, near Ocean City, and the track at Timonium Fairgrounds to apply for one of the four licenses.
Though Ehrlich opposes slots at Ocean Downs or Timonium, he welcomed Rawlings' proposal. "Pete's been great to work with," Ehrlich said. "He is someone we view as an important supporter."
The more bills that are proposed, "the better off we'll be ultimately," said Ehrlich, whose staff is drafting legislation.
The governor-elect indicated he is receptive to a provision of Rawlings' bill that would require approval of the governing bodies in the tracks' home county or Baltimore before slot machines could be installed. The provision would let voters in those jurisdictions petition any approval to local referendum.
The referendum proposal drew quick support from Anne Arundel County Executive Janet S. Owens, who said through a spokesman that county voters should have a say if slots were planned at Laurel Park.
But Bowman said allowing local referendums could pose problems for the state.
"The state is trying to answer the budget crisis as fast as possible," he said. "The referendum process would dramatically slow the whole thing down."
Rawlings said he decided not to seek a statewide referendum because Maryland needs the estimated $500 million his bill would raise to deal with next year's expected $1.3 billion budget shortfall.
But Sen. Thomas M. Middleton, a Charles County Democrat and leading slots opponent, rejected Rawlings' contention that the election was a statewide referendum on expanded gaming. "I don't think success or failure in this last election was determined by slot machines," he said.
Rawlings' legislation will include a provision saying that slot machine licensees must meet the state minority business participation goal of 25 percent in construction and procurement and make a good-faith effort to allow an ownership stake for women and minorities.
The legislation does not specify how the Lottery Commission would determine which tracks would get licenses if more than four apply, but Rawlings said inclusiveness could be an important factor.
Rawlings' legislation would reserve a larger proportion of the proceeds from slots for government purposes than under the industry proposal. Under his plan, 44 percent would go to state education funding, 12 percent to the Lottery Commission to buy or lease machines, and 7 percent to local governments for development projects.
Track owners would get 30 percent, and 7 percent would supplement purses and provide aid to horse breeders.
Gerard E. Evans, lobbyist for the Maryland Thoroughbred Horsemen's Association, said the money Rawlings would provide for breeders and purses - about half what the industry proposes - compares poorly with surrounding states. "If this debate's going to be about horse racing, then the purses have to be competitive," Evans said.
Lawrence S. Klatzkin, a New York gambling industry analyst, said Rawlings' proposal for 10,000 machines at four tracks is more in line with what other states are doing at their tracks than is the horse racing industry's proposal last week.
"I think that is something that is palatable and is similar to what other states have done," Klatzkin said. But he questioned the $125 million licensing fees, saying he knows of no other state that has charged as much.
Bowman said the industry proposed a 4,500-machine limit because that is what analysts said was on the high side of what the market could support. "To put a cap on the number of machines doesn't do anyone any good," he said. "You cap the income for everyone, including the state."
Bowman said the Rawlings plan would provide only about $60 million per year in revenue for each track owner, making it difficult for them to cover initial construction costs, the $125 million licensing fees and other expenses.
Under Rawlings' plan, the fees would provide $500 million with which to address the state's budget shortfall. The industry proposes payments ranging from $37.5 million to $75 million, for a total of $300 million.
The industry plan would let tracks recover that "prepayment" over time, but Rawlings' proposal makes no provision for a refund.
"If you want to play, you got to pay," Rawlings said.
Slots proposal
Details from the proposal by Del. Howard P. Rawlings:
Basics: Authorizes 10,000 video slot machines at four racetracks, to be chosen by the State Lottery Commission on a competitive basis among Maryland's five existing and one planned track. No slots outside racetracks.
Ownership: Slot machines would be owned or leased by Lottery Commission and remain under agency control.
Local option: Local governments in the jurisdictions where tracks are located must approve slots. Voters of counties or Baltimore may petition approval to referendum.
Eligibility: Applicant must invest at least $100 million in construction and related costs and provide 150 full-time jobs.
Minority participation: Applicant must meet state minority business participation goal of 25 percent in construction and procurement and make a good-faith effort to include minorities in ownership.
Up-front money: Applicant must pay one-time fee of $125 million on issuance of license. Provision would raise $500 million in the next fiscal year.
Compulsive gambling: Annual $360 per slot machine fee to be paid into Compulsive Gambling Fund administered by state health department.
Share of proceeds: After winnings are paid, leftover revenue would be split, with 44 percent going to the state for education, 12 percent to the Lottery Commission to buy or lease slot machines, 7 percent to local government for development, 30 percent to track owners, and 7 percent to racing purses and horse breeders.