FISCAL RESPONSIBILITY, Gov. Robert L. Ehrlich Jr. said in his State of the State speech last week, is the first pillar underpinning his governance of Maryland. That's as it should be, and so we urge state legislators to analyze his latest bill to legalize slot machines by the standards of fiduciary duty required of those heading publicly traded corporations.
CEO Ehrlich offers slots primarily to raise state revenues. So, does his plan maximize gains for his shareholders, in this case the citizens of the state of Maryland?
Against financial sense, Mr. Ehrlich persists in seeking to hand owners of state racetracks four of the six state slots licenses. One conservative indicator of the value of each license: In Illinois on Friday, the state announced that its auction of a license for a casino outside Chicago had drawn seven bids averaging $300 million. Certain Maryland licenses might be worth more.
Why has the governor limited the state's effective return on slots to a little more than 50 percent when New York and Rhode Island reap 60 percent? If the state built casinos and sought competitive bids from managers, its take might reach 80 percent.
Why give slots licensees 39 percent of the take when Rhode Island gives them 27 percent, New York only 20 percent, and Alberta, Canada, just 15 percent?
More on the tracks: If they didn't exist, no one would argue that their sites are the best locations in the state for maximizing new state revenues - which depends on capturing Marylanders who've been heading out of state to gamble and on luring out-of-staters to gamble in Maryland.
And why so lavishly subsidize a declining industry that has been a poor steward of its own product? Tracks with slots, known as racinos, turn out to be slots parlors with horses running around outside before still slim crowds; even with increased purses, wagering on live races continues to fall.
We've long been opposed to legalizing slots in Maryland. Across the country, expanded gambling has not solved state fiscal problems, has not delivered on economic development promises and has led to hidden but huge social costs. At the same time, if the state turns to slots for new revenue, it ought to aim to reap the maximum yield.
By that measure - the standard of fiscal responsibility - Mr. Ehrlich's slots plan falls so short that, if he were a corporate CEO, he might be risking a shareholder revolt, if not a lawsuit. His plan is so bad that it's a counterproductive distraction to the core question still facing the General Assembly: Should Maryland legalize these machines to help pay for its government?
Marylanders and legislators remain split on that question, and Mr. Ehrlich's fiscally irresponsible plan does a disservice to even his side of the argument.