Maryland's embarrassing slots giveaway

Gov. Martin O'Malley and Maryland's legislators should be embarrassed at the gambling bill they are sending to voters this November. In their rush to move ahead with an expansion of Maryland's gambling program before the current one is fully up and running, they adopted a plan that amounts to a massive give-away to casino owners with little chance for public benefit. Voters should reject this proposal and tell the legislature not to try again until it can show that it is acting in the interests of the people, not the gambling lobby.

The chief elements of the gambling bill that Governor O'Malley introduced last week remain. Voters will be asked to decide whether to approve a sixth casino, in Prince George's County, and the legalization of table games like blackjack and roulette throughout the state. The bill transfers the responsibility for buying slot machines from the state to the casino owners, allows the casinos to be open 24/7 and sets up a more powerful gambling commission to oversee the program.


That was a bad idea to begin with. Adding a sixth mega-casino in the state would risk over-saturating the gambling market and could reduce the viability of the state's existing casinos or even drive one or more of them out of business. The governor's means of overcoming that problem, allowing some reduction in the tax rates on slot machines, rested on a series of guesses about Maryland's gambling market for which we have no solid data because the state's largest casino, Maryland Live, just opened two months ago, and its second largest, in Baltimore, has yet to break ground.

The smartest way to deal with that uncertainty would be to wait two years and aim for a ballot referendum in 2014, when we will have a better idea of the competitive landscape – particularly since the governor's proposal wouldn't allow a Prince George's casino to open before the summer of 2016 anyway. Failing that, the legislature could have left the matter of determining slots tax rates up to the new gambling commission, subject to General Assembly approval. That way, the rates could be decided by professional evaluation of actual data, not back of the envelope guesses in Annapolis hearing rooms.


But the amendments the House of Delegates adopted in a mad rush to get to 71 votes in that chamber take a bad idea and made it terrible. On Monday night, with virtually no discussion or debate, a House gambling committee decided to guarantee the state's existing casinos much larger tax breaks than the governor proposed and to allow them the possibility of seeking even more. The biggest break would go to Maryland Live, which would see both a larger reduction in its slots tax and greater compensation for the responsibility of buying slot machines than any of the state's other facilities. The Baltimore casino, whose owners had proclaimed themselves happy with the governor's initial proposal, got bigger tax breaks, too.

The upshot is this: The governor's promised $200 million in annual benefit from his bill is reduced to $174 million, but with a big caveat. Three-quarters of that total comes from the benefit to the state of making casino owners responsible for buying the slot machines, but the net increase to state education funding from the legalization of table games and the addition of a sixth casino is a paltry $39.5 million in fiscal 2017.

The casino owners' end of the deal? $525 million. They'll have to cover the expenses of buying slot machines and paying people to run the table games from that amount, but there is little doubt that they stand to benefit from this legislation far more than the state will.

Details like that were apparently unimportant to the House, which voted in favor of the proposal in a late-night session. And they seemed not to register at all in the Senate, which quickly rammed through approval of the bill without seeking to change a single comma. Governor O'Malley, who has proclaimed himself "sick" of the gambling issue, apparently is so uninterested in what the bill actually does that he intends to sign it before the ink is even dry.

But Maryland voters don't need to repeat their elected leaders' mistake. We can hold out for a better deal. We risk losing very little by delaying a gambling expansion for two years, and we stand to gain a great deal more.