A commission that will award five lucrative slots licenses will hear claims today from the Laurel Park racetrack that Maryland's new gambling law is "constitutionally defective" and that the process should be halted and corrected.
That argument, contained in a more than 50-page memo submitted this week by the track's Annapolis attorneys, is an attempt by the financially ailing racetrack to salvage its application for a track-side casino, submitted last week without the required $28.5 million in initial fees. Attorneys for a competing casino application in Anne Arundel County are demanding that the Laurel Park bid be immediately tossed out.
Donald Fry, the commission chairman, said he hopes the seven-member panel will decide today whether to disqualify two incomplete bids - the Laurel submission and the only bid for a casino at Rocky Gap State Park in Western Maryland.
Meanwhile, one of the principals in the sole application for Baltimore's casino license has asked the city for a conflict-of-interest waiver because he is also an attorney who represents Baltimore in revenue bond issues. And the Cordish Cos., which submitted the competing Anne Arundel bid, has disclosed to the slots commission that one of its key partners is related to the chairman of the state lottery commission, which will regulate the gambling operations.
The emerging legal and ethical issues underscore the potential for complications in Maryland's foray into legalized slot-machine gambling. Voters decided last year to legalize slots parlors as a revenue source for public schools, but just over a third of the available 15,000 slot machines have been bid upon. Because two of six bids came in without license fees, the state has lost out on millions in hoped-for cash.
That disappointing result, combined with worries about the deep recession, has put more pressure on the politically appointed slots commission headed by Fry, a former Harford County lawmaker.
Attorneys for Laurel Park defending its failure to submit required fees argued that the state lacks "legal authority" to refund those fees if their application were rejected and that requiring bidders to submit nonrefundable fees is unconstitutional.
A 2007 law that governs the slots program "makes no provision for the refund of an Initial License Fee under any circumstance," according to the legal memo written by attorneys with Rifkin, Livingston, Levitan and Silver LLC, a firm that has long represented the Maryland Jockey Club.
In Baltimore, City Solicitor George Nilson said yesterday that bond attorney Paul D. Shelton asked for a "waiver" several weeks ago because he was a principal in the Baltimore City Entertainment Group, a partnership set up to bid on a downtown Baltimore slots parlor.
Shelton is a bond lawyer to the city and needed the waiver "because on the one hand he is now representing a client who needs to negotiate a deal with the city ... and yet he also represents the city in a transactional way with bond work," Nilson said. The city solicitor said he granted a "verbal waiver" and might revisit the issue at a later date.
Brenda B. Blom, who teaches courses on professional ethics at the University of Maryland, said Shelton's disclosure to his client about the potential appearance of a conflict of interest was appropriate. Joseph Weinberg, president of the entity that wants to build a gambling casino at Arundel Mills mall, is a cousin of lottery commission Chairman Stanley Fine. The relationship "was fully disclosed" in the application, said Jonathan Cordish, an executive with the Baltimore development company making the bid.
The lottery commission does not select the gambling licensees, but it does conduct background investigations of bidders and has broad oversight of the gambling program in general.
Baltimore Sun reporter Annie Linskey contributed to this article.