Last week the state of Maryland, on less than 24 hours’ notice, approved a contract to purchase around 1,000 slot machines for a casino presently under construction in Cecil County. The contract works out to over $46,000 per machine, a figure one industry analyst considered 4 times too high according to a Baltimore Sun article by Annie Linskey.
By participating in an “incredible windfall” for the industry (in the words of Comptroller Peter Franchot) the state has put itself in the business better considered by companies which actually make their fortunes in the gaming industry.
The problems I had with the issue of slots when it came up on the ballot two years ago were many.
- It didn’t need to be a constitutional amendment because doing things that way made adjustments difficult. Prior to the vote, the General Assembly considered slots several years in a row but could never pass the issue the normal way – had they done so we could’ve adapted to the market.
- By restricting the state to video slots and taking such a long time to get them to market, we’ve allowed neighboring states to leapfrog into additional casinos close to the border, adoption of table games, and limited sports betting. To adopt table games would presumably require yet another vote of the people in two years and by that time it will be established in at least Delaware and West Virginia.
- Since the state’s take is higher than in many other locales, the interest in opening slot casinos in a recession is not great. Out of five approved locations for casinos we only have slots on the drawing board for two – the Cecil County location and Ocean Downs. A location on the western fringe of Maryland drew no interest, which obviously will cut revenue further short of projections.
Another casualty of the failure of slots may be the repeal of the 2008 sales tax increase. When I spoke to Bob Ehrlich regarding how he would make up for the decrease in revenue, part of his answer concerned slots:
Bob explained… the increased economic activity lowering the tax would create would fill in part of the gap (also a good presumption.) In addition, with slots coming online that revenue will enable the state to lower our tax burden in that manner.
Those slots, which already need to create $50 million in revenue to the state just to pay for themselves, have a lot of people counting on them to be productive and create the cash to help solve the state’s problems. It’s a burden bound to create disappointment in Annapolis as the best laid plans of the General Assembly and Governor O’Malley fail once again.
