The Maryland gambling pitch

With the question of a possible Special Session to address gaming hanging over our collective heads, I think it’s time to share something I received in my snail mail.

This was addressed to me as a member of the Wicomico County Republican Central Committee and was penned by Vance Ayres, who is the Executive Secretary/Treasurer of the Washington DC Building Trades Council. The letter reads as follows:

Dear Michael,

We’re the Maryland Building Trades, representing skilled trades throughout the state. We support a new destination gaming site in Maryland for one simple reason: it will put 8,400 people to work – the largest new union jobs program in the country.

But why are we writing to you, a leader in Wicomico County? Because new destination gaming is important to Wicomico County. The new destination gaming is estimated to yield at least $223 million in gaming taxes and millions more in state and local income and sales tax.

By law, the gaming taxes are distributed through the Education Trust Fund. In a stabilized fiscal year, Wicomico County’s annual share will be $4,890,000. And in times of budget crisis, the gaming taxes make sure the State meets its existing commitments to Wicomico County without cutting services.

If the legislature doesn’t act now, Marylanders will lose the chance to vote on competitive gaming until 2014. Our state will not get table games until 2015, and no destination gaming until 2017 or 2018.

Maryland can’t wait for new jobs. Our schools can’t wait for new revenue. A 3 year delay would cost the state nearly $1 billion. This includes lost gaming taxes and state and local taxes. It also includes the $120 million the State wastes on government-owned slot machines, paying twice the going rate.

A 3 year delay would cost Wicomico County $14,670,000 in stable fiscal years, and costs the state its funding source for this amount in unstable years. Either way, delay is bad for the State, bad for Wicomico County, and bad for our public schools. Delay helps no one except our existing operators. We need to put the interests of Maryland public schools ahead of the interests of Maryland Live.

Maryland gaming needs to become competitive now. According to a study produced by Union Gaming Analytics LLC, we annually send $620-$830 million of Maryland tax dollars to West Virginia, Delaware, and Pennsylvania to support their schools and help keep their taxes low. These states hope Maryland continues with its infighting.

Enclosed is a recent column in the Baltimore Sun by Martin Knott, a prominent Maryland business leader and chairman of the Maryland Economic Development Corporation, describing why the Maryland legislature needs to act now.

Marylanders want the legislature to act now. A recent poll showed that 84 percent of Marylanders want the right to vote on this issue this fall.

Please add your voice to the effort to put Maryland taxpayers and Maryland public schools first. We need to act now.

Sincerely,

Vance Ayres
Executive Secretary/Treasurer
Washington DC Building Trades Council
(Representing over 25,000 Construction Workers and their families)

Oh, so NOW Big Labor wants some help from Republicans? Should have thought of that a couple years ago.

Well, actually all of this should have been thought of about 6-8 years ago when the General Assembly tried and tried to get video slots passed under Governor Bob Ehrlich. But Democrats didn’t want to give him a victory to run on in 2006. Instead, they waited until Martin O’Malley was inaugurated but legalized slots in perhaps the most convoluted, ill-thought way possible: as I pointed out at the time, the inherent weakness in the approach voters approved in 2008 was that technical changes like adding a sixth location or table games could only be made within the narrow window of a statewide election.

And if that wasn’t enough, there’s the fact that the General Assembly – controlled by the Democrats unions love to support – botched up both the preferred budget process AND changing the slot machine rules in the frenetic final hours before sine die.

But all this is forgotten as the unions promise big money for Wicomico County if we support this changing of the law to benefit one entity at the expense of another – while the unions get their cut, since I presume only union contractors would be able to bid on the construction project based on what’s said in this letter about a “union jobs program.” (Talk about starting out on the wrong foot with me.) And there’s no lack of irony that Martin O’Malley is finally supporting a tax cut – but only for a very, very select few well-connected friends of his. What whining do we hear about lost revenue now?

Yet when I go through the letter I have no shortage of questions.

First of all, who came up with the $223 million revenue number from “destination gaming?” Does it account for the loss of revenue from other casinos? I’ve heard scuttlebutt that Ocean Downs is losing $2.5 million a year, so how is opening another Maryland facility featuring table games going to help them? Would Ocean Downs and the others already in operation be able to put in table games right away, or would they have to wait until this sixth casino opens? (I have never been inside Ocean Downs so I have no idea if their building can handle table games to begin with.)

Nor do I buy the contention that Wicomico County will get nearly $5 million a year from this for education, or anything else. Another weakness of the current gaming law is that the share of 48.5% to education would almost certainly decrease if the tax cut to casino owners is passed. As I understand it, at present the house’s cut is 33% while 48.5% goes to education, 9.5% to local horse racing purses and facilities (the original reason they wanted slots, to “save the horse racing industry”), 5.5% to local impact grants, 2% to the Maryland Lottery for costs, and 1.5% to the Small, Minority, and Women-Owned Businesses Account. So who gets cut if the rate goes to 40% for casinos? What about 45% or 50%?

Another item to ponder: why would it take so long to build a facility? If you’ll notice, the time line for destination gaming with a 2014 passage is 2017 or 2018 – so even if this goes through I would have to presume no new Prince George’s facility is finished until 2015 or 2016. A lot can change in three years, but in my (admittedly limited) experience with casino gambling I seem to recall at least one Detroit casino (Greektown) had a temporary facility to get up and running before building a more grandiose palace. Why isn’t this planned for the PG casino?

And I found this an interesting tidbit: the same Union Gaming Analytics the writer relies on for his information came to this conclusion in a recent Las Vegas Sun story by Steve Green about the firm:

And in the United States outside of Las Vegas, (Union Gaming Analyst Bill) Lerner expects gaming revenue to grow in the “very low single digits” as the U.S. casino expansion story frequently involves cannibalization of existing business as opposed to growing markets. (Emphasis mine.)

So we may steal a little bit of business back from West Virginia, Delaware, and Pennsylvania, but I suspect the new Prince George’s casino will take the most from existing Maryland facilities. Yep, that’s just brilliant because then those operators will want their own sweetheart deals and the state will have to give in.

Here’s what we should do. If we are going to have a Special Session related to gaming, I want them to put before the voters a Constitutional amendment proposed to voters that would work something along the line of rescinding the 2008 Constitutional change, effective April 30, 2013. That would give the General Assembly 90 days to work out a new gaming law that would allow the state the flexibility it needs to adapt to changing conditions via the legislature. If they can’t do that and want to argue like spoiled children, I frankly don’t care if the casinos shut down on May 1.

I can tell you right now that any changes to the state Constitution that give one entity a better deal than the others or don’t address this absolutely asinine weakness in state law that makes it difficult for casino operators to invest in improving their facilities are pretty much dead on arrival with me. Just like many other things this Democratic-controlled General Assembly has done since I moved here in 2004, they have made a complete muckery of gambling in Maryland.

It’s time for the adults to take over.

Author: Michael

It's me from my laptop computer.

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