Republicans swimming against the tide
I received an interesting letter today and it regards Question 7. I’m not going to reprint the whole thing (since I’m sure a number of my Republican readers received it as well) but I think the first few paragraphs are worth reprising. You’ll find out who wrote it after I finish – I’m saving that tidbit of information:
Dear Fellow Republicans,
Just like 5 years ago, West Virginia interests are flooding Maryland airwaves with false advertising trying to fool us into putting West Virginia’s interest first, even though it hurts Maryland.
Why West Virginia? Because that is where Penn National’s casino is located. A casino that West Virginia reporters call a “cash cow.” They can’t say that directly, so they hire fancy marketing companies to try and fool us – spending almost $40 million so far to defeat Question 7.
Penn National’s meddling has cost Marylanders hundreds of millions (of) dollars in lost revenue, and would cost us much more if they win in November. It is time we told Penn National to butt out!
We are FOR Question 7
We have teamed up to explain the history of Question 7 and why we are both voting FOR Question 7.
Ten years ago, when gaming (slots) was first introduced to the State Capital (sic) by Governor Bob Ehrlich, we were enthusiastic supporters, as were most Republicans. After years of back and forth, the Maryland Legislature in 2007 passed a slots bill, which was then ratified by the voters in 2008 (passing in every Republican jurisdiction in the State.)
Unfortunately, the 2007 legislation was hastily put together. It put our gaming industry at a decided disadvantage to surrounding states. To put this in perspective, Pennsylvania, which began gambling the same year as Maryland, received $1.5 billion per year in tax revenue while Maryland lost money.
Maryland Republicans supported bringing gaming to Maryland. But, as many of you have said, “if we’re going to have gaming in Maryland, we should do it right.” Well, we agree.
You know, though, it’s uncanny how often my fellow Republican Audrey Scott and I find ourselves on opposite sides of an issue. Her and co-author Michael Steele have exactly diagnosed the disease, but fail to come up with the correct cure.
But before I get to the meat of my argument, allow me to pick out a few points.
It’s worth mentioning that Penn National indeed owns the Hollywood Casino in Charles Town, West Virginia but also owns the Hollywood Casino in Perryville, so they’re not a completely out-of-state entity. That Perryville casino has requested 400 slots be removed so the facility didn’t look as barren and devoid of players, as an empty casino discourages patrons.
On the other hand, MGM wants to be a party-crasher. This comes from a story I found in the Baltimore Business Journal:
MGM decided not to bid for a Maryland casino in 2007 when the state first opened the door to gaming, (MGM CEO James) Murren said. Maryland’s high — 67 percent tax rate on gambling revenue — the state’s resolve to own the video lottery terminals (VLTs) and its refusal to allow table games drove MGM away.
To me, this seems like a form of crony capitalism at its finest, and I wish the state would be as accommodating to securing productive jobs for Maryland residents as it’s bent over backwards for MGM despite their alleged ties to organized crime. The $40 million Penn National has spent has been matched by MGM and casino backers, potentially making this question a nine-figure bonanza for media and other related interests before it’s all said and done. (Hopefully Steele and Scott received a nice little cut for their efforts. It doesn’t hurt to have Prince George’s County ties as both authors do, either.)
The argument about Penn National “costing” Maryland hundreds of millions is also a red herring. Certainly a number of Maryland gamblers go to Charles Town, but there’s no guarantee they’ll suddenly cease to do so if and when a casino at National Harbor opens. And those who flock to National Harbor may well come from other Maryland properties, particularly the Maryland Live! facility in Anne Arundel County. (In turn, that Anne Arundel facility is blamed for cutting Perryville’s business once it opened.) The rosy revenue projections often given to Maryland gambling have seen their bloom fade when reality hits, and there’s no reason to expect this round to do any better.
The crux of the Steele/Scott argument, though, is the request for Maryland to “do it right.” They correctly point out that Pennsylvania is raising far more money – with lower tax rates - than Maryland has. In fact, Maryland’s tax rate on casino operators is among the highest percentages in the country (based on 2010 data) with only New York and Rhode Island in the same neighborhood, although Pennsylvania is above average as well.
But the problem Maryland alone has is the inefficient method of making changes. It’s a point I made back in 2008 to no avail, and we’re now stuck with the folly of needing voter approval to build a facility and place equipment inside.
Voting for Question 7 only repeats the mistake made because, sure enough, someone will come along and promote the next “can’t miss” venture and have to suffer through both a legislative process and voter approval to receive it. Many casino operators don’t like those odds (or those tax rates) which probably explains why just three of the five proposed facilities are in operation four years after voters approved them the first time. A valid question raised by opponents is why the casino authorized in Baltimore City is being promised now when ample time has elapsed to build a slot barn – are they holding it hostage to a better deal? And what’s to stop MGM from demanding a better cut down the road and holding National Harbor hostage?
Maryland casinos should have the flexibility afforded to the Maryland Lottery. When they wanted to join up with MegaMillions and Powerball they didn’t need voter approval; instead, they just went ahead and did it. Certainly there are a few Maryland residents and businesses pleased that a ballot question was unnecessary.
I believe the best way to give the state this sort of leeway is to reject Question 7 and force the state to come back in 2014 with a ballot measure repealing Article XIX of the Maryland Constitution. By repealing Article XIX, it once again frees the General Assembly to make necessary law adjustments because these lines will no longer be in effect:
(d) Except as provided in subsection (e) of this section, on or after November 15, 2008, the General Assembly may not authorize any additional forms or expansion of commercial gaming.
(e) The General Assembly may only authorize additional forms or expansion of commercial gaming if approval is granted through a referendum, authorized by an act of the General Assembly, in a general election by a majority of the qualified voters in the State.
So the game plan is simple: say no now and say yes to repeal of Article XIX in 2014. The National Harbor project is not slated to come online under its current schedule until 2016 anyway, so a two-year wait wouldn’t hurt the state much in the long run.
I’m not naive enough to believe that gambling can be eliminated in Maryland, for three of our neighboring states have let that genie out of the bottle. But if we really want to do it right, the small-d democratic idea of voter involvement has to be eliminated from the process. While the power of the referendum is a useful one, it shouldn’t be a substitute for a General Assembly doing the job it’s appointed to do in a republic.