Tag: MGM

A REAL Republican voter guide

Yesterday I got a mail piece that REALLY burned me up as an elected member of the Maryland Republican Party – as opposed to the two who claim to speak on my behalf. Here’s a photo:

Audrey Scott and Michael Steele don't speak for the rest of us.

Maybe it’s because I don’t have family on the payroll of the pro-Issue 7 side, but it seems to me that these two have drifted pretty far away from the party mainstream on a number of issues.

If you really want a good – conservative – Republican voter guide, you can look no further than my website since I went over all these questions last week. I don’t sell out to the highest bidder.

It is interesting to note, however, that the group which paid for this mailing is NOT the one which has paid for the numerous pro-Question 7 mailings which have found their way to my mailbox. Those are paid for by the laughably misnamed FOR Maryland Jobs and Schools, while this mailing was paid for by the similarly misnamed Republican Leaders Referendum Guide. The treasurers for each group are different as well.

Now I can understand that both Audrey and Michael have their roots in Prince George’s County and they feel the new casino would someday benefit their former home. And it just might once the conditions are set right.

But we are in a situation now where casinos being opened up cannibalize the revenues of existing facilities, and the rationale for choosing locations seems to be more about cronyism and buying votes than real market forces. It’s telling that MGM waited to jump into the market until they got a sweetheart deal they could live with; meanwhile, Penn National played by the original rules and watched their investment in Perryville go sour the minute a casino opened in Anne Arundel County. Obviously that’s the risk an investor runs.

So why should every little decision have to come down to the voters? I’ll grant that I’m not familiar with the setup of other states, but it seems to me that if we’re talking about a commission that includes both gaming and the Maryland Lottery the rules should be relatively the same – if the Maryland Lottery wants a new scratch-off game voter approval is not required.

The solution is simple: vote AGAINST Question 7 and make the General Assembly come back with a ballot issue in 2014 to repeal Article XIX of the Maryland Constitution. That ill-considered change from 2008 removed the General Assembly from making decisions more properly theirs, punting these issues to a ballot every two years as opposed to being able to make changes at least annually if not more often via a Special Session as it was this summer. If Question 7 passes then there’s no incentive to change a system that’s flawed. Let’s get gambling done right: it’s as simple as that.

And just for the record: Steele and Scott are wrong on Questions 1 and 2 as well. There’s no need to modify the Orphan’s Court in any county.

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.

Question 7: Money vs. money

Regardless of supporters’ pleas that money that’s currently fleeing to West Virginia will, as if by magic, return to Maryland if we only allow more gambling and another casino, the question about Question 7 remains: who do we believe? Their question about what Maryland loses can be flipped on its head and asked: who gets the real benefit?

Of course, those who oppose Question 7 call it:

…a massive rip off for Maryland families because it shifts hundreds of millions of dollars in tax cuts to multi-millionaire casino operators while sticking working families with a $260 million tax increase and shortchanging Maryland teachers and students.

The questions really come down to those of trust and responsiveness.

Back in 2008, when the law was first passed by Maryland voters, a number of parameters were set. The two most key were setting the locations for the five proposed casinos and the cut each entity would get. Many said then the proportion which was slated to go to casino operators was too low, and that theory may have been borne out when few takers were found for the various slot barn licenses. The state figured all five facilities would be online by now; instead just three (Perryville, Ocean Downs, and Arundel Mills) are in operation.

This referendum allows the state to change the proportions for return to licensees to suit particular situations as well as correct what some obviously perceived as an oversight, with a proposed facility near Virginia and Washington, D.C. But it’s not like the casino in Charles Town wasn’t there when the original bill was passed.

It points out the weakness I warned about when the Constitutional amendment was considered in 2008: there’s very little flexibility to adapt to changing conditions. Had the General Assembly done its job like it was supposed to, Maryland may well already have table games and whatever number of locations the market could bear. Instead, we’ve learned the hard way that there isn’t much of a market for slot machines in rural areas (Perryville and Ocean Downs are lagging) and we’ve given other states a huge head start on table games. All these could have been addressed by the General Assembly but they punted.

Indeed, supporters of Question 7 may make it seem like we’re leaving millions of dollars on the table – a very dubious proposition when you consider the total costs of gambling. Virginia seems to do just fine without casinos. But voting no also rebuffs a General Assembly which hasn’t done its job. The opponents make a good point when it’s stated that, while the money raised by gambling goes into the educational pot, the money is taken away at the other end and sucked into that black hole known as the General Fund.

The 2014 ballot should have a provision which removes the section of the Maryland Constitution specific to slot machines and instead authorize casinos in the general sense that horse racing tracks and the Maryland Lottery are already allowed. Then any needed changes can be made during a regular or special General Assembly session rather than waiting until November of an even-numbered year (while other states progress merrily onto table games and sports betting.)

Frankly, the only people who seem to be profiting off this particular battle are the political consultants, advertising agencies, and media outlets who put out and broadcast the dozens of spots we see during the week on both sides. If we vote yes, MGM stands to gain millions; if not, Penn National maintains its market share. Personally I’d rather the state concentrate on good manufacturing jobs which actually create things than entertainment jobs which depend on the regressive tax gambling truly is.

In Maryland, the gambling genie is already out of the bottle. Honestly I have no issue with the ability to wager, which doesn’t cost me more than the few dollars I occasionally spend on Powerball or MegaMillions tickets. But if they were going to adopt casino gambling it should have been done right. Let’s step back, take two years to write the proper legislation, and remove voters from the equation in 2014.