By Michael Dresser and Annie Linskey, The Baltimore Sun
8:43 PM EDT, August 15, 2012
Gov. Martin O'Malley signed legislation Wednesday asking voters to approve expanded gambling in Maryland as supporters and opponents prepared for what could be a bruising referendum campaign this fall.
The governor's action capped a whirlwind special session of the General Assembly that ended with passage of the bill in the House of Delegates without a vote to spare Tuesday night. The Senate agreed to the House's changes early Wednesday morning, ending the session.
"We are now able to put this issue behind us and move forward," O'Malley said.
If voters approve the changes, the measure will allow a new casino to be built in Prince George's County and permit table games there and at existing locations with slot machines.
The referendum question will join three contentious issues that have been placed on the ballot by petition drives — involving same-sex marriage, in-state tuition for the children of illegal immigrants and the state's congressional redistricting map.
The casino referendum is expected to pit corporate rivals with deep pockets in a battle for votes.
Senate President Thomas V. Mike Miller said he expects Penn National Gaming, which opposed the bill in the legislature, to pull out all the stops in an effort to defeat it at the polls. But Miller said the Cordish Cos., which had argued that the new venue would hurt business at its Arundel Mills casino, had assured him it would sit out the referendum campaign after winning eleventh-hour concessions in the bill.
Asked Wednesday what the companies' plans were and how they view the final bill, Cordish spokesman Joe Weinberg declined to answer.
A spokeswoman for Penn National could not be reached. Legislative leaders said the company, which owns Rosecroft Raceway as well as the Hollywood Casino in Perryville, was unhappy with the provisions allowing a Prince George's casino.
While Rosecroft will be able to seek a casino license there, many lawmakers expect it to have a hard time competing against the National Harbor development on the Potomac, which has advantages in transportation infrastructure, riverfront location and the support of county government. Penn National also has concerns about National Harbor's potential impact on its casino in Charles Town, W.Va.
Largely as a result of its location, National Harbor has attracted Las Vegas giant MGM Resorts International as the intended developer of a casino there. National Harbor and MGM officials both issued statements Wednesday praising the legislature's vote.
Caesars Entertainment, which was recently awarded the license for a casino in downtown Baltimore, also supported the legislation because of its desire to offer table games. The company said the General Assembly action "brings Maryland one step closer to a critical economic development milestone."
The governor said the bill will lead to the creation of 2,300 permanent jobs and raise $200 million a year for education when fully implemented. He added that the measure, if approved by voters, would put the Maryland gambling industry in a good position to compete with surrounding states' casinos, which offer table games now.
O'Malley gave much of the credit for the bill's passage to House Speaker Michael Busch, who joined him for the signing ceremony. It was Busch who mustered the 71 votes needed to pass the legislation in the House, which has been resistant to gambling. In the Senate, where Miller is a leading supporter of gambling, the vote was 32-14. All three men are Democrats.
The bill squeaked through the House after days of deal-making that brought previously skeptical delegates aboard.
Five Republicans found provisions in the bill they thought would be popular in their districts. Del. Rich Impallaria, who represents Baltimore and Harford counties, said an amendment allowing slots-like machines at veterans' halls helped win his vote. Del. Michael A. McDermott of Worcester County praised the bill's provisions cutting the tax rate for the money-losing Ocean Downs casino in his district.
Wendell Beitzell of Garrett County, LeRoy E. Myers Jr. of Allegany County and Robert Costa of Anne Arundel County were the other Republican delegates who voted yes.
Baltimore's House delegation proved critical to Busch's efforts. City delegates, who had considered presenting a laundry list of demands in return for their support, wound up splitting 14-2, with two not voting, after winning some concessions to protect the Baltimore casino and direct some of the table game revenue to school construction and parks.
Busch said city delegates came around when they saw the benefits to the city from table games and longer hours that the legislation allows. The city's support was even stronger than that of the delegation from Prince George's County, seen by many as the primary beneficiary of the bill. Its delegates voted 15-6 for the bill with two absent.
The city's delegation dropped a demand that Baltimore's capacity to issue school construction bonds be doubled to $200 million, but delegates appeared to have won assurance of favorable consideration during next year's session. Busch said the city's request appears "very doable."
Among those pleased by the outcome were the state's veterans' organizations.
Tom Davis, department adjutant for the American Legion Department of Maryland, said his organization has been asking for the past 10 years for permission to have slots-like machines in its halls. Under current law, veterans' groups in nine Eastern Shore counties can run gambling terminals. The new law expands that right to all counties except Montgomery, whose lawmakers opted out. Halls would be limited to five machines.
"I think it is a positive thing," Davis said. He said it will enable the organizations to raise more money and consequently provide more support to veterans. The American Legion — including auxiliary groups — has about 90,000 members in the state and 145 posts, Davis said.
While the provisions allowing table games and a new casino require voter approval, the language permitting the gambling machines at veterans' halls does not. It will become law without going on the ballot. Another provision that doesn't face a referendum will transfer ownership of slot machines from the state to casinos. That provision is expected to account for $135 million of the $174 million in new revenue the bill is expected to generate for schools in 2017.
Busch acknowledged that the bill, as changed in the House, is estimated to raise $32 million a year less in revenue for the state than before the amendments. He said the House tried to strike a balance that would keep the industry healthy and be fair to all of the incumbent license holders, including Cordish, an important employer in Busch's home county of Anne Arundel.
"Obviously the owner of Maryland Live had every right to be concerned," Busch said. The House changes gave the recently opened casino, the state's largest, a deeper tax cut.
Miller said the outcome was a big win for Maryland Live. "Mr. Cordish had a great deal more influence in the House," Miller said.
Comptroller Peter Franchot, a Democrat, said he plans to fight the measure in the referendum.
"Any modest revenues that will result from this new MGM casino will be offset to a large extent by the deep tax cuts that have been awarded by the legislature to MGM's in-state competitors," Franchot said.
In addition to elected officials and disgruntled casino owners, the referendum could face a fight from churches that oppose gambling.
The Rev. Delman Coates, pastor of Mount Ennon Baptist Church in Prince George's, said he expects that local clergy will urge voters to reject the casino expansion. He said the state should create jobs by building infrastructure, not casinos.
"These are debt-driven jobs that seek to generate revenue off the backs of those who can least afford it," he said.
•Allows casinos to be open 24 hours a day
Provisions of bill needing voter approval
Other key provisions of law
Casino tax cuts
The new gambling law cuts the tax rate on slot machine profits for four current casino sites. The change is to compensate license holders for competition from a new casino and for the cost of buying slot machines, now owned by the state. The state tax rate on slots at these four casinos is currently 67 percent. Under the new law:
Hollywood Casino Perryville: Rate cut to 61 percent, with option to go to 56 percent if commission agrees
Maryland Live: Rate cut to 51 percent, with option to go to 49 percent if commission agrees
Baltimore: Rate cut to 54 percent, with option to go to 51 percent if commission agrees
Ocean Downs: Rate cut to 57 percent