Maryland General Assembly began the second day of a special session to consider placing a full-service casino in Prince George’s County, but the threat it poses to the state’s existing five gambling sites still unnerves lawmakers from districts where investments in slots parlors have been significant since 2008 — when Marylanders approved the plan through a statewide referendum.
“Before it is all over, this will be found to have been a corrupt process,” wrote Del. Michael Smigiel, R-Cecil, on his blog Wednesday. “Some of the immediate problems that come to mind are that tax breaks are being offered to all the Casinos –except the Cecil County facility, Penn National Gaming’s, Hollywood Casino in Perryville.”
Under the bill, four casinos get increases in a share of the revenue if National Harbor is approved.
The proposal attempts to placate anxiety in current slots districts by allowing table games and lowering tax rates on slots revenues for four of the five casinos.
But many lawmakers worry that a planned National Harbor Casino in Prince George’s will intercept legions of gamblers coming from DC and northern Virginia, who would otherwise make the trip to casinos at Arundel Mills, Baltimore and Perryville.
Lawmakers have also questioned why the gaming bill couldn’t wait until January to save the taxpayers the cost of the special session.
“I think that the special session should be used for an emergency and extraordinary conditions as read in the Maryland Constitution,” said Del. Stephen Hershey, R- Queen Anne’s. “We have talked to the Attorney General on what emergencies and extraordinary conditions are…and the AG said that was something for the Governor to define.”
“The [Governor] is using this as the basis for something he’d like to see passed…because he wants it on this November’s ballot,” Hershey said outside the House chamber on Friday. “If we were to wait until next year, which I think we should, it would not be on the ballot until 2016.”
Unequal distribution
Many Republicans, and some Democrats, who originally signed on for the economic development potential, say the process is now seriously corrupted and offers no uniformity in the state’s growing “gambling-industrial-complex.”
Maryland Live in Anne Arundel will receive an additional 5 percent of the slots revenue, from 33 to 38 percent, starting when National Harbor opens its doors in 2016 — but the increase must be used for marketing and promotion. Baltimore City gets the same deal.
Cecil County will not get an increase in slot revenue for the Hollywood Casino in Perryville. Worcester County will get a 43 percent shareof the slots revenue, but must skim off 2.5 percent for capital improvements at the Ocean Downs Casino in Berlin. The Rocky Gap Casino in Allegany County can keep 50 percent of the slots revenue for the next ten years, with no caveats for marketing and promotion.
If the bill passes in its current form, table games will be allowed at existing slot sites as early 2013 — if Maryland voters approve the measure in a referendum in November.
However, the sixth site at National Harbor could die on the vine if a majority of voters in Prince George’s County vote “no” on the referendum — even if the rest of the state votes in favor. The expansion of table games at the five slots parlors would still move forward if the referendum is passed.
If the sixth casino is approved, it would have to pay out an additional 5 percent of its revenue to the original five locations.
No one promised the casinos a rose garden
A lawmaker who asked to be anonymous said the wrangling and deal-making comes down to making the original 5 casinos whole — and wrongly makes the state the final arbiter among competing companies.
“This is all about market share,” the lawmaker said. “And some of them have used their perceived market share to develop their projects.”
“Now they’re saying that adding a sixth casino takes away their market share,” the lawmaker said. “The state is doing something it shouldn’t do, by getting involved in making companies whole…we should not be in the business of picking winners and losers in the market place.”
The lawmaker also said that the developers of the existing casino sites assumed the risks knowing the rules could change.
The 2008 referendum said that the state could expand to table games and add casinos through subsequent legislation and referenda.
“They might think they were promised something during the backroom conversations,” the lawmaker said. “But the referendum” opened the door to more casinos and expansion to table games, the language was very specific in the 2008 referendum…the backroom deals didn’t decide anything, the voters did.”
Franchot calls for transparency
State Comptroller Peter Franchot asked lawmakers on Thursday to disclose any gambling contributions they received up to the start of the special session.
In a letter to the Governor and lawmakers, Franchot echoed wide skepticism on the motives to rush the gambling bill through a three or four-day special session.
He argued only three of the five slots parlors have come online since they were approved in 2008 and the National Harbor Casino planned for Prince George’s County will not generate any revenue until the summer of 2016, when it is scheduled to open.
“…there is little to no evidence that this precipitant action by the General Assembly will have any meaningful effect on the current fiscal challenges facing our state, from its lingering structural budget deficit to an unfunded state pension and retiree health care liability that is now estimated at $35 billion and growing,” Franchot wrote.
He said a hurried special session could overlook unintended consequences.
“There is considerable cause for concern that approving a new casino in Prince George’s County — without the opportunity for scrutiny, professional analysis and debate that is afforded in a traditional session – will result in unintended consequences,” Franchot said.
Good Fellas
Franchot also expressed concern about the companies Maryland selects as business partners.
In 2009, the New Jersey Division of Gaming Enforcement released a 74-page report that chronicled MGM’s entrance into Macau, China’s gaming market — through a partnership with casino operator, Stanley Ho, whose ties to organized crime figures in China and Hong Kong were well documented. Ho was well known among domestic and international law enforcement agencies for “permitting organized crime to operate and thrive in his casinos,” the report said.
To avoid further actions from regulators, MGM sold its Atlantic City casino and quickly put down roots in the Macau gaming market with a $1.5 dollar Initial Public Offering on the Hong Kong exchange. MGM China Holdings Ltd., currently has a 51 percent in stake in the MGM Macau Casino. Stanley Ho’s daughter, Pansy, is a 29 percent partner.
The Division of Gaming Enforcement took two years to complete its investigation, which involved travel to China and working with international law enforcement officials.
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