Gambling workgroup falters

The Workgroup to Consider Gaming Expansion failed to reach a consensus yesterday, as the likelihood of a second special session retreated.  The sticking point appears to be whether to keep the 67 percent tax rate on casinos or reduce it. Members representing the House of Delegates were willing to support a sixth casino, if it delayed opening until 2016 and if the tax rate remained the same.  While supporters of a casino at National Harbor were willing to delay its opening, they argued that it only made business sense if the tax rate were lowered.

However, there was significant agreement on other issues, including:

• Allowing table games such as blackjack and poker.  This could net the state an additional $51 million, and create 1,900 jobs.
• Transferring ownership of slots machines from the state to the operators. This would save Maryland about $80 million annually.
  
• Establishing an independent gambling commission to oversee casino operations, separate from the lottery commission.
• Ending restrictions on casinos' hours of operation.

The consensus suggests some or all of these issues could be addressed in the 2013 regular legislative session. The 2013 legislature could act on the recommendations regarding ownership of the machines, the organization of the regulatory commission, and hours of operation. Of course, those are not the big issues. The legislature could also act to adjust the tax rate on gaming proceeds, which is one of the big issues.

However, any expansion of gaming - either to a new location or for table games, requires approval by the voters in a referendum. If there is indeed no special session prior to the November election, those issues will need to wait for the next statewide general election in November 2014.

Room for gambling expansion

That was the conclusion drawn by the Department of Legislative Services and its consultant, PricewaterhouseCoopers, in a report today to the General Assembly's Workgroup to Consider Gaming Expansion.

The report concluded that adding a casino at National Harbor and allowing table games would raise an additional $160 million for the state. That could go a significant way toward solving the roughly $400 million structural deficit. Even if the report proves somewhat optimistic, another $100 million in income would be welcome relief for legislators facing another year of difficult decisions.

Opponents of gaming expansion, particularly the current casino operators, were undoubtedly disappointed.  Others making moral arguments against gambling expansion-such as Dan Rodricks in a recent column-will likely be undaunted.  Yet it seems to us that the difference in moral hazard between five and six casinos is negligible. The larger difference might be in allowing live table games; there are some interesting questions about the income stratification of who plays what games. Allowing live table games might be the more progressive move.

This report makes it more likely that legislators will return in July for a special session to expand gambling.  How much more remains to be seen, however.  And of course any expansion would have to be put to Maryland voters in November.

MBTPI wrote a guide to the original slots referendum in 2008.  If the issue is put to referendum in November be sure to look for our update to that guide.