State’s consultants reaffirm Prince George’s County casino report

December 12, 2013

(Courtesy MGM Resorts.)

[This post has been updated.]

The consultants hired to study the three proposals for a Prince George’s County casino responded Thursday to complaints and concerns from one of the applicants, saying, in essence: We stand by our  MGM-favoring findings.

In a public teleconference convened by the Maryland Video Lottery Facility Location Commission, the independent consultants contracted by the state responded to questions raised by Greenwood Racing, which wants to build the Parx Casino Hotel & Spa in Fort Washington.

Among the Pennsylvania company’s loudest complaints: The consultants’ revenue projections didn’t make sense, giving MGM National Harbor too much credit for being just a few minutes closer to Northern Virginia and the District. Tony Ricci, the company’s chief executive, called the projections “fatally flawed” at a commission meeting last week in Annapolis and questioned the reliability of the consultants’ reports, which favored the MGM Resorts proposal in just about every category. (Drafts of the consultants’ reports can be found on the Maryland Lottery Web site.)

Will Cummings and Jim Oberkirsch – who came up with two sets of revenue projections separately, using their own models — reiterated their projections that MGM National Harbor would generate either $30 million or $102 million more than Parx in pretax gambling revenue in fiscal 2019. (The consultants projected 2019 revenues of  $713 million to $719 million for MGM.)

Another consultant, Dean Macomber, explained why he rated MGM’s non-gambling facilities and marketing plan ahead of Parx and Penn National Gaming, which wants to build a Hollywood Casino at the old Rosecroft racetrack. Acknowledging that “it is, by its very nature, a subjective effort,” Macomber said: “I’m not sure I can put Parx at rest.”

And Dan Houston, whose firm analyzed the economic impacts of the three proposals, said a last-minute Parx proposal to double down on its commitment to fund Indian Head Highway improvements wouldn’t move the needle: The company, which had already promised to spend up to $100 million on highway construction, would expect to recoup some of the extra $100 million, Houston said. Thus, he said, he wouldn’t ascribe economic impact to the second $100 million – “in effect, it works out almost as a loan to the county.”

The casino-location commission will meet on Dec. 20 in Baltimore to decide which of the three applicants will win the lucrative Prince George’s license.

Though the state’s consultants clearly favor the MGM proposal, commission chairman Donald C. Fry told his colleagues at the conclusion of Thursday’s call that it’s their decision to make.

“The consultants are not the answers to all of the questions,” Fry said, adding: “I equate this back to my days of practicing law…where juries are advised with respect to reports from experts that you have to use your own discretion and you can believe all, part or none of any testimony or any expert witness.”

[UPDATE]

In an interview after the teleconference, Ricci, the Greenwood Racing/Parx chief executive, said he remained frustrated with the consultants — Cummings and Oberkirsch in particular. “All they did was produce more numbers that really didn’t answer the driving question: How could three or four minutes make a $100 million difference in revenue? I was encouraged that some of the commissioners asked them questions along those lines; but their questions weren’t answered, either.”

In defending their market assessments, Ricci said, the consultants “were never able to demonstrate that there’s any evidence for their [models] in the real world. Because there isn’t, and can never be. … But it didn’t surprise me that they stood by their work.”

Ricci also disputed Houston’s analysis of the Parx promise to fund the Indian Head Highway construction project

Still, Ricci said, don’t bet the house on MGM winning the license next week.

“I was encouraged by the chairman’s comments at the end and some of the questions from the commissioners,” he said.

“Our project offers the highest level of capital investment, the highest tax rate, the most slot machines, the most tax revenue and funds desperately needed highway improvements…which won’t happen without us and would create additional economic benefits to the region. MGM is offering a lower tax rate, fewer slot machines, less tax revenue and no infrastructure improvements. In my mind, it’s a very simple decision.”

J. Freedom du Lac is the editor of The Post's general assignment news desk. He was previously a Local enterprise reporter and, before that, the paper’s pop music critic.
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Mark Berman · December 12, 2013