Maryland gambling issue has netted $56 million from companies for ad blitz

October 20, 2012

Dueling out-of-state gambling companies and their allies have poured $56 million into the fight over whether to allow a Las Vegas-style casino in Prince George’s County, fueling an unprecedented advertising blitz in what has become one of the most visible races in the region.

The money, which is being shelled out at a rate of $6 million a week, exceeds what the candidates spent in Maryland’s past two gubernatorial races combined. With two weeks to go, the spending has already eclipsed that of all but a handful of other recent ballot measures across the country. And it is unlike anything previously seen in Maryland politics.

The fight over Question 7, as it will appear on Maryland’s Nov. 6 ballot, has included celebrity endorsers, including illusionist David Copperfield and “Golden Boy” fighter Oscar De La Hoya, who said in a recent robo-call that the proposed casino would be a “destination resort” that will create “thousands of jobs for hard-working people.”

Those claims, funded in large part by the $21 million MGM Resorts has ponied up so far, have been met head-on with a nearly $30 million campaign by Penn National Gaming aimed at convincing voters that the promised jobs and money for education won’t materialize.

The ads have targeted an electorate that in 2008 approved Maryland’s slots program in a landslide, 59 percent to 41 percent. But now, among likely voters this year in Maryland, 46 percent favor Question 7 while 48 percent are opposed, according to a new Washington Post poll that also shows widespread doubt that the measure would boost education funding as advertised.


A high-stakes duel in Maryland regarding gambling expansion

In addition to a Prince George’s casino, the expansion plan, backed by Gov. Martin O’Malley (D), would also allow table games, such as blackjack and roulette, at the state’s five previously authorized slots locations.

Maryland voters embraced the slots plan just four years ago in a relatively low-dollar referendum — with a combined $8 million in spending and muted opposition — that set the previous record for a statewide ballot-issue campaign in the Free State.

This year’s ads have been so relentless that O’Malley recently pushed back, telling reporters in Annapolis, in unusually colorful language, that the opposition claims were “hogwash, a bunch of West Virginia casino hooey.” He has since appeared in an ad funded by MGM and its allies seeking to rebut the claims.

Those ads have touted the money that could be generated for schools by expanded gambling, as well as the promise of thousands of jobs. Proponents, such as O’Malley, have also argued that Penn’s opposition stems from its own business interests: Its properties include Hollywood Casino in Charles Town, W.Va., which stands to take a big hit if another large-scale venue opens in Maryland.

MGM has a lot at stake as well. The company, which owns several hotels and casinos on the Las Vegas strip and elsewhere, is angling to build a high-end casino by 2016 at National Harbor, the mini-city on the banks of the Potomac River. MGM executives envision a 400-room hotel, a spa, high-end retail and restaurants, convention space, and possibly venues for concerts and shows.

If built, that casino could be the most lucrative on the East Coast, analysts say, drawing gamblers from the District and Virginia as well as visitors to the Washington area from around the globe.

“You have very narrow interests who are going to benefit greatly from passage or defeat of this measure,” said Daniel A. Smith, a professor of political science at the University of Florida who is an expert on ballot measures nationally. “I can’t say I’m surprised to see this kind of money in Maryland.”


Gambling expansion on the Maryland ballot

If the same number of Marylanders vote on Nov. 6 as did four years ago, the gambling companies will together have spent more than $20 trying to sway each one of them.

Elsewhere, ballot measures involving gambling have emerged as some of the most costly of the past decade as competing interests have duked it out in states including California, Rhode Island and Ohio.

Penn has been involved in a few of the bigger battles, where it has sought to both advance and protect its interests. In 2008, the company contributed nearly $38 million to a campaign to defeat a proposed Ohio casino that could have undercut Penn’s business at a nearby property in Indiana. More than $64 million was spent by all parties involved, according to the National Institute on Money in State Politics. The next year, Penn gave $20 million to an effort to allow four new casinos in Ohio, two of which it would own. The total cost of that campaign exceeded $60 million.

The Penn-funded ads have sought to make the case that you can’t trust what politicians say about the benefits of gambling, particularly on education funding. In one ad, viewers are told there’s “a giant loophole” in Maryland’s plan: “No new money is required to go to education.”

The truth is not quite so simple. Maryland law does require a share of gambling revenue to be spent on education programs, and this year, legislative analysts project that $286 million in slots revenue will go toward that purpose.

What the law does allow is for state officials to use gambling revenue to displace other dollars that would have been spent on education funding if the program didn’t exist — something O’Malley and other advocates insist was known from the outset.

Regardless of the reality, the ads appear to have dampened enthusiasm for the expansion plan.

“I think one has to conclude the ads are making a huge difference,” said Donald F. Norris, chairman of the public policy department at the University of Maryland Baltimore County. “People don’t trust politicians, and they’re being told politicians sold them a bill of goods. I think that resonates.”

In The Post’s poll, nearly two-thirds of likely voters say they have heard or seen “a lot” of ads on the issue, and more than half (55 percent) say they are not confident that the expansion plan will produce more money for schools.

At the same time, a slim majority of likely voters polled (51 percent) say Maryland’s existing slots program has been a “good thing” for the state. Only about half as many, 28 percent, say they see the program as a “bad thing,” and the remaining 21 percent say they have no opinion or see the effect as mixed.

Bill Miller, an aircraft mechanic from St. Mary’s County, is among those who are inclined to vote no this time, even though he said he has no objections to gambling in general.

“I’m not sure where all the money is going to go, how much the school system is going to get,” said Miller, 47. “I don’t know what to believe anymore. They bombard you so much.”

Jim Murren, chief executive officer of Las Vegas-based MGM, said in a recent interview that “this wouldn’t be such a close race if not for one casino in West Virginia spending tens of millions of dollars on the airwaves confusing the issue and trying to tell people in Maryland how to vote.”

Murren said he was not surprised, however, by Penn’s pace of spending.

“They’re very adept at political campaigns,” Murren said. “We’re very adept at running luxury resorts.”

MGM has a couple of allies in the ad war. A group that includes Caesars Entertainment has given $4.6 million to the same ballot issue committee. Caesars plans to open a casino in Baltimore in 2014 that could benefit from table games.

And the Peterson Cos., the developer of National Harbor, has chipped in $1.3 million. Peterson has also given $500,000 to another pro-expansion committee led by Wayne K. Curry, a former Prince George’s county executive.

Penn officials have declined repeated requests for interviews in recent weeks.

The company also owns Rosecroft Raceway, a horse track in Prince George’s, and a small casino in northeastern Maryland.

As written, Maryland’s plan would invite competitive bids for a gambling license in Prince George’s from National Harbor and Rosecroft, but Penn officials have said the deck is stacked against them.

Reginald Calloway, a retired chef from Germantown, is among those supportive of Question 7 who underscore what Penn has to lose. Calloway said he heads to Charles Town to play slots a couple of times a year. If a casino opens in Prince George’s, Calloway said he would go there instead.

Not surprisingly, gamblers such as Calloway, 63, are among the biggest supporters of Question 7. The Post’s poll finds that six in 10 likely voters who have visited a Maryland casino in the past year support the expansion plan.

Jon Cohen, Peyton M. Craighill, Scott Clement and Aaron C. Davis contributed to this report.

John Wagner has covered Maryland government and politics for The Post since 2004.
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