Maryland raising stakes in casino wars with Delaware and West Virginia

For years, casinos in West Virginia and Delaware siphoned hundreds of millions of dollars in gambling revenue from Marylanders. Now Maryland is poised to win back increasing numbers of those gamblers — and their millions.

Next week, the state’s largest casino will introduce blackjack, craps, roulette and other live-
action games. Maryland Live will offer 24-hour play at 122 tables, more than Delaware’s three racetrack casinos combined and more, too, than West Virginia’s cash cow, Hollywood Casino at Charles Town Races.

The debut of those table games will mark the latest step in Maryland’s dramatic expansion of commercial gambling. It will also mark an escalation of the casino wars — a battle for the hearts, minds and money of Maryland gamblers.

Maryland Live already has an opening salvo planned.

Motorists driving east on U.S. Route 340 from Hollywood Casino will soon see a new billboard announcing table games at the casino at Arundel Mills mall. The message to gamblers will be clear: You can stop leaving the Free State. And thousands are expected to heed that call.

Maryland casinos have put pressure on gambling sites in Delaware and West Virginia.

“Maryland is getting what the other states already have, which is going to make it very difficult for casinos in West Virginia and Delaware,” said Mark Nichols, an economics professor with the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada at Reno. “The only way they can keep those Maryland residents from staying in Maryland is offering incentives or differentiated products that somehow make it worthwhile to travel. But almost anything they try, Maryland can copy. I’m not sure there’s much they can do.”

Still, they are trying.

The casinos in Delaware and Charles Town added table games in 2010 to counter Maryland’s legalization of slots. Facing pressure from a nascent Pennsylvania gambling industry as well, Delaware added sports betting in 2009, although it is limited to National Football League parlays.

Last year, Delaware lawmakers passed the Gaming Competitiveness Act, providing nearly $8 million in licensing-fee relief to the state’s three racetrack casinos so they would have more money for promotion and capital improvements.

Dover Downs Hotel and Casino already features live harness racing, NASCAR races, a conference center and a spa. Delaware Park offers golf and runs regular poker tournaments.

Executives at Dover Downs and Delaware Park declined to discuss what they are going to do to appeal to Maryland gamblers. But Al Britton, the general manager at Hollywood Casino in West Virginia, said his casino is ready for its smackdown with Maryland Live.

The property has been expanded, with a hotel built and a steakhouse and other restaurants added. And it has been re-branded, with Charles Town Slots becoming Hollywood Casino at Charles Town Races.

Hollywood Charles Town serves complimentary alcohol to players and allows smoking in the casino. By contrast, Maryland Live and the state’s other casinos are prohibited from comping cocktails and are nonsmoking facilities.

“We’ve been preparing for competition from Maryland for years now,” Britton said last week. “Quite frankly, we thought we’d have competition in Maryland much sooner. We feel like we already have all the amenities we need.”

‘Dire consequences’

Officials at Dover Downs have long been wary of Maryland casinos, particularly Maryland Live, which has been generating more than $1 million per day in slots revenue since it opened in June.

Ed Sutor, Dover Downs’ president and chief executive, declined requests for an interview. Last year he called Maryland Live “the 800-pound gorilla in the room,” according to a Delaware State News report.

“Fifty percent of our business comes from Maryland, and 45 percent of our business lives within 50 miles of Arundel Mills,” Sutor said at Video Lottery Advisory Council meeting. “That is going to be a significant hit to us.”

And that was before Maryland voters approved table games and 24-hour operations, in addition to a sixth casino, to be in Prince George’s County.

Delaware state Rep. Darryl M. Scott, a Democrat whose district is home to Dover Downs, said the increased competition next door is terrifying.

Business at Dover Downs and Harrington Raceway and Casino is already down.

“We could be facing dire consequences if we don’t do something to stabilize the industry,” Scott said. “There may come a point where Dover Downs has to make a determination about its viability. The increased competition is a very significant threat to our jobs and to our state’s revenues.”

Delaware’s casinos, which employ about 3,000 people, generated more than $230 million in tax revenue in fiscal 2012. But slots revenue is off by nearly 25 percent statewide over the past five years. And in February, Maryland Live pulled $38 million out of its 4,750 slot machines — about $6 million more than Delaware’s three casinos combined.

Now comes another layer of competition — table games, which debuted last month in Maryland at the modestly sized Hollywood Casino in Perryville, just off Interstate 95 in Cecil County.

“You’ll need a pretty good excuse to drive past a Maryland casino to come to one of ours now,” Delaware Lottery Director Vernon Kirk said last week. “It used to be just us and Atlantic City, but we have a proximity problem now.

“We couldn’t have the monopoly forever.”

A big ATM

Six years ago, as Maryland wrestled with the idea of legalizing slots gambling, Thomas E. Perez, then the state’s secretary of labor, licensing and regulation, wrote in a report that Free State residents were losing $350 million to $400 million per year in Delaware and West Virginia. Their losses, Perez wrote in a report to Gov. Martin O’Malley (D), translated to about $150 million in annual tax revenue.

For the casinos in the neighboring states, Maryland looked like a big, fat ATM, full of players and money. So when the casino expansion referendum was on the state’s ballot last year, Penn National Gaming, the owner of Hollywood Casino Charles Town, spent more than $40 million in an effort to defeat the measure and protect its crown-jewel property.

A political action committee partly funded by MGM — which hopes to build a destination casino at Maryland’s National Harbor — responded with a parody ad featuring a remake of John Denver’s “Take Me Home, Country Roads.”

“Maryland cash/bring it back/to the state where it comes from,” the song went. “Not West Virginia/Don’t let ’em spin ya/Bring it back/Our Maryland cash.”

The referendum measure passed, and so the pressure is on at Hollywood Charles Town, which, according to a private study financed by MGM, made more than $1 billion from Marylanders over the past decade.

Britton, the casino’s general manager, said his property will hold on to many of its Maryland gamblers. “Even for those who may be a little closer to Maryland Live strictly in terms of miles, we believe we’re more convenient to get to,” he said. “There’s lots of issues with traffic around Arundel Mills. We’re a much more leisurely drive, and the access is easier.”

Industry analysts say that proximity and ease of access are two of the most significant factors when gamblers are choosing between casinos with similar offerings.

Hollywood Charles Town, which has 109 table games, a newly installed 50-table poker room and about 3,500 slot machines, is more than an hour’s drive from Rockville. But it treats the Washington area like a local market, advertising heavily here in Metro stations, on billboards and elsewhere.

When Maryland Live opened as a slots-only casino last year, Britton said, his property’s revenue declined by about 15 percent.

“It was certainly far from doomsday. We fared even better than we projected,” he said. “Any time competition is added, you see short-term negatives. But there’s a pretty healthy market in this area. We feel fairly confident in our ability to compete.”

On a recent Friday afternoon, cars began to fill the parking lot at Delaware Park, about 10 miles past the Maryland-Delaware state line. Based on an informal count, roughly one of every six vehicles in the lot had a Maryland tag.

Inside, there was plenty of talk at the blackjack tables and in the poker room about how the Maryland players are not coming as much since Hollywood Casino in Perryville became the first property in the state to launch table games. Crowds had been pretty sparse of late, dealers and players said.

Already, Perryville is capturing some of the Maryland gamblers who used to keep going up I-95 to Wilmington. For those who did not stop in Cecil County this time, there is a Hollywood billboard directed at drivers coming back into Maryland. “Table games,” it reads. “Now playing. Hollywood Casino, 20 miles south, Exit 93.”

Perryville is a modest property. There are just 12 table games, plus an eight-table poker area. But the demand has been off the charts. About 100 people were waiting for a seat in the poker room on one recent weekend, and the casino is planning to add tables.

Brian Bohlayer, a high school math teacher who lives in Owings Mills, said he has seen a lot of familiar faces in Perryville.

“Every time I’ve sat down at a poker table, I’ve recognized people I played with at Delaware Park,” Bohlayer said.

Then he added the words officials in the Blue Hen State dread hearing most: “I haven’t been back to Delaware Park since Perryville opened.”

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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