Maryland’s casino-gambling ballot measure: The big questions about Question 7

In the ad war over casino gambling in Maryland, “facts” are being thrust upon voters at a dizzying pace.

Passage of Question 7 would mean “hundreds of millions of dollars for our schools,” Gov. Martin O’Malley (D) says in one television spot. Other ads put the amount at $200 million a year and promise thousands of jobs and a “destination resort” in Prince George’s County.

Graphic

Maryland gambling revenue projections.
Click Here to View Full Graphic Story

Maryland gambling revenue projections.

Graphic

Maryland referendum primer
Click Here to View Full Graphic Story

Maryland referendum primer

The story from opponents, whose ads are airing at least as often, is much different. They tell viewers that the claims of politicians cannot be trusted and that “no new money is required for education” under the Nov. 6 ballot measure, which would “cut taxes for billionaire special interests.”

Feeling confused? You’re not alone.

That’s because neither deep-pocketed side is telling the full truth about Question 7, which would allow for a Las Vegas-style casino in Prince George’s as early as 2016, as well as table games such as blackjack and roulette at Maryland’s five previously authorized slots venues, probably starting next year.

Here’s a look at some of the big questions about the ballot measure, without any spin.

If Question 7 passes, how much money would be generated for education?

Let’s back up just a bit.

Currently, five slots sites are authorized in Maryland, three of which are open. As things stand now, nonpartisan legislative staff estimate the program will generate about $260 million this year for education and expect that figure to grow to around $580 million over the next four years.

In August, the General Assembly approved gambling legislation that calls for a public vote on a sixth casino — in Prince George’s — and table games.

If Question 7 passes, legislative staff estimate the expansion plan will generate an additional $60 million for education during the next fiscal year. That amount would gradually increase to $199 million by fiscal year 2019.

That’s the figure supporters cite in their ads and other campaign material. But not all of that money is tied to passage of Question 7. That’s because some provisions in the legislature’s law expanding gambling do not require voter approval.

One of those is altering the state’s current practice of buying slot machines for the private casino owners. When lawmakers launched the slots program in 2007, many thought state ownership of machines would reduce the odds of fraud — but the policy has come at a very high price.

By requiring larger casinos to procure their own machines, by 2019 the state is expected to save $36 million a year, money that will instead flow to education — even if the ballot measure fails.

If you back out that number and others from the $199 million, you are left with about $150 million a year in education funding from passage of Question 7.

Of course, that’s just an estimate of how much additional revenue the casinos would generate, and some state estimates have been off in the past.

For this fiscal year, for example, less than half as much education money is projected from slots as was the case in 2007, when lawmakers approved the program — about $260 million compared with a forecast of $660 million. Much of the drop-off is due to casinos taking longer than expected to open and to the sour economy.

Does passage of Question 7 guarantee that state spending on education will increase?

Technically, no. But the state does have a law mandating how much should be spent on K-12 education every year, and that amount has gone up consistently in recent years.

Under current practice, the money generated by gambling is being used to help fund the education spending law — not add to it. That is likely to continue to be the case going forward.

This year, legislative staff anticipate $286 million in gambling revenue will be used to help fund $5.8 billion in state education aid to local school systems. That means the state has $286 million that it otherwise would have spent on education that can be spent on other things.

If Question 7 passes, the amount of gambling revenue earmarked for education is expected to continue to climb, meaning considerably more dollars will be freed up for other purposes.

Proponents argue that the gambling money makes planned spending on education more secure because legislators will be less likely to change the funding law. But as of now, if Question 7 passes, the total level of spending on education is not expected to rise beyond where it would be otherwise.

Would casino owners get tax breaks if Question 7 passes?

Under current law, most casino owners get to keep 33 percent of slots revenue generated at their facilities. The remaining percentage is often referred to as the “tax rate.”

If Question 7 passes and a new casino opens in Prince George’s, casino owners would pay a lower “tax rate” — but state analysts predict the amount of slots play at the other large casinos would drop because of the new competition.

Under the new law, changes in the operator share would differ casino by casino in what lawmakers said was an attempt to be fair to everyone.

At Maryland Live in Anne Arundel County, the casino closest to Prince George’s, the operator would get to keep an additional 8 percent of slots revenue. The operator could also petition state regulators for an additional 2 percent.

All casinos would also benefit from offering tables games. If Question 7 passes, the operators would keep 80 percent of the revenue from those games.

Have other questions? Send reporter John Wagner an e-mail and he’ll attempt to answer them online in coming days.

 
Read what others are saying