Correction:

An earlier version of this story incorrectly reported that the Video Lottery Facility Location Commission is planning a public conference call Tuesday. It will be held Thursday. The story also gave a wrong location for Arlington, Mass.-based Cummings Associates.

Proposed MGM casino at National Harbor favored by two gambling-revenue consultants

Two gambling-revenue consultants analyzing the Prince George’s County casino proposals have reached the same conclusion: MGM National Harbor is money.

The state-contracted consultants told Maryland’s casino licensing commission Friday that MGM National Harbor would generate $713 million to $719 million in pretax gambling revenue in fiscal 2019 — vastly more than the other proposed casinos.

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See previous stories in an occasional series exploring the changing casino industry and gambling culture in Maryland.
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See previous stories in an occasional series exploring the changing casino industry and gambling culture in Maryland.

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At a lengthy Maryland Video Lottery Facility Location Commission meeting in Annapolis, where six consulting firms presented studies on everything from traffic and hotel suites to economic impacts and marketing expenditures, MGM came out on top in most categories. But those analyses were immediately attacked by rival casino companies executives, with one calling the revenue projections “fatally flawed.”

The two consultants, who created separate sets of projections before comparing notes, said MGM would generate either $30 million or $102 million more in 2019 revenue than a Parx Casino in Fort Washington and $152 million or $168 million more than a Hollywood Casino at the historic Rosecroft harness-racing track.

Their projections did not address the different slots-tax rates proposed by the applicants. But another consultant, who reviewed the economic and fiscal impacts of the proposed casinos, told the facility location commission that MGM would wind up paying more total gambling taxes than the other applicants — despite using the lowest tax rate.

MGM, the consultant said, would pay $333 million in gambling taxes in its fifth year of operation, compared with $328 million from Parx and $294 million from Hollywood.

The MGM proposal calls for a 56 percent slots tax, a consultant revealed during a presentation in Annapolis. The Greenwood Racing proposal for Parx sets the slots tax at 61 percent. Penn National Gaming would pay a 62 percent tax on slots at Rosecroft. Table games are taxed at a flat 20 percent rate.

The National Harbor site has long been favored by Prince George’s County Executive Rushern L. Baker III (D) as a catalyst for economic development. The commission plans to award the license Dec. 20, although the new casino would not open until mid-2016.

The consultants’ findings, MGM Resorts Vice President of Public Affairs Gordon Absher said, “seemed to validate what we’ve said all along: that MGM National Harbor is the best company, best location and best proposal.”

The revenue consultants agreed that any of the three casinos would draw heavily from neighboring Virginia, none more so than MGM. Both reports predicted Virginia gamblers would fork over nearly $350 million to a casino at National Harbor in 2019. The commonwealth has long rejected casino gambling, even as surrounding states have embraced it as a source of additional revenue.

Greenwood Racing is proposing the most slot machines — 4,750, compared with 3,000 at Rosecroft and 3,600 at MGM. But in providing revenue analysis of the proposals, Will Cummings of Arlington, Mass.-based Cummings Associates said MGM’s was more promising because of its location: just across the Woodrow Wilson Bridge from the District and Northern Virginia, the primary markets for a Prince George’s casino.

On average, Cummings said, the MGM location “is three to four minutes closer to practically everybody.” Although it’s only a matter of minutes, he said, “those minutes matter.”

Greenwood Racing chief executive Tony Ricci called the revenue models “fatally flawed.” Addressing the commission, Ricci said the location advantage Cummings cited in explaining MGM’s projections didn’t make sense.

“It’s impossible to think that a three- to four-minute differential would have an impact,” he said.

According to the company’s own projections, its Parx casino would generate more than $800 million in gross gambling revenue — nearly $100 million more than the consultants’ figures for MGM.

MGM’s proposal, Ricci said, would “shortchange the state,” offering a lower slots tax rate on fewer machines generating less total revenue.

Traffic consultant Michael Monteleone said extensive Capital Beltway connections built to previously accommodate National Harbor also gave MGM’s proposal an advantage.

Monteleone came down hardest on the Parx bid, which he said required two interchanges over Indian Head Highway to prevent congestion build-ups. Without the interchanges, the casino location wouldn’t work, Monteleone said.

Greenwood Racing officials promised to fully fund the upfront construction costs of improvements to Indian Head Highway, which runs past the proposed site of the Parx casino. Traffic near the MGM site, Greenwood officials argued, is bad and getting worse, now that an outlet mall has opened at National Harbor.

In its rebuttal, Penn National officials reminded the commission of the company’s profit-sharing proposal for Hollywood casino, which would pump up to $100 million into the Prince George’s health-care system — with many millions more set aside for a retirement fund for county teachers. A consultant promised to rework his fiscal-impact study to reflect the profit-sharing program.

The commission is planning a public conference call on Thursday to ask additional questions of the consultants and applicants.

But MGM officials were already anticipating that they would get the nod for the sixth and final casino license in Maryland.

“We heard clearly today . . . that MGM wins,” Bill Hornbuckle, the company’s president and chief marketing officer, said near the end of the marathon meeting.

Jonathan O’Connell contributed to this report.

 
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