Monday, August 20, 2007
THOMAS E. PEREZ, Maryland's secretary of labor, licensing and regulation, has issued a report that buttresses the stated goal of Gov. Martin O'Malley's administration to grant slot-machine gambling licenses to selected racetracks as a means of saving the state's racing industry and preserving the jobs and farmland that depend on it. The report, which is tendentious in the extreme, adds little new information to the argument over slots that has gripped Maryland for most of this decade. It represents a missed opportunity to inject some evenhanded analysis into a policy debate that is expected to divide state lawmakers bitterly when they convene in January.
From the outset, the report makes the assumption that the racing industry in Maryland is worth saving, and subsidizing with slots revenue, by dint of its history, tradition and supposedly outsized economic impact. History and tradition may engage the sentiments of some Maryland policymakers, but what have they to do with the economic logic of intervening to sustain an industry in long-term decline? Mr. Perez asserts that the racing and breeding industry accounts for more than 9,000 jobs and $600 million of annual economic impact, as if those numbers speak for themselves. In fact they raise the question of why Maryland, which has 2.6 million jobs and $250 billion in overall annual economic activity, should divert precious resources and incur the social costs that gambling entails to bail out an industry that has proved itself inept at competing for entertainment dollars in the 21st-century marketplace.
Equally specious is the idea that Maryland should open the door to massive gaming as a means of saving 685,000 acres of privately owned horse farms, which represent 10 percent of Maryland's open space. In fact, agricultural zoning would impede dense development on much of that land. If the state is intent on preserving open space, it can do so by buying undeveloped land, as it has done in many instances.
At the heart of Mr. Perez's argument is the point that the state is "leaving money on the table" because tens of thousands of Marylanders are already going out of state to play slots. He estimates that Maryland residents are spending as much as $400 million a year on slots in neighboring Delaware and West Virginia, thereby contributing $150 million annually in budget revenue to those states' coffers.
On its face, that is a potent argument, particularly as Maryland faces the legal obligation of closing a budget deficit of $1.5 billion in the fiscal year starting next summer. On closer examination, the idea that the state could easily recapture $150 million in supposedly "lost" revenue is shaky. For one thing, it would take several years before a full-fledged slots program is up and running. For another, some people would continue to play slots out of state for reasons of personal preference or geographic convenience. Moreover, rather than representing new revenue, some or much of the money spent in Maryland slots parlors would inevitably be diverted from existing in-state businesses or pursuits, including restaurants, souvenir stands, movies or the state lottery. That explains why the chamber of commerce in Ocean City, to cite one example, is vehemently opposed to slots.
In his report, Mr. Perez gives short shrift to other valid concerns about the massive expansion of gambling that slots would represent -- that they act too often as a tax on the poor; that they foster corruption; and that while pumping money into the pockets of wealthy horse breeders and track owners, they in fact do little or nothing to keep bettors at the track or increase the public's interest in racing.
No one is happy with watching the erosion of a storied aspect of Maryland life and history. Jobs and a way of life that have thrived for decades are at stake. But that has been equally true of many other industries that over time have shrunk, disappeared or evolved. If there is a case to be made for using state tax dollars to subsidize the horse industry, Mr. Perez's report has failed to make it.