Lawmakers Scrutinize Control of Site Selection
By John Wagner
Washington Post Staff Writer
Friday, November 2, 2007
As Maryland lawmakers turn their attention to slot machine gambling, some are asking whether a bill put forward by Gov. Martin O'Malley (D) goes too far in steering licenses to preordained locations.
The bill, the focus of a hearing today, calls for a state commission to award licenses to operate up to 15,000 machines based on a competitive bidding process. But three of the five locations in the bill appear narrowly crafted to favor a potential operator, lawmakers say.
The bill -- which would take effect only if voters approve it in a referendum on slots next year -- would allow a slots parlor within one mile of a particular intersection in Worcester County. Ocean Downs Racetrack is in that area. Somewhat less-restrictive language would allow a parlor at Laurel Park racetrack in Anne Arundel County.
Past or present owners of both tracks have contributed thousands of dollars to O'Malley and other Maryland politicians and stand to benefit financially if slots are legalized at those locations. O'Malley aides strongly deny that those donations affected the bill.
A third site described in the bill would allow a slots parlor at a planned sports and entertainment complex in south Baltimore that is being developed on city-owned land by a company in which Baltimore Ravens linebacker Ray Lewis is a partner. A spokesman for Mayor Sheila Dixon (D) said yesterday that the site is her "preferred" location in the city.
House Speaker Michael E. Busch (D-Anne Arundel) said that he is continuing to study O'Malley's bill but that he has concerns about "unjust enrichment or entitlement. . . . The whole idea is there should be a competitive bid."
Busch, the legislature's most powerful slots opponent, is supporting O'Malley's proposal to put the question of legalizing slots to voters in a referendum. But he and other lawmakers suggested that there will be significant debate over the details of the bill that O'Malley hopes will pass in the current special session devoted to addressing a budget shortfall of at least $1.5 billion.
O'Malley's slots bill, aides say, could eventually generate more than $700 million a year for the state and about $400 million for operators. An additional $100 million a year would be set aside to subsidize Maryland's horse-racing industry.
Although some track owners have expressed interest in slots, others in the racing industry have said it makes little difference where parlors are located as long as enough of the proceeds are earmarked to enhance racing purses.
"The governor ran on slots at the racetrack, so it's not surprising that two of the sites he's proposing are at or around racetracks," said Joseph C. Bryce, O'Malley's chief legislative officer.
A gambling industry analyst who examined O'Malley's bill said it appears to foster little competition for a majority of the licenses. "With three of the five locations, it's definitely been greased," said Jeffrey C. Hooke, managing director of a McLean-based corporate finance consulting firm. "I guess that's just a fact of Maryland politics."
Analysts say two other sites in the bill are likely to draw more competition for licenses: one on state land near Rocky Gap Lodge in Allegany County and one along Interstate 95 in Cecil County.
Hooke said that operators should be able to make a profit and that concerns about enrichment are overblown. A provision that limits operators' share of proceeds to 30 percent is the most restrictive in the nation, he said.
Analysts say it is possible that other proposals could emerge to compete with racetrack sites. But O'Malley, who would appoint the majority of the commission that selects sites, seemed to suggest during an interview Monday on Maryland Public Television that such was not his intent. O'Malley described his plan as having two track sites and three non-track sites.
"It appears there is every intention of favoring politically connected special interests," Del. Steven R. Schuh (R-Anne Arundel) said yesterday at a news conference at which Republicans outlined a plan that would allow operators to bid to put slots at six locations anywhere in the state.
Sen. J. Lowell Stoltzfus (R-Somerset) said he was particularly irked by O'Malley's decision to include the Ocean Downs area location, which is opposed by many elected officials and business groups in nearby Ocean City.
Stoltzfus suggested that political contributions from the track's owner, William M. Rickman Jr., could have been a factor. In January, companies affiliated with Rickman and his family gave more than $48,000 to O'Malley's campaign and an account run jointly by O'Malley and Lt. Gov. Anthony G. Brown (D).
"I'm not looking for any favoritism whatsoever," Rickman said at the time. "I'm looking for a fair slots bill to come out that maybe I have a chance to participate in."
Rickman did not return a phone call yesterday.
Joseph A. DeFrancis and minority owners of the Maryland Jockey Club sold their stake in Laurel Park to Canadian-based Magna Entertainment in September. But DeFrancis, who has contributed thousands of dollars to O'Malley and Senate President Thomas V. Mike Miller Jr. (D-Calvert), still stands to benefit from slots coming to Laurel, according to a Securities and Exchange Commission filing.
Louis J. Raffetto Jr., president of the Jockey Club, which still operates Laurel Park, said he learned long ago that one should not assume anything in politics. But he said he has not heard rumblings about a slot parlor elsewhere in Anne Arundel.
"We are an eligible location," he said. "That's what I can say."
Anthony McCarthy, a spokesman for Dixon, the Baltimore mayor, said her preferred slots site emerged after much research and discussions with O'Malley.
"We are more concerned with the specific site than the party that is developing it," McCarthy said.
Staff writer Ovetta Wiggins contributed to this report.
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