The Shortfall and Slots

Saturday, September 20, 2008

SUPPORTERS OF a November referendum to bring slot machines to Maryland keep shifting their rationale. First they said slots were necessary to save Maryland's horse racing industry. Then they said slots were key to keeping taxes low. Now, with Maryland facing a $430 million budget shortfall, slots supporters have altered their argument once more. Voters should pass the referendum, they contend, to close the state's budget gap. This latest line of reasoning isn't convincing. Slots aren't a short-term fiscal fix; if the referendum passed, money wouldn't trickle in for at least two years.

State officials estimate slots would eventually generate $600 million each year, half of which would go to education. First, though, slots operators would have to get gambling licenses and set up the machines -- a process that would take about two years. Slots would start generating revenue in fiscal 2011, when they're projected to bring in about $75 million. Slots would provide the state with $600 million or more annually starting in July 2012, officials estimate.

The state made its projections last year, before the economy worsened. Since then, casino revenue has declined, and it will probably stay stagnant until the economy perks up. It's likely, then, that the $600 million number is unrealistic. The estimates don't take into account the harmful effects of slots, including gambling addiction and increased crime. They also don't account for the sizable chunk of slots revenue that would leave the state. About one-sixth of it, or about $100 million a year, would subsidize horse race purses. Much of that money would go to horse owners who don't live in Maryland.

Opponents of the referendum have faced an uphill battle that was made more difficult this week. The company that owns Pimlico Race Course in Baltimore announced it would spend $2 million to support the referendum. Montgomery County Executive Isiah Leggett (D) shifted his position and endorsed the measure, citing budget pressures.

But there are also signs that public opinion is shifting. Forty-nine percent of likely voters support slots, while 43 percent oppose them. The same survey recorded a 16-point advantage for slots in January. Eight percent of voters remain undecided.

Slots opponents scored another victory when the Maryland Court of Appeals, the state's highest court, determined that the ballot language for the referendum was misleading. The court ordered the state to make a slight but significant change to the wording of the referendum to clarify that only a portion of slots revenue would go to education.

There's a reasonable argument to be made for slots. But they aren't the panacea their supporters make them out to be. Voters should know the full story before heading to the polls in November.

© 2008 The Washington Post Company