Maryland's bid to cash in on slots casinos in peril

By John Wagner
Washington Post Staff Writer
Sunday, March 7, 2010

If everything had gone as planned, Maryland's first slots casino would be opening this spring and four others would be on the way -- with the promise of more than $660 million a year on the horizon for education programs.

Instead, the state's efforts to cash in on casinos is in serious trouble, as local opposition, zoning fights, concerns about financing, the recession and other unforeseen obstacles have combined to stall or kill the projects.

The prospects for the state's largest proposed slot machine casino are once again in doubt because of a petition drive that is likely to force a vote in November that could sink plans for it at an Anne Arundel County outlet mall.

A bid to build the state's second-largest casino in downtown Baltimore was scrapped late last year after doubts were raised about the developer's ability to pay for the project. The search for a new developer is on hold.

Of the remaining three smaller projects, one is moving forward in Cecil County. No qualified bidders stepped forward to operate a planned casino in Western Maryland. And construction problems have pushed back the Memorial Day debut of what had been advertised as the state's first slots parlor, at Ocean Downs Racetrack on the Eastern Shore.

"There's no denying this is a potentially lucrative market, once it gets populated with slot machines," said Jeffrey Hooke, a Bethesda-based gambling industry analyst. "But right now it's a bit of a fiasco."

Over the coming three years, Maryland's slots program is expected to generate less than half the revenue legislative analysts predicted when voters approved its launch in 2008. The outlook would deteriorate considerably if voters scuttle the Arundel Mills casino.

Donald C. Fry, chairman of the state panel that awards slots licenses, acknowledged that the $660 million that state leaders once advertised won't be realized anytime soon. But he said he still thinks that amount could be reached.

There is "a likelihood that we're going to achieve those numbers," Fry said. "It's just going to be further out because of the economic downturn."

Legislative analysts now project that casinos will generate about $525 million for education by 2015, but that assumes an Anne Arundel casino opens by early 2012 and a Baltimore casino begins generating revenue in 2013.

Fry and other state officials largely blame the state of the slots program on the timing of its launch, noting that when bids were due in February 2009, gambling companies were over-leveraged and short on cash and that credit markets were frozen.

Potential operators said entering Maryland was made less desirable because the state offered them one of the lowest shares of revenue in the nation.

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