'Ding-ding,' but no 'ka-ching'

Monday, May 31, 2010

HEY, MARYLAND, remember slots? Nineteen months ago, you voted to approve them -- 15,000 slot machines at five locations around the state -- on the promise that they would generate heaps of cash for schools and revive the moribund horse-racing industry. Well, don't hold your breath.

The original revenue projections set lawmakers' mouths watering at the idea that slots would fill the state's depleted coffers. Starting in 2012, they were supposed to be up, running and yielding $660 million annually for public schools and $100 million for horse racing (most of which would go to out-of-state horse owners). Leaving aside an additional $400-odd million that would be skimmed off the top by casino operators -- that part was always sotto voce -- how could one possibly object?

The reality has been, and will continue to be, crueler. Although the plan for five casinos was approved in a referendum in November 2008, no casino is complete, and slot machines have not yet generated a dime. The first parlor, a small one in Cecil County northeast of Baltimore, hopes to open this fall; another, in Ocean City, by the end of the year. Together they will generate just a fraction of the income forecast by the state and by the fast-talking officials who sold slots to voters.

The rest of the picture isn't much prettier. Proposals for the two biggest planned casinos -- one in downtown Baltimore, the other at a huge mall in Anne Arundel County -- are so mired in legal and financial morasses that it's anyone's guess when they might get built. A fifth venue earmarked for a casino -- at a state-owned resort in the middle of nowhere in western Maryland -- attracted zero interest from investors. Meanwhile, the state is already on the hook for $200 million to buy thousands of slot machines, to be paid off if and when the gambling proceeds start flowing.

More ominously, the competition -- meaning Delaware, West Virginia and Pennsylvania, which also have casinos -- has not been idle. Those states upped the ante by approving more casinos, some of them near their borders with Maryland, as well as table games such as blackjack, roulette and craps, which Maryland has not permitted. In other words, Maryland casinos, late to the party, will face long odds from the get-go. Will voters next be asked to expand gambling in the state?

The recession is just one reason for slots' wobbly start. Another was the eleventh-hour decision by state lawmakers in 2007 to permit localities a veto over casino venues. That probably thinned the pool of possible investors; so did the legislature's move to set casino owners' share of profits at just 33 percent, against 67 percent for the state, among the worst deals for gaming investors anywhere.

We were never slots fans and warned that the revenue projections were probably a mirage. The state, by its own actions, is fulfilling that prophesy, with assists from the neighbors and the recession. Touring the casino construction site in Cecil County the other day, Gov. Martin O'Malley (D) was upbeat -- despite the fact that he once called slots' revenue-generating potential a "pipe dream."

"I can almost hear the 'ding-ding-ding,' " enthused the governor. Notice that he didn't say "ka-ching."

© 2010 The Washington Post Company