Legislation to Ban Devices Opposed

Nonprofit Group Leaders Say They Depend on Revenue

Nonprofit groups and owners of electronic gaming machines urged Maryland lawmakers yesterday to defeat legislation that would outlaw the devices, hundreds of which have appeared in recent months in Southern Maryland and elsewhere.

At a hearing before the Senate Budget and Taxation Committee, opponents of the bill said the machines, which are legal in some counties as long as they are operated by nonprofit organizations, provide crucial funding to volunteer fire departments, private schools and churches.

But legislation supporters said that the arrangements do not give enough money to the nonprofit organizations sponsoring them, cut the state out of the profits and could interfere with a November referendum in which voters could legalize slot machines in five locations.

Senate President Thomas V. Mike Miller Jr. (D-Calvert) told the committee he is concerned about a "massive, massive explosion" of what he considers illegal slot machines. Only a small portion of the money from the machines goes to the nonprofit groups, and "the state lottery revenues are being cannibalized," he said.

The legislation, which Miller co-sponsored, would ban most of the machines beginning July 1. A violation would be punishable by up to one year in prison and a maximum fine of $1,000.

Anne Arundel and Calvert counties permit the machines as commercial enterprises in certain circumstances. The bill would allow such establishments, and some nonprofit groups, to keep using the machines for up to an additional year, under certain circumstances.

Miller said he expects swift passage of the measure, and a spokesman for Gov. Martin O'Malley (D) has said the governor will sign the bill.

Faced with the possibility of a ban, some machine owners and nonprofit organization officials spoke candidly about their arrangements, few details of which had been disclosed publicly.

Donna B. Bennett, executive director of Alternatives for Youth and Families, a nonprofit organization based in St. Mary's County that provides mental health services, said the group received about $25,000 in two months from machines it operates at Fred's Liquors in St. Mary's.

The group pays the liquor store owner $50 a day for each machine it operates, and the rest of the money goes to the machines' owner, she said. The money has allowed the group to pay bills that have piled up at its three facilities, Bennett said.

The Center for Children also operates machines at Fred's Liquors and has made about the same amount of money, said Ann Seely, that group's director of development. State funding has increased only 5 percent in the past 10 years, she said, and the revenue has been "absolutely a godsend."

Many machine owners said they would prefer tighter regulations and heavier taxing, rather than a ban. When the machines are operated by a nonprofit group, they are exempt from the 20 percent state tax that applies when the machines are operated commercially.

According to Maryland lottery statistics, between Dec. 1 and Feb. 29, lottery revenue rose about 9 percent statewide but decreased 5.39 percent in St. Mary's, where the machines began to appear in large numbers this year. At establishments that feature the lottery and video gaming machines, revenue fell as much as 16 percent during that period.

Lobbyist Bruce Bereano, who represents a Baltimore vendor with 80 machines in St. Mary's County, said banning the machines would hurt nonprofit groups and "quicken the demise" of civic organizations.

Atlantic Bingo Supply Inc., based in Odenton, provides machines for three commercial bingo halls in Anne Arundel County and a bingo hall used by nonprofit groups in St. Mary's, in addition to bingo halls in other states, the company's president, Larry Weinstein, said.

Weinstein said he works with county authorities and pays taxes when he is required to do so. He said he has been in the business for 30 years and complies with laws in Maryland and elsewhere.

"This didn't happen in a bubble," he said of the emergence of the machines. "This was sent all the way up the flagpole."

The proposed ban would not apply to the limited use of previously authorized gaming devices on the Eastern Shore.