Top lawmakers in the Maryland General Assembly yesterday ripped Gov. Robert L. Ehrlich Jr.'s latest plan for legalizing slot machines, as leaders of the House of Delegates said they would soon approve a one-year moratorium on slots instead.
Gambling foes and supporters alike said Ehrlich (R) was losing ground on the issue after fumbling two attempts to craft a detailed gambling proposal. After introducing his latest bill Wednesday, the governor and his aides gave conflicting answers to questions about how they would divide the jackpot that slots are expected to generate each year.
"It's like a band of wandering gypsies up there," said Senate President Thomas V. Mike Miller Jr. (D-Prince George's), a top Ehrlich ally on slots, referring to what he described as disarray in the governor's office. "They don't know where they're from, where they are or where they're going."
Though Miller said the governor "tried to be fair to all sides" in developing a "workable" proposal, several other lawmakers said they felt misled by the briefings Ehrlich and his aides gave them Wednesday evening. They said the administration failed to make clear that the owners of three racetracks would receive more than $6 billion in gross profits over the next 20 years, as well as reimbursement for an additional $7 billion in expenses for their slot operations.
"It just becomes more surreal to me," said House Speaker Michael E. Busch (D-Anne Arundel), a slots opponent who attended one of the briefings at the governor's mansion. "I certainly left there with a misunderstanding. At least I'd rather call it a misunderstanding. I'll let some of my colleagues use stronger language."
Busch and other House leaders said they would pass a bill next week that would set a one-year moratorium on slots to give the state more time to come up with a gambling plan. Without slot revenue, lawmakers would have to plug a $400 million hole in next year's state budget.
In the Senate, where there is stronger support for slots, leaders said they were mulling their next step as they sought more details on Ehrlich's proposal. They acknowledged that time was running out; the assembly is scheduled to adjourn April 7.
"We're working on it, we're working on it," said Sen. Ulysses Currie (D-Prince George's), chairman of the Senate budget committee, which handles gambling legislation. He declined to say when his committee would vote on Ehrlich's bill.
Miller reserved judgment on the details of Ehrlich's plan but said the Senate will take up the legislation soon. "We'll find a way either to make the numbers work or adjust them so they can work," he said.
Ehrlich predicted again yesterday that the assembly will legalize slots this year, despite the House's threat to adopt a one-year moratorium. The governor told reporters that he "likes the spirit that has been building for the last week" for his gambling proposal.
The administration's new bill would allow three tracks -- Pimlico, in Baltimore; Laurel Park, in Anne Arundel County; and Rosecroft Raceway, in Oxon Hill -- to operate a total of 10,500 slot machines. In return, they each would be required to pay a $40 million one-time licensing fee, which would expire after 20 years.
A fourth track still on the drawing board in Cumberland would be allowed 1,000 slots.
Ehrlich projects that the three major tracks would generate $1.5 billion a year in gross revenue. Of that, about $642 million, or 42 percent, would be dedicated for public education.
The owners of the three tracks would get $665 million a year, or about 44 percent of the revenue. That figure is projected to cover their operating expenses, plus give them $314 million a year in gross profits.
Ehrlich's aides said the deal was fair. Although the three tracks would amass more than $6 billion in gross profits over 20 years, the governor's staffers said the owners would have to deduct debt and construction costs from that amount.
"This is a huge deal. It's extraordinary in size and scope," said Chip DiPaula Jr., Ehrlich's budget secretary. "There's a lot of risk involved for the folks who are planning this. For investors, higher risk requires higher projected returns."
Many lawmakers expressed skepticism about the tracks' share and accused Ehrlich of trying to conceal how much the racing industry would benefit.
"I don't know what's more shocking: the size of the subsidy to the horse racing industry or the idea that they thought no one would notice this," said House Majority Leader Kumar P. Barve (D-Montgomery).
Ehrlich's original slots plan, introduced Jan. 30, gave far less to the tracks. Under that proposal, track owners would have received 25 percent of the annual gambling take, with 64 percent going to public schools. Tracks also would have been charged a total of $350 million in licensing fees -- three times as much as the governor wants to charge them now.
Ehrlich withdrew his first proposal after track owners, horse breeders and local governments all complained that they wouldn't receive enough revenue. Yesterday, his staff agreed.
"Unfortunately, we reached too far and it just wasn't sustainable," DiPaula said. "You know what? There was nobody who was going to take that deal."
In the end, Ehrlich's revised plan strongly resembled a proposal floated by the racing industry in January that was dismissed by top lawmakers as too greedy.
Track owners gave plaudits to the revised plan, although they cautioned that they were still absorbing the details.
Jim McAlpine, president and chief executive of Magna Entertainment Corp., which owns Pimlico and Laurel Park, said the company was hoping for an even greater share of the money but called Ehrlich's new numbers acceptable.
"At these levels, we believe we can go forward," he said. "We believe we can make it work."
Officials at Magna and Centaur Inc., an Indiana gambling company that has a contract to buy Rosecroft Raceway, said the firms plan to spend more than $200 million at each track to build parking decks, gaming halls and restaurants.
"We're very pleased that they've addressed some of the primary issues, and we're looking forward to trying to work through the rest of the [legislative] system," said Jeffrey Smith, chief executive of Centaur.
Track owners also noted that Maryland would receive a greater share of the gambling profits than many other states that have slots at tracks. For example, Delaware and Virginia both get about 35 percent of the take from slots, and their tracks were not required to pay licensing fees.
New York lawmakers approved a deal that would give their state 75 percent of the revenue from slots at racetracks, but track owners there have balked at the terms, in part because they feel their share of the profits is not big enough.