Gov. Robert L. Ehrlich Jr. laid out a plan yesterday to allow casino-style operations at four Maryland racetracks and direct nearly two-thirds of the gambling profits -- as much as $800 million a year -- to the public schools.
Ehrlich (R) introduced a bill that would permit 10,500 slot machines across the state, vaulting Maryland into the big leagues of legalized gambling. In return, the racetracks would pay the state $350 million in one-time licensing fees and a 64 percent cut of the annual profits from slots.
With an eye toward a sharply divided General Assembly, the governor proposed that the state's share be wholly dedicated for public education and that a small percentage go to communities surrounding the tracks. Each year, $500,000 would be reserved to treat compulsive gambling.
Although Democrats in the House of Delegates said they had lined up enough support to delay the slots bill for at least a year, Ehrlich predicted that his measure would pass this spring and said he had already begun an intensive campaign to persuade legislators to support him.
"We believe there's a bipartisan majority in both chambers to pass this bill," he said in an interview. "I've been lobbying all day behind closed doors. And I've had a pretty good day."
Ehrlich's campaign for slots has left the General Assembly split along unusual lines.
Many Republican lawmakers are opposed to gambling on moral grounds, but are feeling pressure to back Maryland's first GOP governor in more than 30 years. Liberal Democrats are fighting the proposal, but are being lobbied by organized labor -- their usual ally -- to change their minds. Black legislators are also divided.
House Speaker Michael E. Busch (D-Anne Arundel) has been leading the opposition. He met with Ehrlich yesterday over breakfast to discuss slots, but he said nothing in the governor's bill had led him to change his mind.
"It's kind of a desperate measure to balance this year's budget," Busch said. "It obviously begs a lot of questions. . . . There's enough doubt that I think people are saying we're not prepared to move forward in this legislative session."
Slot machines have been banned in Maryland since 1968, with a small exception carved out for nonprofit groups on the Eastern Shore.
Under Ehrlich's plan for legalizing slots, about 25 percent of the revenue would go to track owners, about 8 percent to the horse industry and 3 percent to jurisdictions hosting the tracks. The bulk, though, would pay for an increase in school funding that the General Assembly and Ehrlich have committed to.
Ehrlich is counting heavily on legalized gambling to erase next year's projected $1.3 billion deficit and keep the state's books balanced for years to come. If the measure does not pass, he and the General Assembly will have to cut spending or raise taxes by nearly $400 million next year and $600 million the following year.
Ehrlich's staff predicts that by the time all 10,500 slot machines were phased in and fully operational in 2006, they would generate $1.3 billion a year in profits, with $800 million of that going to the state treasury.
Senate President Thomas V. Mike Miller Jr. (D-Prince George's) said that he was "satisfied" with the details of Ehrlich's plan and that hearings would begin next week.
Miller said Ehrlich's proposal was a good deal for the state and not overly generous to track owners and the horse industry, which has lobbied for a greater share of the profits.
"The owners are not going to be happy, the companies are not going to be happy," he said. "They tried to appease everyone, and they've made no one happy. Which may make for a good bill."
Although Ehrlich has said he would fight any attempts to expand gambling beyond the four racetracks, his bill contains a loophole that leaves the possibility open.
The plan would limit slots by granting special licenses to four specified racetracks: Pimlico in Baltimore, Rosecroft Raceway in Oxon Hill, Laurel Park in Anne Arundel County and a track under construction in Cumberland.
If the owners of those tracks failed to pay their licensing fees by March 31, 2004, however, the Maryland Racing Commission would take over the licenses and could conceivably sell them to other bidders, Ehrlich's aides said.
Ehrlich's bill would allow Pimlico, Laurel Park and Rosecroft to operate 3,000 slot machines each in exchange for a $100 million licensing fee. The Cumberland track would pay $50 million for a license to have 1,500 slots.
Slots would be prohibited at the Ocean Downs harness track on the Eastern Shore and at the State Fairgrounds in Timonium -- two places that Ehrlich has said are not conducive to gambling because they have a "family atmosphere."
William Rickman Jr., a Potomac businessman who owns Ocean Downs, has fought in the past to allow slots there and once implied that he might close the track otherwise. But yesterday, he said he could live with Ehrlich's proposal as long as slots are allowed at his track in Cumberland.
"I can accept their position on Ocean Downs," he said. "I'm still not happy with it, but I can accept it."
At the same time, Rickman said track owners are likely to balk at Ehrlich's plan to divide the profits, saying racetracks need a bigger share to cover their expenses. He pointed out that track owners in Delaware, where slots have been legal since 1994, receive twice as much as Maryland owners would under Ehrlich's bill.
"The State of Maryland is in the position to get the highest commission rate in the nation, but not at a tax rate of 64 percent," he said. "I don't think anyone can participate at that rate."
Some local officials criticized the bill, saying it doesn't do enough to address the costs of increased traffic and crime in communities that host the racetracks.
"It's ridiculous," said Prince George's County Executive Jack B. Johnson (D), whose county is home to Rosecroft Raceway. "There are neighborhoods where the lights will be on all night. I can't even begin to imagine the added cost of police officers, fire protection, ambulances, roads we've got to repair, and all the trash we'll have to pick up on the highways."
Other groups are gearing up to oppose the proposal. A group of black ministers met yesterday with Busch to discuss strategy.
"To have to deal with a 24-hour-a-day, 365-day-a-year menace is pretty frightening," said the Rev. Raymond G. East, director of the Office of Black Catholics for the Archdiocese of Washington. "We are going to go around to our parishes and raise awareness."
Under Ehrlich's bill, slot machines would be allowed to operate from 8 a.m. to 2 a.m. every day of the year.
Staff writers Eugene L. Meyer and Lori Montgomery contributed to this report.