A divided Maryland panel signed off Wednesday on a $169 million plan to lease slot machines for the state’s largest planned casino — but only after one member said he was “disgusted” by the use of gambling revenue to bolster the state budget.
The other two members of the panel, Gov. Martin O’Malley (D) and Treasurer Nancy K. Kopp (D), offered no public comments before voting to approve the arrangement sought by the State Lottery Agency.
Franchot, who is eying a gubernatorial bid in 2014, blasted slots as a ”predatory scheme to separate working people from money they cannot afford to lose” and said he could “not in good conscience” vote to spend taxpayer money on the machines.
Unlike in many other jurisdictions, procurement of slot machines in Maryland is the responsibility of the state, not that of private casino operators. That provision was included in the 2007 legislation that launched Maryland’s slots program.
With a planned 4,750 machines, Maryland Live! is slated to be the third of five authorized casinos to open in the state and one of the largest of its kind in the country.
State legislative analysts estimate that the casino, being built by the Cordish Cos., will eventually generate more than $400 million a year in gross proceeds, about half of which are earmarked for state education programs.
The lease arrangement approved by the board will provide 4,719 machines from eight different vendors. Another 31 machines at Maryland Live! will be relocated from other slots sites, under the lottery agency’s plan.
Franchot also used Wednesday’s meeting to pepper Stephen Martino, director of the lottery agency, with questions about other recent developments affecting Maryland slots sites.
Franchot said he was troubled by a Washington Post report over the weekend that lottery officials had relaxed a rule on license requirements after hearing from a high-profile applicant for a Baltimore casino.
The change came in response to lawyers for Dan Gilbert, the majority owner of the Cleveland Cavaliers and the chairman of Rock Gaming, who was arrested in Michigan in 1981 for allegedly running an illegal bookmaking operation. Even though Gilbert’s record was expunged, it could have disqualified his bidding group from getting a license, under state rules adopted in 2009.
The day before bids were due for the Baltimore casino, the State Lottery Commission changed the rule. Now, an out-of-state offense that does not result in a conviction is only disqualifying it if occurred during the past 10 years.
Martino told Franchot the change was made to address some “ambiguity” in the previous rule and said a “bad act” from more than 10 years ago can still be considered before awarding a license — even if it is not automatically disqualifying.
Franchot said he had been left with the perception “that the rule has been changed for one person.”
Franchot also urged Martino to closely scrutinize plans by Cordish to use a federal “cash-for-visas” program to finance his casino in Anne Arundel County.
The Post reported in September that Cordish was courting Chinese investors through the EB-5 visa program, under which the promise of a green card is offered in exchange for a $500,000 investment.
“There’s a lot of potential abuse affiliated with this,” Franchot said, citing a recent New York Times story raising questions about the program.
Martino told him that his agency has had preliminary conversations with Cordish about the program, which Martino stressed is “a tool that’s used nationwide.”
As questioned wrapped up, O’Malley thanked Martino for his “total professionalism and integrity.”