Critics: Slots revenue inflated

ANNAPOLIS — Slots opponents say Maryland officials expect more money from slot machines than they are likely to get and that slots supporters inflate revenue estimates to garner public support.

State analysts expect slots to bring in an estimated $1.3 billion annually, of which $660 million would go to the state.

But slots opponents say the numbers used are overly optimistic and point to an increase in competition from surrounding states and the proposal to locate slots parlors in out-of-the-way places, such as Worcester and Allegany counties.

“The most dangerous thing about slots is, for politicians, it’s any number you want it to be; it’s totally flexible,” said W. Minor Carter, a spokesman for StopSlotsMaryland. “If slots are going to really be meaningful, the numbers have to be meaningful.”

Federal agencies that track Maryland’s ability to pay its debt say they are concerned about officials banking on projected revenue to pay for future programs.

“Beyond fiscal 2009, budget balance is dependent on [slots] revenues, particularly in fiscal years 2012 and 2013, when they are estimated at $453 million and $604 million, respectively, levels that may be overly optimistic,” Moody’s analysts wrote in February.

Moody’s and the two other major agencies gave Maryland the highest credit rating, which allows the state to borrow money at low interest rates.

On the assumption Marylanders will vote in favor of slots in November, Gov. Martin O’Malley’s administration already has budgeted an additional $660 million for a health care expansion and increased spending on the state’s public schools and its university system.

Slots supporters say if the 15,000 machines are not approved, lawmakers will be faced with “slashing vital services or raising taxes.”

Frederick W. Puddester, chairman of the pro-slots For Maryland, For Our Future, said opponents are too quick to discount the work of the state’s nonpartisan budget analysts, who have studied the issue for at least six years.

He led a commission in 2002 that concluded 10,000 machines would generate $217 a day each, or about $800 million annually.

Slots supporters estimate 15,000 machines will bring in about $236 a day each, or $1.3 billion a year.

Mr. Puddester said Maryland’s estimates are lower than the average takes in Delaware and West Virginia, which make $250 and $255 a machine.

“I think our estimate is pretty conservative,” he said.

Mr. Puddester plans to attend the Preakness on Saturday with volunteers raising money for his group.

Executives for Magna Entertainment Corp., which owns Pimlico Race Course, where the Preakness is annually held, announced this week they will not move the race, despite previous threats to move the second leg of the Triple Crown unless slots were legalized.

Comptroller Peter Franchot opposes slots and says revenues numbers are often hard to pin down.

“Nobody really knows what the revenue figures are, except that they are inflated,” he said. “There are a tremendous amount of undocumented assertions that are tossed around.”

Mr. O’Malley, a Democrat, recently called Mr. Franchot hypocritical for supporting a 1998 measure to legalize slot machines. However, the governor also has opposed previous slots proposals, calling them “morally bankrupt.”

Maryland lawmakers last year approved a constitutional amendment to place up to 15,000 slot machines across the state, if voters approve the measure in November.

Lawmakers designated locations in Baltimore city and Allegany, Anne Arundel, Cecil and Worcester counties.

Former Gov. Robert L. Ehrlich Jr. routinely attempted but failed to legalize slot machines during his four years in office. He promoted them as a way to pay for education, just as Mr. O’Malley has since taking office.

Mr. Ehrlich, a Republican, also was frequently criticized by slots opponents, including House Speaker Michael E. Busch who said his estimates were inflated.

Mr. O’Malley’s slots proposal uses estimates similar to the estimates in Mr. Ehrlich’s 2003 proposal. Both the Ehrlich and O’Malley proposals estimate machines would be close to $100 more daily than what the Puddester Commission estimated in 2002.