- The Washington Times - Friday, February 13, 2009

A state commission has thrown out two of the six bids to operate slot machines in Maryland because they did not include legally required licensing fees, and attorneys for one of the rejected bidders are asking an Anne Arundel County judge to intervene.

“For the four bids which met the minimum requirements, we will be considering and moving forward, and the two which did not meet the minimum requirements we will not be considering,” said Donald C. Fry, chairman of the Maryland State Lottery Agency´s facilities location commission.

The two rejected bids, one for parlors at Laurel Park racetrack in Anne Arundel County and the other for machines at Rocky Gap State Park in Western Maryland, were deemed “incomplete” by the commission because they did not submit $33 million in upfront licensing fees.

The unanimous vote was taken after the seven-member commission was advised in a letter by the state attorney general´s office that it could not consider proposals which did not submit the fee.

“The location commission does not have the discretion to consider proposals under such circumstances,” stated the letter.

The General Assembly approved legislation in a 2007 special session to put as many as 15,000 slot machines at five locations, and voters approved of the plan in a November referendum. A total of 6,500 slot machines have been proposed with the remaining bids, fewer than half than what had been expected.

State officials have said that Maryland could receive roughly $600 million annually from the sites by 2012. The money would come as Maryland faces years of potential budget shortfalls, including roughly $2 billion in fiscal 2009.

State House Speaker Michael E. Busch, Anne Arundel Democrat, said that the rejection of the bids indicates that the commission is doing its job.

“This is the reason we established the commission in the first place. It´s been clear to everyone what the proposals were required to do,” said Busch spokeswoman Alex Hughes.

Laurel Racing Association Inc. and the Maryland Jockey Club, subsidiaries of Magna Entertainment Corp., submitted a bid for 4,750 machines at Laurel Park but did not submit the licensing fee. Empire Rocky Gap also failed to provide the fees with its bid for a 750-machine casino it planned at Rocky Gap, in Western Maryland.

Magna has since stated it would cover the cost, however Assistant Attorney General Bonnie Kirkland said that the commission could not legally waive the requirement.

“Based on our interpretation of the statute, we find nothing to alter, waive or forgive the postponement of licensing fees,” said Miss Kirkland.

Meanwhile, attorneys for Laurel Park filed for an injunction Thursday morning in Anne Arundel County Circuit Court to prevent the commission from throwing out the bid. The 50-page filing states that the requirement to pay the initial $28.5 million licensing fee was unconstitutional because it was not clear whether the fee was refundable.

“The requirement of a nonrefundable or potentially nonrefundable Initial License Fee … is constitutionally facially invalid and constitutes an unlawful taking of private property,” the memo states.

The commission discussed the memorandum in closed session Thursday but took no action.

Mr. Fry said that any legal challenges would be sorted out by the attorney general.

“We certainly hope that legal challenges will not occur, but that´s not out of the realm of possibility. That´s something for the attorney general and the legal representatives of the other parties to pursue,” said Mr. Fry.

State Senate President Thomas V. Mike Miller Jr., Prince George’s Democrat and a key advocate for the passage of the slots amendment last fall, said that he supports the commission´s decision, but that the state of Maryland will be hurt because Laurel Park will not be included in the gambling initiative.

“Those parties that refused to provide initial licensing fees did so at their own risk, and unfortunately we´ll have to move on with what we have. What hurts is the fact that Laurel Park will be precluded from the process,” said Mr. Miller.

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