Maryland struggles to cash in on gambling

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ANNAPOLIS — Mid-Atlantic states are locked in a high-stakes competition to expand legalized gambling and boost lagging revenue, but Maryland might have the fewest chips and worst hand of anyone at the table.

Maryland has struggled to get slots casinos off the ground since they were legalized in a 2008 referendum, while other states in the region have established slots and moved on to legalize casino table games such as poker and blackjack.

The District and New Jersey have upped the ante to fill government coffers by attempting to legalize online gambling, especially after the Justice Department last month gave its approval.

Maryland officials are largely focused on expanding slots and adding table games, but acknowledge that online gambling in nearby states could put them even further behind.

“We’re a day late and a dollar short,” said state Sen. Richard F. Colburn, Dorchester Republican, who is co-sponsoring a bill to legalize table games. “Even if we get table games, we’re still going to be behind the eight ball. Maryland will probably never catch up.”

Maryland lawmakers passed legislation in 2007 that paved the way for slots, after years of wrangling between the Democrat-controlled General Assembly and Gov. Robert L. Ehrlich Jr., a Republican and one of the state’s most vocal proponents of the machines.

Slots were intended to help put Maryland on a level playing field with Delaware, Pennsylvania and West Virginia. All of those bordering states had legalized slots and were raking in millions of dollars from visitors throughout the region, including Maryland.

As originally planned, Maryland would issue licenses for five casinos, which would be up and running by August last year and would bring the state more than $1 billion in annual revenue.

As it turns out, the rollout has gone slowly. Two casinos have opened, in Cecil and Worcester counties. The Maryland Live casino in Anne Arundel County is scheduled to open in June.

The state has not awarded contracts for its two other planned casinos, in Allegany County and in Baltimore, largely because of a lack of interest from qualified bidders. Still, officials hope to award contracts later this year.

The slow start and other delays have caused revenue to fall short of initial projections.

The two operational casinos brought in $103 million in fiscal 2011, compared with 2007 projections of $157 million during that period, and generated $80 million in the first six months of fiscal 2012, short of the $1 billion that the state initially predicted.

Maryland is not alone. As competition increases, states across the country are trying to stop declining casino revenue.

Revenue is reportedly down 30 percent since 2006 in Atlantic City, N.J., and Nevada’s biggest casinos reported a combined $4 billion loss in 2011.

Delaware, which opened slots at the first of three racetracks in 1995 and added table games in 2009, has switched from expansion plans to considering ways to keep “racinos” from folding. One option on the table is reduced licensing fees. Slots revenue there has declined every year since 2007, when Harrah’s opened a casino in Chester, Pa.

The exception appears to be Pennsylvania, which in 2006 opened the first of its 10 casinos and added table games in 2010. December 2011 revenue of $199 million was 13.9 percent higher than in December 2010.

“It’s a competition for those customers,” said Doug Offerman, an economic analyst for Fitch Ratings. “For a state like Maryland to have many of its border states offering gaming presents the possibility of lost revenue.”

Though the addition of gambling tables has had mixed results, Maryland lawmakers are set to take up the issue during the General Assembly session that began last week.

Maryland Gov. Martin O’Malley, a Democrat, has expressed a desire to wait until all five slots casinos are up and running before making a decision. The assembly also is slated this session to consider a sixth slots parlor, in Prince George’s County.

To institute table games, lawmakers would have to follow the same steps as they did for slots — passing a constitutional amendment and allowing voters to decide the question in the next statewide election.

“We need to continue our efforts to implement, in its entirety, our slots legislation,” said Donald C. Fry, chairman of the state commission in charge of vetting potential casino developers. “But the world has changed since 2008, and that makes it incumbent upon Maryland to look at that issue to remain competitive.”

The District has legalized online gambling and is working on legislation for rules and regulations. The New Jersey Legislature is attempting to pass a similar bill, then send it to Gov. Chris Christie, a Republican who has indicated that he will sign it into law.

Maryland House Speaker Michael E. Busch, Anne Arundel Democrat, told The Washington Times that the state is far from considering such a program, but he will monitor its progress elsewhere.

Mr. Fry said online games could bring additional revenue, but likely would not have the draw of casinos.

“With gaming facilities that have entertainment and things of that nature, you never get that experience with online gaming,” he said.

Maryland Comptroller Peter V.R. Franchot, a Democrat, has called slots “the crack cocaine of gambling” and opposes the expansion of gambling as a revenue source.

“Let’s take care of what we have and understand how to manage it properly,” he said. “Gambling is an unstable source of revenue for states and municipalities, and we should avoid it whenever possible.”

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