- The Washington Times - Tuesday, July 24, 2012

Maryland’s high tax rate on slot machines and reluctance to expand gambling have not only deprived the state of needed revenue, but have also nearly killed its horse-racing industry, according to the president of the American Gaming Association.

In a wide-ranging interview with editors and reporters at The Washington Times, Frank J. Fahrenkopf Jr. said Tuesday that Maryland is continuing to lose ground to surrounding states as its lawmakers debate whether to begin the process toadd table games and a new casino during a possible special session of the General Assembly this summer.

Horse-racing tracks have especially fallen victim, he said. While they receive 9.5 percent of revenues from Maryland’s fledgling slots industry, that money isn’t nearly enough for them to remain viable without additional gambling revenues.

“I think the Maryland situation has been tragic,” said Mr. Fahrenkopf, who is also co-chairman of the Commission on Presidential Debates and a former chairman of the Republican National Committee. “You’ve had an awful lot of horse breeders who have left the state of Maryland because of the legislature not being able to get it together.”

It is still uncertain whether the General Assembly will reconvene this summer to pass legislation setting up a November referendum on legalizing table games at the state’s five designated slots sites and approving a new casino to be built in Prince George’s County. High-level officials have had several closed-door meetings in the past week to discuss the issue. House Speaker Michael E. Busch, Anne Arundel Democrat, met Tuesday with officials from Cordish Cos., which owns the Maryland Live casino in Anne Arundel County. Cordish officials have vehemently opposed a Prince George’s site on grounds that its proximity would hurt their business.

The Senate has pushed for gambling expansion, but House members have balked at their proposal to lower the state’s 67 percent tax rate on slots revenues.

Democratic Gov. Martin O’Malley has suggested a compromise of leaving the tax rate up to a yet-to-be-formed gaming commission and is expected to release draft legislation in coming days.

Mr. Fahrenkopf said the state could benefit from the expertise of a full-time gaming commission, but suggested that gambling expansion is being hindered by the state’s current slots tax rate, which is one of the highest in the country.

He said the current rates could limit profit margins and hurt the long-term viability of casinos, especially if new sites are added.

“In many, many states, governors and state legislators have looked at the industry as being a golden goose that you can’t kill,” he said. “Tax rates that are set too high are going to hurt them . There’s got to be a balance.”

Mr. Fahrenkopf said that expanded gambling would help the state recoup some revenue lost to states that already have table games like Delaware, Pennsylvania and West Virginia. It would also bring tens of millions of dollars to Maryland’s horse-racing industry, which has struggled despite receiving continued state subsidies.

But Delegate Luiz R.S. Simmons, Montgomery Democrat, said the state has supported horse racing long enough, arguing that the industry represents less than 1 percent of Maryland’s economy and jobs and is unlikely to be saved from waning public interest in the sport.

Current law allows the state’s racetracks to receive as much as $140 million a year from slots revenue, but they are projected to receive less than $50 million this fiscal year.

He most of the jobs that the industry creates are relatively low-paying and accused the casino advocates of trying to use horse racing as a way to gain entrance into many states, including Maryland, by setting up slots at tracks or at least using the machines to fund racing.

“It’s been part of their modus operandi to say, ‘Oh, we’re not that much about gambling, but we want to save horse racing,’” he said. “Why should we save horse racing if the market doesn’t justify it?”