- The Washington Times - Tuesday, August 19, 2003

ANNAPOLIS — Racetracks may not be the best locations for casinos if Maryland decides to legalize slot-machine gambling, a college economics professor said yesterday in testimony to a state House committee that is expected to play a major role in drafting a gambling bill for the 2004 legislative session.

The legislature “should consider decoupling the plan from the racetracks to maximize the state’s financial return from slots,” said Robert Carpenter, an associate professor of economics at the University of Maryland Baltimore County (UMBC).

Mr. Carpenter presented the findings of a study he did for UMBC’s Maryland Institute for Policy Analysis and Research at a hearing before the House Ways and Means Committee.

The committee heard testimony from an array of witnesses including gambling opponents and representatives of Maryland’s horse-racing industry.

Mr. Carpenter did not make specific recommendations to the committee, but said his economic analysis found several problems with limiting slot machines to racetracks, an approach proposed by Gov. Robert L. Ehrlich Jr. and approved by the state Senate.

The bill was killed by the Ways and Means Committee in April.

The governor proposed putting slot machines at Laurel, Pimlico and Rosecroft tracks in the Baltimore-Washington corridor, as well as a track proposed to be built in Allegany County.

Mr. Carpenter said the state should consider other locations that could attract larger numbers of players from nearby states or tempt Marylanders to bet their money at home instead of going to tracks in Delaware and West Virginia.

“If the number of Maryland visitors to other states’ casinos is extremely large, it also may make sense to consider placing slot-machine casinos on the road between Baltimore and Dover Downs, for example,” Mr. Carpenter said.

But racing-industry representatives argued against expanding gambling beyond the tracks.

William Rickman, a Montgomery County businessman who owns a track in Delaware and has a license to build a track in Allegany County, said slot machines should be limited to places that already have gambling, “and that is racetracks.”

James McAlpine, chief executive officer of Magna Entertainment, owner of tracks at Pimlico and Laurel, said the racing industry needs slot machines to compete with tracks in Delaware and West Virginia that are flush with cash from slot-machine gambling.

Mr. Ehrlich, a Republican, proposed putting 3,500 slot machines at each of three existing tracks and up to 1,000 slots at the Allegany County track.

House Speaker Michael E. Busch, Anne Arundel Democrat, has asked the committee to look at other alternatives, including spreading a total of no more than 1,000 slot machines over several locations around the state.

“More locations won’t increase gambling. More locations will reduce economic benefits to the participants [the tracks and the state],” Mr. McAlpine said.

He said the Maryland racing industry has been weakened by competition from nearby states with slot machines.

Pimlico earns between $7 million and $9 million from the Preakness, but only breaks even the rest of the year, he said.

Under Mr. Ehrlich’s bill, he said, slot machines would produce annual revenues of about $1.6 billion, with about half going to the state.

Slots opponents asked the committee to consider the social costs of slot machines, which they said would produce more crime, hurt small businesses that would lose customers to racetracks, and lead to more problems with gambling addiction.

But Frank Fahrenkopf, president and chief executive officer of the American Gaming Association, said expansion of gambling would generate tax revenues and spur economic growth.

He said as much as 1 percent of the U.S. population is subject to gambling addiction, but told the committee that studies in other states show there is very little increase in pathological gambling from legalizing slots.



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