The competition to open slots parlors across Maryland got off to a lukewarm start Monday as concerns about the economy contributed to just six companies bidding to install the gambling machines at five authorized locations.
“Obviously, we would have liked to have as much interest as possible,” said Donald C. Fry, chairman of the Maryland State Lottery Agency’s facilities location commission. “The legislature is hoping for a good start, but it’s tough to predict expectations. The state has never done this before. We’re in uncharted waters.”
The bidding deadline arrived as Maryland faces a roughly $2 billion shortfall in the fiscal 2009 budget and, like many other states, needs a new source of income to cover decreasing tax revenue.
The General Assembly approved legislation in a 2007 special session to put up to 15,000 slot machines at five locations, and voters approved the plan in a November 2008 referendum.
Mr. Fry said the six bids provide for a total of 10,550 machines at first, rising to 13,000 in a second phase. Only one site received more than one bid.
He declined to release the names of the bidders and other details until Tuesday.
House Speaker Michael E. Busch, Anne Arundel Democrat, called the start “pretty good” but acknowledged that he had been hoping for more competition.
“I thought that there would be more bidders, but the fact of the matter is that the economy is tough, particularly to get money for the capital improvements that they’re going to need for the facilities,” he told the Associated Press.
Mr. Fry declined to put the full blame on the recession.
“It’s fair to say the economy played a part, but these companies are serious about this and recognize there are going to be economic cycles, which are included in every business decision. They’re not in it for just the next couple of years,” he said.
The sites are in Allegany, Anne Arundel, Cecil and Worcester counties and Baltimore city. The Allegany site is at the Maryland-owned Rocky Gap State Park.
State officials have said Maryland could receive roughly $600 million annually from the sites by 2012, though critics say the revenue will be lower because of competition from parlors in Delaware, Pennsylvania and West Virginia and the waning interest in slot-machine gambling.
“It demonstrates Maryland was five years too late,” said state Sen. Allen H. Kittleman, Carroll and Howard Republican. “It’s also safe to assume that because of that, we’re not going to get the anticipated revenue. We need to revise our revenue projections.”
The parlors at Laurel Park racetrack in Anne Arundel and Ocean Downs in Worcester County outside Ocean City are expected to open first, in 2011. That means the revenue will not help the state’s immediate budget problems, which has Gov. Martin O’Malley calling for layoffs of 700 state workers.
Mr. O’Malley, a Democrat, proposed the slots plan in his second year in office, after predecessor Robert L. Ehrlich Jr., a Republican, failed to get such legislation passed during his four-year term.
Some of the initiative’s biggest critics, including Republican leaders in the House and Senate and Comptroller Peter Franchot, declined to comment Monday.
Though the state declined to release the names of the developers, the Baltimore-based Cordish Co. and the Maryland Jockey Club previously announced their intentions to submit bids.
Observers said factors beyond the economic recession contributed to the small bidding turnout,
For every 500 machines, developers are expected to spend $3 million for the machines and $25 million on capital improvements.
The state’s Video Lottery Facility Location Commission will handle the licensing process, and the first license likely will not be issued for at least seven months.
Mr. Fry said the initial license will be good for 15 months with the possibility of a 10-year extension. His commission set a deadline of April 15 for receiving additional information from the developers.