ANNAPOLIS – Both proponents and opponents of expanding Maryland gambling make an economic argument: It’s good. It’s bad. The debate drags on.
But one powerful Maryland legislator has decided it will happen and has done his bit to prepare the state for gaming.
When Senate President Thomas V. Mike Miller Jr., D-Prince George’s, established a committee on gaming in January, he indicated the General Assembly needed to familiarize itself with the issue because legalized gambling is “inevitable” in Maryland.
The state needs the money, he said. While Maryland has met education and transportation needs while the economy was booming, the state has continuing needs, especially in health care, and now the economy is cooling off, said Miller.
To keep pace with demand, Miller said, gambling may provide a more popular revenue stream than other alternatives.
“Legislators are going to look to gambling, and, I believe, in particular casino gambling, as a source of revenue rather than raising taxes on their constituents,” Miller said.
Maryland, which already has a few legal forms of gambling but no casinos, is “well-positioned for the gaming market,” according to a 1997 report on gaming from the Greater Baltimore Commission. That report estimated the state could reap potential revenues between $870 million and $1.7 billion, depending on the extent and structure of gaming.
But expanding gambling hasn’t had a chance while Gov. Parris N. Glendening has been in office. His vehement opposition is well known; however, when he leaves office in 2003 all bets are off.
The candidates lining up for the 2002 gubernatorial race haven’t expressed much enthusiasm for gambling, but most aren’t as adamantly opposed as Glendening.
Still, Miller and other gambling advocates may have some convincing to do.
Gaming committee co-chairman Sen. Brian Frosh, D-Montgomery, is skeptical.
“Gambling doesn’t bring with it any significant benefits,” he said.
Frosh is concerned casinos will hurt smaller restaurants and bars by pulling away customers, which the small businesses can’t afford.
“It just sucks the blood right out of their businesses,” he said.
Another of the biggest costs is the substitution effect, Frosh said, where the casinos collect money that people would otherwise spend elsewhere. Maryland residents might start betting their rent money at the roulette table or spending their entertainment budget on blackjack instead of local sporting events or restaurants. Casinos actually have a low substitution effect, according to a 1996 Arthur Andersen study cited by Monica Kearns of the National Conference of State Legislatures in the committee meeting Thursday. It’s state lotteries that are in jeopardy, she said.
Maryland’s lotteries brought in $514.4 million of $731.1 million in gross gambling revenues in 1999, Kearns said. That figure was up from $492.9 million in 1997.
“Lotteries provide more government revenue than any other form of gaming,” she said.
Some lawmakers worry casinos and new slot machines might hurt the gaming activities already in Maryland – a different kind of substitution effect.
When West Virginia legalized slot machines, it hurt the tip jars in Western Maryland, said Sen. John Hafer, R-Allegany. Tip jars are similar to raffles; players draw a pull-tab slot from a jar, usually located in a bar or private, nonprofit club, in hopes of hitting a winning entry.
Horseracing, too, could be imperiled by additional slot machines or casinos, he said.
“If you’re going to put a casino where the horses are, that’s a whole other ball game,” said Hafer, who is opposed to casinos. “You’re going to attract people to the casino, not to the racetrack.”
Miller, however, said he thinks casinos might help the horseracing industry, as the number of racetrack visitors declines.
The additional revenue brought in by casinos could fund bigger purses and help draw better horses and jockeys, and thereby increase the popularity of racetracks, Miller said.
“It would solve some of our state’s racing problems,” he said. And, he said, it would give gamblers an opportunity to spend more money between races. Maryland’s gambling industry could then better compete with those in Delaware and West Virginia.
Frosh would rather the state concentrate on developing industries with more lucrative job opportunities, including high tech and biotechnology. The National Council of Legislators from Gaming States found casinos are more likely to benefit rural areas, usually by increasing job opportunities. However, they can siphon off business from local businesses in areas with tourism-based economies.
“The jobs (casino-style gambling) creates are not high-paying jobs that would move Maryland’s economy in the direction we want it,” Frosh said.
Casinos can create well-paying jobs, said Steve Comer, audit partner for Arthur Andersen who analyzed the economic impact of casino gambling for a 2000 American Gaming Association study.
The casino industry created 30,000 new jobs and 500,000 indirect jobs in 1999, Comer said.
“The wages and compensation . . . are very, very good for the amount of skill that’s required,” he said. “It just depends on how you look at it. Do they pay as much as the chairman of General Electric? No.”
The Greater Baltimore Commission also reported casinos produce more jobs and economic benefits than slot machines at racetracks. The report estimated commercial gaming could result in a statewide net gain in jobs between 5,629 and 12,324.
Attorney General J. Joseph Curran Jr. doesn’t believe commercialized gambling is the right avenue to raise state revenues or stimulate economic growth.
Gambling “is taxing just a subset of the state, and usually a subset that can least afford to have the losses,” he said. “It’s coming out of the pockets of people who will buy less other goods.”