Maryland Slot Machines, Question 2 (2008)

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The Maryland Slot Machines Amendment, also known as Question 2, was on the November 4, 2008 ballot in Maryland as a legislatively-referred constitutional amendment, where it was approved. The measure authorized the State to issue up to five video lottery licenses for the primary purpose of raising revenue for education of children in public schools, prekindergarten through grade 12, public school construction and improvements, and construction of capital projects at community colleges and higher education institutions. The measure also approved the placement of 15,000 slot machines at five locations throughout the state. Maryland became the 38th state that allows slots or casino-style gambling.[1][2]

Aftermath

A report done by the National Institute of Money was released on October 28, 2009, detailing how much money gaming interests spent on trying to influence gambling-related ballot measures in Maryland, and other states that had gambling questions on the November 2008 election. The section in the report on Maryland shows that pro-gambling groups outspent their counterparts 7 to 1. $7.1 million of the $8.2 million raised for the campaign was contributed by gambling companies and other interests.[3]

The full report can be read here.

Maryland Governor Martin O’Malley defended the passage of the measure in a November 2009 interview with a local radio station. O’Malley stated that the awarding gambling licenses is happening exactly “as the voters approved it”. According to reports, the slots program was to generate more than $600 million a year in revenue. However, reports have stated it remains unclear when such revenue will be available or when it will start to materialize.[4]

Election results

Maryland Question 2 (2008)
ResultVotesPercentage
Approveda Yes 1,482,295 58.69%
No1,043,12941.31%

Election Results via: Maryland State Board of Elections

Text of measure

The text of the measure can be read here.

Background

A major reason for the legislative support behind this measure is that state legislators are looking for additional ways to pay for public education in the state. Thomas V. Miller Jr. (D-Calvert) has said that after the "Thorton" plan, education spending makes up 40% of the state's budget. The legislature has already passed $1.4 billion in tax increases and other measures to pay for its share of public education funding, but is now looking for a source of additional revenue.

With that in mind, Rep. Miller has turned to the state's education union and teachers to support passage of the casino amendment. "We're saying to them (the teachers), 'Look you guys, you've got to step up.' We love you, but we've got to pay the bills." said Miller.[5]

Like several other states before it, Maryland has found the installation of slot machines to be the path most likely to shore up the floundering business at Pimlico, the home of the Preakness Stakes, and other tracks.[6]

Specific provisions

The measure enacted the following provisions:

  • Stipulate that the Casinos receive 65% of the slot profits the first year, 50% the next five years and only 33-40% in the following decade.[7]
  • Potentially produce $600 million annually for the government.

Estimated fiscal impact

Maryland's Department of Legislative Services (DLS) has estimated that the 2,500 additional slot machines at the new casino would generate $375,000/day or as much as $137 million per year, with $667 million of this going into the state's Education Trust Fund.

The Maryland Institute for Policy Analysis and Research (MIPAR), based at the University of Maryland-Baltimore County, issued its own fiscal estimate in mid-October. Their report is called "Analysis of the Impact of Introducing Video Lottery Terminals in Maryland."

The MIPAR report says that DSL's figures are, in the words of a local newspaper editor, "grossly exaggerated."[8]

The MIPAR report says the DLS report is questionable partly because it assumes that the state will re-capture all casino money that Marylanders are currently spending in neighboring states, plus another $812 in revenue from new slots players.

Supporters

Supporters included:

Arguments in favor

Notable arguments made in support of the measure included:

  • The referendum establishes an Education Trust Fund and dedicates half of future proceeds to our public schools.
  • It provides Maryland with an additional source of funding, beginning with licensing fees in early 2009.
  • If this referendum fails, students, teachers and support staff will be left with outdated facilities, larger classes, outdated textbooks and shortages of materials.
  • School systems will be left with fewer resources to recruit and retain the best teachers and support staff.

Donors in support

Through mid-October, 14 donors had contributed a total of about $3.8 million to the campaign to pass the casino amendment. The average contribution of the 14 is $270,000.[12]

Some of the donors are:

  • Laurel Racing Association, a division of Magna Entertainment from Ontario: $2,000,000.
  • Penn National Gaming, Inc., $1,000,000.
  • Maryland Thoroughbred Horsemen's Association, $300,000.
  • Allegany Racing Association, $250,000.
  • Association of Gaming Equipment Manufacturers (Nevada).
  • International Game Technology (Nevada), $50,000.
  • Maryland Horsebreeders Association, $25,000.
  • Fallsgrove Holdings, $25,000.
  • Joel Texter, $25,000[13]

In Ohio, Penn National Gaming, Inc. is on the opposite side of the casino issue; there, the organization has donated about $27,000,000 to the effort to defeat Ohio Issue 6.

Opposition

The two main groups opposing the new casino amendment are Stop Slots Maryland and NO Casino Maryland.

Other opponents included:

  • StopSlots Maryland[11]
  • Comptroller Peter Franchot[14]
  • Glenn F. Ivey, Prince George's County State's Attorney
  • Representative Wayne Glichrest, R, MD-1
  • Taylor Branch, Rev. MLK Jr. Biographer
  • Marylanders United to Stop Slots[14]
  • Stewart Bainum Jr, chairman of Choice Hotels International Inc[11]
  • Nina Rodale Houghton, president of the Wye Institute[11]

Arguments in opposition

Notable arguments made in opposition of the measure included:

  • State-sanctioned gaming is a form of regressive taxation, often against those who can least afford it
  • It's unethical to fund the government through gambling.
  • A study of Illinois casinos found that for every $1,000 of casino revenue, miscellaneous retail and wholesale revenues declined by $247, or nearly 25 percent. The eating and drinking revenues within the casinos goes up, but it goes down at nearby eating and drinking establishments.
  • The presence of slot machines in close proximity to existing resort areas will "cannibalize local businesses by siphoning disposable dollars away from restaurants, hotels and other established forms of entertainment."[8]

Newpaper endorsements

See endorsements of Maryland ballot measures.

The Baltimore Sun is endorsing the measure, while the Washington Post and Annapolis Capitol are opposed.[17][18][19]

Casino's position

Magna Corp

Magna Entertainment Corp., the Canadian Company running two of the tracks in Maryland, has not committed to endorsing the measure along with a number of other casinos. John Franzone, chairman of the Maryland Racing Commission, has said that Frank Stronach, Manga's Chairman, has been much more definitive behind the scenes. He quoted Stronach as saying that he'd not contribute "one penny to support the referendum."[20]

On March 19, Magna Corp's executive vice-president of racing Scott Borgemenke said the company is leaning toward supporting the slot machine initiative but would not rule out other options, including selling Laurel Park. The Casino suffered huge losses in the last quarter, totaling $113 million, and is now looking to the slot machines as a way to increase revenue in the future. However, the company has said no costs, timelines, or campaigns strategies for the ballot measure have been presented to them at this time.[21]

Ocean Downs

William Rickman Jr., who owns Ocean Downs near Ocean City, another potential site for slots, was quoted in an interview with The Sun late last year that donating to the pro-campaign would be a waste of money since the casinos only get to keep 33 percent of the profits.

Legal battle

A legal challenge to the proposed ballot language for November's slot-machine referendum mostly failed, although the state's highest court upheld a lower court's order to add one word to the hotly contested question.

A panel of Anne Arundel Circuit Court judges ruled that the proposed ballot language was misleading but could be fixed by adding a single word to clarify that state education programs would be the primary and not sole recipients of anticipated revenues.

The seven-judge Court of Appeals affirmed that decision and ordered the plaintiffs to pay court costs.[22]

The opponents' argument was that ballot language drafted by the secretary of state misrepresents the initiative because it does not mention that slots revenue will subsidize the horse racing industry and benefit gambling interests. The constitutional amendment would legalize 15,000 slot machines at five locations across the state.[23]

See also

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References

  1. Maryland State Board of Elections, "Constitutional Amendments," accessed June 2, 2014
  2. Washington Post, "Full-Scale Md. Brawl Expected Over Slots," November 27, 2007
  3. Maryland Politics, "New report details Md. slots campaign money," October 28, 2009
  4. The Washington Post, "O'Malley defends state's slots program," November 24, 2009
  5. Washington Post: "Teachers Union Gives Backing to Slot Machine Initiative," March 16, 2008
  6. 6.0 6.1 CasinoGamblingWeb.com: "Maryland Casino Slot Machines on Ballot," Nov 19, 2007
  7. Baltimore Sun: "Tracks balking at slots campaign," March 4, 2008
  8. 8.0 8.1 The Dispatch, "Report Finds Slots Revenue Projection Unrealistic," October 24, 2008
  9. Baltimore Sun: "Slots role could put Franchot to the test," April 14, 2008
  10. ToTheCenter.com: "Maryland Teachers Stand Behind Legal Gambling Measure," March 17, 2008
  11. 11.0 11.1 11.2 11.3 11.4 11.5 11.6 Baltimore Sun: "Wealth driving 'No' vote on slots," July 20, 2008
  12. Baltimore City Paper, "Horse Sense"
  13. List of donors to For Maryland For Our Future from the Maryland campaign finance website
  14. 14.0 14.1 Baltimore Sun: "With public divided, campaign to pass slots measure heats up," Sep 14, 2008
  15. Examiner, "Prince George's County Executive opposes slots," October 28, 2008
  16. League urges readers to vote 'no' on slots
  17. Baltimore Sun, "Yes on Question 2"
  18. Post, Sun split on endorsements
  19. A 'no' on Question 2 will save state from a new slots debacle
  20. Baltimore Sun, "Tracks balking at slots campaign," March 4, 2008
  21. Washington Post, "Magna Undecided on Whether to Support Push for Slots in Md.," March 19, 2008
  22. Leagle.com, "Stop Slots MD 2008 v. State Board of Educations," filed January 6, 2012
  23. Baltimore Sun: "Slots decision is a win for referendum proponents," September 16th, 2008

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