Slot Machines Licenses

Few Bidders for Slot Machines Licenses in Maryland

On February 13th, 2009, with about half of the profits from the legalization of slot machines gaming slated to be allotted for education, schools have the most to lose if things do not proceed as planned. Such was the situation last week as the head of the state commission charged with giving slots gaming licenses announced that Maryland only received 6 bids for only 6,550 slot machines at five gaming locations. That is well below the fifteen thousand slot machines allowed by state voters in November 2008, when they have approved a constitutional amendment allowing slot machine gaming.

Fewer slot machines would mean less can than anticipated to place into the Education Trust Fund, which could leave the supporters of the November 2008 referendum looking for political cover. Improving aid to state schools was one of the important selling points for expanded gaming. Analysts predicted that the state would earn $90 million from licensing fees this year-which would be allotted into the fund. Bob Rankin, a lobbyist for the Maryland State Teachers Association said that the main concern is that they did place $90 million in licensing fees in this year’s state budget. Slots bidders needed to place up to $3 million per 500 slot machines.

The number of slot machines requested would produce just $39.3 million in licensing costs. Two of the slot bids that were submitted last week-for Laurel Park located in Anne Arundel County and the Rocky Gap State Park outside Cumberland-did not state the fee with their gaming proposals out of concern over a zoning issue in Anne Arundel that could affect the slots parlors and the facilities would not be as lucrative because of the high tax rate. But Education supporters are not worried yet.

Rankin said that the weak economy and the fast-tracked bidding process were certain to affect the bids that are received by the state but the long-term effect on profits for school may be minimal once the whole situation is fixed. Bidders said that Maryland’s sixty-seven percent take from gross revenue makes it a little difficult to bid for the slots licenses.

But Rankin said that the legislators should resists the petitions to change the revenue split scheme because the state may be in better financial shape by the time the slots licenses expire in fifteen years. Federal stimulus cash could prove to be a lifeline for pro-education programs at risk of being slash in the face of a $1.9 billion budget deficit. Senate President Thomas V. Mike Miller Jr. said on February 5th, 2009 that the state should think about reopening the bid for the slots licenses but later changed his mind and supported House Speaker Michael E. Busch and Governor Martin O’Malley’s stance in being patient with the whole bidding process.