Pro-Gambling, Anti-Slots Amendment

Of all of the people in Maryland’s blogospohere, I have probably been one of, if not the, most vocal proponents of the expansion of gambling in Maryland. And not just the addition of slots, but also my long-standing support of table gaming here in Maryland.

All that being said, I am voting no on the slots referendum.

The reason that I am voting no is quite simple; the language contained in the Constitutional Amendment has no business being in the actual constitution. I go back to what I wrote last November during the Special Session:

And that's the problem with the slots plan as currently proposed. Making it a Constitutional Amendment will artificially limit the location of slots parlors to certain jurisdictions or, in the cases of one of the plans floating out there, limiting them to certain geographic coordinates within municipalities or defined areas. That is not the point of a Constitutional document. This amendment goes into specific details about plans that would make the location of slots parlors difficult or impossible to change since any change to those locations would require the approval of the voters.

A Constitutional Amendment on slots, at least one as specific as the legislators are currently discussing, is a problem hatched by legislators to address a concern the voters really don't have. The voters want the legislators to deal with the issues. The legislators want to pass the buck the voters. Ultimately, the legislative leadership is abdicating its responsibility to lead, and in doing so handcuffing whatever potential profit the state may have from slots revenue given the constraints of using a Constitutional Amendment as a change agent (and as political cover)...

And I stand by that still. The fact of the matter is that such language adopted in the Constitution will make it nearly impossible to correct any shortcomings with slots, particularly with slot parlor locations, once it is ensconced in the Constitution. At that point, If zoning becomes an issue as the Amendment allows, there is no useful way to fix it; any changes would also need to be adopted as Constitutional Amendments and subjected to another referendum to state voters. That’s no way to make public policy.

On top of Constitutional concerns, the bill as stated is just bad policy and bad politics. Table gaming, not slots is what is needed in order to create gambling revenues in the state (a conclusion even Baltimore City was able to reach). And what’s of even greater concern is the amount of corruption that we have already seen this amendment bring. Clearly, the slot parlor locations determined by the Amendment are no accident, because legislative and Democratic leaders know exactly who is supposed to operate these parlors and win these licenses. Combine that with the buying and selling of legislators we saw from back in the Special Session, and you already know what kind of enterprise O’Malley and Company have created.

Like many, I am pro-gambling, but I cannot in good conscience vote for a poorly written, poorly conceived idea just because it moves this ball forward. I’m voting no, and anybody who supports the expansion of gambling in a logical and constructive manner should do the same…

Mayoral Task Forces states the obvious

A Baltimore Mayoral Task Force has come to an obvious conclusion; table gaming, not slots, is where the money is:

A mayoral task force report says one of the best long-term ways to reduce Baltimore's highest-in-the-state property tax rate would be to use revenue from legalized gambling - not just the slot machines currently under debate but full-scale casinos.

State leaders have spent a decade debating slot machine gambling, only to decide to let citizens settle the issue in November's election. Table games have long been considered a political non-starter in Maryland.

One of the best things for the City of Baltimore could be the proposed 17-cent across the board Property Tax cut for all residents of Baltimore.

As somebody who has long been a proponent of table gaming instead of just legalizing slots, I think that this is a step in the positive direction. However, the likelihood of such table gaming happening in Baltimore (or any other locale in Maryland) anytime soon is pretty dim. This is something that is rather unfortunate, when you consider that table gaming can produce jobs, tourism, and revenue to the city of Baltimore and a state of Maryland in a way that does not pillage the pocketbooks of Maryland taxpayers. It's just unfortunate that nobody in Annapolis wants to look at such a common sense alternative...

More Flaws from the Constitutional Amendment

noted before that one of my biggest issues with a Constitutional Amendment calling for slots was the fact that this particular amendment specifies where slot machines can be, without allowing the state the flexibility to change the locations later without another referendum on a new Constitutional Amendment. And now we are starting to see the error of those ways:

Local government officials could block the legalization of slot machine gambling in their communities even if voters in 2008 approve a ballot initiative passed this week in the General Assembly, a lawyer with the Maryland attorney general's office said yesterday.

A little-noticed provision in the referendum legislation that orders state slots operators to comply with local zoning regulations essentially allows local authorities to exercise final say, said Kathryn M. Rowe, an assistant state attorney general who deals with bills passed by the legislature.

The threat of local opposition sets up yet another battleground in what many believe will be a fierce referendum campaign on slot machines leading up to the November 2008 election....

...Should slots not go forward in Anne Arundel and Worcester, the number of machines proposed by the governor would be cut almost in half - taking away a large amount of the $650 million in state revenues expected annually from slot machines for public education and health care. The state's horse industry would also be affected, as the Anne Arundel and Worcester slots sites are expected to be at two racetracks, Laurel Park and Ocean Downs.

All of this means the knuckleheaded Democrats who included those mandated locations in the Amendment are realistically setting the entire enterprise up for failure. And frankly, this makes me even more infuriated at the Republicans who knifed the party by supporting this amendment. If slots fails, either at the ballot box or upon implementation, because of these particular zoning issues, it is going to lead to (what else) even higher taxes. And I don't think that fiscal conservatives are going to forget that the next time these five run for re-election...

Back to Back

That's two weekends in a row the House has been held late:

Voters are likely to get the final say on whether to welcome slot-machine gambling to Maryland, following passage early this morning of legislation by the House of Delegates that provides details of a plan to place 15,000 machines at five locations around the state.

The 71 to 44 vote, which came at 1:40 a.m., was the second action needed to execute a proposal by Gov. Martin O'Malley (D) to hold a referendum next November on legalizing slots at venues in Baltimore and Allegany, Anne Arundel, Cecil and Worcester counties.

And even then the didn't adjourn until closer to 2.

Once again I ask, is there any reason to hold these votes in the middle of the night if the legislative leadership has nothing to hide?

Delegates, bought and sold wholesale

Multiple sources are telling me that Ana Sol Gutierrez, an anti-slots Delegate from Montgomery County, sold her vote on the slots referendum to the O'Malley Administration. In exchange, the Administration guaranteed Gutierrez passage of a two-tiered driver's license that will give licenses to illegal aliens.

And I bet this 'aint the only story we are gonna here about payoffs....

Busch has lost control

Insider sources are telling me that Mike Busch has lost control of the House Chamber.

You will note today that at 3:53 PM the Senate went into session, and stayed in session for five minutes. Busch adjourned the House because he looked around the room and realized that he didn't have the votes to get the Senate slots bill passed.

It was after that around (as reported here via WBAL ) 6:15 that House Majority Leader KumarBarve started saying that they had the 85 votes to pass slots.

When they went back at 7:06, Busch tried to pull a fast one and pass the House bill instead of the Senate bill. Minority Leader Tony O'Donnell tried to Special Order the bill until tomorrow, since Delegates had prepared amendments to the Senate bill, but not the House bill. The Speaker said no, which prompted Democratic delegates to start booing and hissing until the Speaker relented.

As I said, Mike Busch has lost control of his chamber. He is not handling the stress put on him by the O'Malley folks very well because he is making poor judgment calls and can't keep his own Democrats in line.

Tomorrow is going to be interesting.

Why the Constitutional Amendment authorizing Slots is dumb

And I'm not just talking about the abdication of responsibility from our elected officials. I'm talking about the general bickering and bitching about slots locations:

A key House subcommittee today recommended adding Frederick County and possibly Harford County to the list of sites where slot machines would be placed and knocking out Worcester County, home to the Ocean Downs racetrack and a site strongly opposed by many local officials and residents.

House leaders say a location near Interstates 70 and 270 would attract gamblers from Montgomery County who now drive to Charles Town Races and Slots in West Virginia. They said they believe it would be significantly more lucrative to the state than the slots parlor at Ocean Downs envisioned in the gambling bill that Gov. Martin O'Malley submitted and the state Senate approved.

Both the O'Malley administration and Senate President Thomas V. Mike Miller have said they don't want to see major changes to the slots legislation at this late date in the current special session of the General Assembly. But they have also said they will be flexible about the details as long as the legislature votes to put a slot machine gambling referendum on the November 2008 ballot.

OK, the long and the short of it is that nobody can agree on the details of the slots plan. Everybody wants the slots in differently places, mainly due to rampant NIMBY-ism.

And that's the problem with the slots plan as currently proposed. Making it a Constitutional Amendment will artificially limit the location of slots parlors to certain jurisdictions or, in the cases of one of the plans floating out there, limiting them to certain geographic coordinates within municipalities or defined areas. That is not the point of a Constitutional document. This amendment goes into specific details about plans that would make the location of slots parlors difficult or impossible to change since any change to those locations would require the approval of the voters.

A Constitutional Amendment on slots, at least one as specific as the legislators are currently discussing, is a problem hatched by legislators to address a concern the voters really don't have. The voters want the legislators to deal with the issues. The legislators want to pass the buck the voters. Ultimately, the legislative leadership is abdicating its responsibility to lead, and in doing so handcuffing whatever potential profit the state may have from slots revenue given the constraints of using a Constitutional Amendment as a change agent (and as political cover)...

District 31 Town Hall Meeting

The District 31 delegation (well, most of the District 31 delegation) held a Town Hall meeting at the North County Library in Glen Burnie. Senator Bryan Simonaire and Delegates Steve Schuh and Nic Kipke spoke on the issues and answered a number of questions from the audience on taxes and slots. Delegate Don Dwyer, as usual when facing the public, didn't bother to actually show up despite living a whopping third of a mile away from the North County library.

The crowd was a mix of Democrats and Republicans, with a few independents thrown in for measure. And just about every one of them was appalled by what the General Assembly is doing.

If the Democratic leadership thinks the people are going to forget about this anytime soon, they are sadly, sadly mistaken...

What you might not know...

What neither the hard copy Sun nor the Sun's website are telling you is that HB2 and HB5 passed third reader last night...when the House came into session at 11:07 PM and adjourned at 1:22 AM this morning.

Again, by holding major votes in the middle of the night, the legislative leadership clearly has nothing to hide, right?

Dooming Slots?

The O'Malley administration can't even propose slots without messing things up:

Maryland slot machine operators will pay one of the nation's highest casino tax rates - effectively 70 percent - if voters approve Gov. Martin O'Malley's plan to legalize the devices, and some industry analysts say that would mean low-end facilities catering mostly to the local population.

"It's going to limit how much you can give away to customers because the margin is so thin, and it will limit how much you can invest in the enterprise," said Lawrence Klatzkin, a gambling industry analyst and managing director of Jefferies Equity Research.

The margin is so tight, Klatzkin said, that Maryland would end up with "a lower-cost product with much more limited offerings" than slots casinos in surrounding states provide to their patrons.

"It doesn't mean that they won't make money," Klatzkin said, "but some of the richer, higher-quality customers will likely go to Dover, Del., or to West Virginia for more comps and giveaways and much better amenities."

And experts also note that the language probably artificially limits the places which slots could go:

Because O'Malley's proposal identifies what appear to be some specific sites, it is unlikely to lead to competitive bids for slots licenses, Eadington said. That would mean less potential revenue to the state. "It's written so only [certain people] are eligible to bid," Eadington said. "I do not advise it as a useful form of public policy."

All of this, of course, makes the proposal put forth by House Minority Leader Tony O'Donnell and Minority Whip Chris Shank much, much more sensible. The GOP proposal is much more likely to lead to competitive bidding and a larger pool of potential slot machine operators than the complicated, burdensome O'Malley plan.

In fact, considering all of the taxes, bureaucracy, and catches that the O'Malley bill puts on potential slot machine operators, I am invariably lead to this question: Does Governor O'Malley truly want slots, or does he merely want to put up a facade of supporting slots in order to justify massive tax increases?

Given O'Malley's past description of slots as a "gambling gimmick" that preys on the poor, I think that it's a fair question to ask...

Inconsistent

My colleague Streiff as noted went and contacted the offices of the sponsors of HB47 and HB48 that I wrote of yesterday. I am glad that Delegate Impallaria's office responded by providing a copy of the Delegate's Press Release on the matters.

What that doesn't address, however, is the nannystatist attitude that the press release conveys. Let's face it, if you read the release, basically the purpose of this legislation is to protect people from themselves by limiting their access to gambling facilities if they wish to play on credit or have gambling problems.

But aren't these the same kind of arguments that we as conservatives ridicule when liberals want to protect people from themselves as it relates to guns?

It seems that Delegate Impallaria is opposed to slots. And that is fine and a reasonable position for a conservative to have, even if it is one I disagree with. However, it is very hard to be a consistent conservative while proposing legislation that sounds like something I would expect from the far left of Maryland's Democratic Caucus...

I Don't Get This

Why are ostensibly conservative Republicans sponsoring HB47 and HB48?

HB47 would require that a special gaming card be obtained in order to use slot machines, including the use requiring proof of identification to include a credit card, thumbprint, or social security number in order to operate a machine. It also requires that operators of slot facilities prohibit the use of machines by gambling addicts, and requires the facilities to collect taxes for the state.

HB48 inhibits commerce by prohibiting a slots operator to accept payment by credit card.

Call me surprised that Delegates Impallaria, Boteler, Dwyer, McDonough, and Shewell are sponsoring such legislation. Particularly Dwyer for HB47, since this would allow slot machine operators to collect social security numbers, in direct contradiction to a 2003's HB134, of which Dwyer was the lead sponsor. That bill would have prohibited "a person from requesting, recording, or distributing the Social Security number or a portion of the Social Security number of an individual who is seeking to obtain consumer goods or consumer services as a condition of providing the consumer goods or consumer service" and would have authorized "the Attorney General to institute a civil action against a person who violates the Act to recover for the State a specified penalty."

Can somebody enlighten me as to why these conservatives are sponsoring such restrictive legislation?

A Gambling Gamble

Senate Republicans today said no to the O'Malley slots plan:

Senate Republican leaders said that they do not support a special session of the General Assembly and that if Gov. Martin O'Malley calls for one anyway that the GOP caucus would block his slots proposal.

Sen. David Brinkley, the Senate minority leader, chided O'Malley for not releasing the details of his proposal to legalize slot machine gambling in Maryland before calling for a November special session. Brinkley said he and his colleagues would be open to a slots bill, however, when the General Assembly convenes for its annual three-month meeting, which begins in January.

"Part of our concern is that the Republican votes for slots were being taken for granted," Brinkley said in an interview. "The whole package has been crafted without our input."

Presumably, the House Caucus is probably going to take a similar stance.

This is a calculated risk on the behalf of the Senate Caucus. During the Ehrlich Administration, the legislative Republicans were (along with Mike Miller) slots most ardent cheerleaders. Now, this has the potential to be seen as a course reversal for the sake of political posturing.

However, at the moment, this is really one of the few bullets the GOP has in our legislative arsenal. The fact of the matter is that Republican leadership in Annapolis wants a piece of the action on crafting this legislation. And O'Malley along with the legislative leadership, as they are hypocritically wont to do, have completely cut off Republican input in the name of crafting a "bipartisan bill." One of the only ways Republicans can throw a wrench into the works is to unite together and vote no during the Special Session.

Of course, this could backfire. If the slots bill does pass notwithstanding GOP objections, then everybody will have played the fool. And if the failure of slots leads to higher taxes, the Democrats can blame Republicans for not supporting the slots bill.

That being said, it is a smart tactical move. Not only will it (hopefully) get GOP leadership to the table, it may throw the brakes onto any tax increases. If Mike Miller doesn't get slots, I doubt that Administration will get their cherished tax hikes.

Great Minds Think Alike

Apparently, I'm not the only cat who digs the idea of table games:

As Gov. Martin O'Malley makes a pitch for slot machine gambling as part of his attempt to address a $1.7 billion budget shortfall, a powerful retail lobby is asking that he go one step further by pushing for table games.

The Maryland Retailers Association, miffed by O'Malley's inclusion of a state sales tax increase in his budget package, is suggesting instead that the state approve full casinos.

Without them, Maryland will lose customers to West Virginia, which has approved slots and table games in some jurisdictions, said Tom Saquella, president of the organization

"We would support legislation that would involve table games and full casinos," Saquella said. "We always felt that slots was good for the economy. We never bought this zero sum game."

Though an O'Malley spokesman and other lawmakers said this week that table games are unlikely to be part of any tax package approved by the General Assembly this fall or during the next legislative session, some argue that if the state legalizes slots in coming months, a debate over casinos would be imminent - and unavoidable.

And that is a debate that we should have. We should be debating the utility of slots, and debating the utility of table gaming. And the Retailers are even trying to play let's make a deal with the Administration on the gaming issue:

Representing about 700 businesses across Maryland, the retailers association is lobbying for O'Malley to include table games in any slots proposal. It is suggesting four locations: the Inner Harbor, National Harbor in Prince George's County, and still-undetermined sites on the Eastern Shore and in Western Maryland.

In exchange, the retailers want O'Malley to drop plans to increase the state sales tax from 5 percent to 6 percent. O'Malley hopes to raise $730 million by increasing the sales tax and extending it to health club memberships, property management and other services.

This is something that on which we need to have a full and serious discussion in Annapolis.

Why slots won't work

My esteemed RedMaryland colleague Streiff noted today that Governor O'Malley finally unleashed an expected piece of his budget-gap closing arsenal: slots. And yes, this proposal does come from the same governor who called slots a "gambling gimmick" so long ago. As much as I support the of legalizing slots, (even if O'Malley's idea of only having only state-owned machines is a little weird) this plan is too little too late.

One of the best reasons that Maryland could have introduced slots years ago was the competitive environment in which legalized gambling was available at the time. Charles Town, Dover Downs, and Delaware Park were the only games in town for legalized slot action. Now, with the opening of slot parlors in Pennsylvania, and the expansion of gambling operations at the West Virginia and Delaware tax, there are even more opportunities for Maryland bettors to vote with their feet and take their expendable income to Pennsylvania. Furthermore, the expansion of slot gambling in those states (particularly Pennsylvania) makes Maryland slot machine opportunities less appealing really only to Maryland gamblers and those in D.C. or Northern Virginia.

The General Assembly's reticence to support slot machine gambling in the past means that we pretty much missed the boat as far as sustainable income from slots parlors. The law of diminishing returns tells us that the expansion of gambling to include legalized slot machines is likely to merely split an already existing market for slot machine gambling. Yes, Maryland machines will take revenue from Pennsylvania, Delaware, and West Virginia parlors, but it also means that Maryland machines won't generate nearly as much income as everybody thinks they will.

I strongly support the idea of raising additional revenue through the expansion of legalized gambling in Maryland. However, there is no earthly way that slot machines alone are going to cut it. Slot machines may be able to save horse racing, but they are not the be all and end all of the budget debate.

If Maryland is going to be serious about raising revenue through the expansion of legalized gambling, there is really only one way to make that work. An idea that I support, but one that would not be warmly received by a lot of people.

The only answer is through the legalization of full casino gambling. I'm talking about table games: blackjack, poker, roulette, etc. That is the only way that Maryland can stand above the surrounding crowd in order to raise revenue through gambling expansion. It is a surefire way to take long-distance business away from the Atlantic City tables, and a surefire way to draw certain gamblers past the Pennsylvania, Delaware, and West Virginia slots parlors and into Maryland casinos. And you can only imagine the potential revenue available through the location of a full casino near Washington to draw in the national and international travelers who came through year-round.

Is full table gaming the solution to our budget problems? Heavens no. But it beats a slots only solution if the objective is revenue enhancement.

Slots or No Slots

Bud has a very good piece on his blog and at RedMaryland regarding slot machines and whether or not John Leopold will work to keep them out of Laurel Park.

I think ultimately that, given his proclivity to support tax increases, Leopold will ultimately side against slot machines, even if it means taxpayers getting stuck with higher income and sales taxes. Not exactly the best defense to appeal to Republican primary voters either for a re-election campaign or in his campaign for Governor...