August 2012 Special Session on Gaming in Maryland
On August 15, 2012, Governor O'Malley joined House Speaker Busch and Senator Garagiola, representing Senate President Miller, to sign a bill addressing gaming in Maryland. On this page you will find information pertaining to the session, and related documents.
“By finally resolving this issue of gaming in Maryland, we have an opportunity to generate more than $200 million for our #1 ranked public schools, create 2,300 additional, permanent jobs, and keep Maryland’s facilities competitive with surrounding states.
The legislation passed by the General Assembly will create predictability in the marketplace, protect local and city aid being generated at existing sites, ensure authorized facilities are able to be built, and allow the people of Prince George’s County the opportunity to decide whether they want a sixth site for the benefit of their county and revenue base.”
-- Governor Martin O'Malley
We have an opportunity to create thousands of new construction jobs and as many as 2,000 permanent jobs. By acting now, we also have an opportunity to secure additional revenue for Maryland's public schools over the next two years.
It is time to resolve an issue that has consistently been divisive in order to move forward to the other important issues facing the State. The legislation will create predictability in the marketplace, make Maryland’s gaming program competitive with other states, protect local and city aid being generated at current sites, ensure authorized facilities are capable of being built, and allow the people of Prince George's County to decide at the ballot whether they want a sixth site for the benefit of their county.
How soon could there be table games in Maryland? How much revenue will that generate? At what rate will those table games be taxed?
If a majority of Maryland voters vote in favor of the question to expand gaming on the November 2012 ballot, the State Lottery and Gaming Control Commission shall immediately begin the regulatory process to authorize table games. It is estimated that Maryland could have table games by early 2013.
According to the fiscal analysis provided for the Workgroup to Consider the Expansion of Gaming, table games will likely generate approximately $45-51 million per year in additional revenues to the State. The proposed bill would generate that additional revenue by taxing table games at 20% and dedicating those dollars to the Education Trust Fund. If a sixth facility opens, that distribution adjusts to the benefit of the local jurisdiction in which the facility is located -- with 5% of the proceeds to the jurisdiction and the remaining 15% to the Education Trust Fund.
Yes. The Workgroup recommended establishing a Gaming Commission, with an expert Executive Director, in order to protect the State’s interest. The proposed legislation would re-constitute the current State Lottery Agency as the State Lottery and Gaming Control Agency, with a State Lottery and Gaming Control Commission therein. Members would be appointed by the Governor, with the advice and consent of the Senate, and would be required to have substantial experience in a profession relating to fiscal matters or economics. The Commission will also consult with an outside consultant to provide continual analysis of the gaming industry.
Specifically, how does the legislation impact Baltimore City and its plans to build a facility? How soon could that move forward?
On July 31, 2012, the State’s Video Lottery Facility Location Commission voted unanimously to approve Caesars Entertainment’s application to build a $310 million casino near M&T Bank Stadium in Baltimore. That facility is expected to open in the second quarter of 2014. Representatives from that facility have consistently testified in favor of the changes contemplated in this legislation. If a majority of voters approve the expansion of gaming, the Baltimore City facility will have the opportunity to include table games at their facility.
Does the legislation authorize a casino in Prince George’s County? If so, how soon could plans for a casino move forward?
The legislation authorizes an additional site in Prince George’s County only if: (1) a majority of Maryland voters vote in favor of the question to expand gaming on the November 2012 ballot; and (2) a majority of voters in Prince George’s County approve the same question. The Commission may not permit the operation of that facility before the earlier of July 1, 2016 or 30 months after the Baltimore City facility is open to the public.
The legislation does not specify National Harbor but allows for a competitive bidding process, contingent on local zoning approval, thereby affording competition, transparency, local control, and maximum return to State taxpayers
Is there a provision minimizing the impact on Baltimore City and Anne Arundel County if a Prince George’s County casino is built?
Yes. The bill includes a “hold harmless” provision to ensure that Baltimore City and Anne Arundel County’s local impact grants are not reduced because of the addition of an additional site.
PricewaterhouseCoopers, a gaming consultant to the State, estimated that a new Prince George’s County site will have an impact on facilities in Anne Arundel and Baltimore City. The magnitude of the impact would warrant an increased operator share of 6-10%. In recognition of that fact, if a video lottery facility is licensed in Prince George’s County, the Baltimore City and Anne Arundel County facilities may retain an additional 5% of their video lottery proceeds for marketing, advertising, promotional costs, and/or capital improvements to their facilities. This will help them remain competitive in a new market, and maximize the return for the State.
After thoroughly reviewing all relevant data and reporting to the Governor and General Assembly, the State Lottery and Gaming Control Commission, with legislative oversight, may also increase the Baltimore City and Anne Arundel facilities’ percentage by not more than 5% percent of the video lottery terminal proceeds. It is in the State’s interest to preserve viable facilities. Importantly, this expansion of sites will generate significant new revenue for the Education Trust Fund.
The percentage of the video lottery proceeds distributed to other licensees is as follows:
- Rocky Gap: Current law provides that Rocky Gap will receive 50% of the video lottery proceeds for 10 years and, after 10 years, 43% provided that each year 2.5% of the proceeds is used for capital improvements.
- Ocean Downs: The legislation provides that, as of July 1, 2013, Ocean Downs will receive a percentage equal to 43% of the video lottery terminal proceeds if the facility has fewer than 1,000 machines and spends at least 2.5% of those proceeds annually on capital improvements.
- Perryville: Current law provides that the Perryville facility receive 33% of the video lottery terminal proceeds.
The legislation also provides that licensees receive an additional 6% of the proceeds if they own or lease the video lottery terminal devices and associated equipment and software. This will generate significant savings for the State and the Education Trust Fund, as the State is currently responsible for purchasing or leasing the machines – at a cost equivalent of 13% of the video lottery terminal revenues.
Can Maryland support additional facilities while existing facilities are seeing a decline in revenues?
Yes. PricewaterhouseCoopers and the Department of Legislative Services concluded that Maryland can support a 6th facility. The fiscal analysis provided to the Workgroup to Consider the Expansion of Gaming indicated that the addition of a 6th site, along with the other changes provided in the legislation, could generate up to $223 million per year to the State.
Will the state continue to lease the video lottery terminals? At some point, will the state turn over responsibility/ownership to the operator?
The State will continue to own the video lottery terminals at the Allegany County and Worcester County facilities. After March 31, 2015, the facilities in Anne Arundel and Cecil County will own or lease their own machines. This transfer of ownership is expected to generate tens of millions of dollars in savings to the State, all of which shall be appropriated to the Education Trust Fund.
The ban would restore confidence that important decisions are being made based on expertise and analysis and without unnecessary distractions. Similar legislation has been introduced in the Maryland General Assembly in previous legislative sessions.
Yes. In current law, there are provisions that require facility operators to meet certain State and local MBE goals. These will continue to apply. In addition, the bill will require an applicant seeking investors to seek out minority equity investors and require the Governor’s Office of Minority Affairs to assist applicants and potential minority investors with these requirements. The bill will also allow local jurisdictions to apply provisions regarding local minority business participation and local hiring requirements to these projects, to the extent permitted by the Constitution.
The bill will provide the same level of funding to the racing industry as is currently expected to be generated by the existing VLT program. This is done by lowering the percentage dedicated to purses, but applying it to 6 sites (with the addition of Prince George’s). Additionally, the Race Track Facility Renewal Fund percentage is reduced, but extended for additional years, to generate a comparable amount of money, while preserving more money for the Education Trust Fund in the near future. Making these changes preserves the money originally dedicated to racing, while generating an additional $20 million a year for the Education Trust Fund.
Letter from Workgroup
The study has concluded and the workgroup reports its findings
Overview of Consensus Recommendations
Five recommendations and the rationale behind them