In 2008, Maryland voters approved a constitutional amendment to allow slot machines, or video lottery terminals (VLTs), in five locations across the state. The proposal was pushed by Governor Martin O’Malley (D), who warned that unless it passed, funding would have to be cut for disabled caregivers, the Baltimore Zoo, helicopter search-and-rescue efforts, and 283 police officers. And since the slots were going to be a horseracing tracks, that industry would benefit too. (Some have since gone bankrupt.)
Instead of $600 million a year, all that’s ensued are lackluster interest from potential operators and zoning battles. In return for the monopoly, the local slots operator has to make the parlor as drab and entertainment-less as possible, pay workers a high wage, pay a bunch of fees (for the Baltimore casino, over $20 million), and fork over 67% of the take to the state. So far, one location (in Western Maryland) has received no bids and the others only a handful. (Officials are lowering their demand of the proceeds to merely 64.5% in hopes of attracting a bidder.) The Perryville slots parlor is due to open in September and one more by the end of the year.
On the zoning side, some officials in wealthy Anne Arundel County felt cheated when the slots parlor they thought was going in some run-down racetrack was actually planned for Arundel Mills Mall, a popular shopping center. After trying to block the slots parlor from being with 1,000 feet of anything else, opponents took to the ballot.
My colleague Alicia Hansen summarized it well:
What lesson should other states take from this? Yes, video lottery terminals have been prodigious revenue raisers in a number of states, but they also have vocal critics, for good reason. And even those who can overlook the tax policy problems with state-run video lottery can’t reasonably overlook the debacle in Maryland. Starting a state-run enterprise to save another industry or to raise revenue in a less-transparent way than explicit taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. increases is never a good idea. In other states, proponents of video lottery claim success (although revenue has dropped slightly in FY2009) but states that are considering starting a video slots plan should learn a thing or two from Maryland.Share