Slots, like Barack Obama, were supposed to save us. As Obama’s tax-challenged cabinet nominees reveal, the man is not perfect. And as the paucity of bids received by the state to build slots facilities shows, Gov. Martin O’Malley’s delusional projections for $1.3 billion in annual slots revenue by 2013 will remain a dream.
Only six companies submitted proposals for the five available licenses. The lack of competition means a smaller take for state taxpayers. So does the overall number of machines. After deducting machines from incomplete proposals, the total number of machines proposed is 6,550 — or less than half the maximum allowed under the constitutional amendment passed in November. That makes the projected $660 million for schools and $75 million for “local impact grants” and $34 million for “racetrack renewal” as realistic as thinking Republicans can win elections in Baltimore City.
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This is not just a theoretical exercise, because those dollars have already been spent. If slots don’t provide them, they must come from someplace else. And with the case of Rocky Gap State Park, one of the locations for which the bid was incomplete, it means taxpayers will immediately be on the hook again to finance the perpetually money-losing resort. That means higher taxes or more appeals to the federal government for help. And while giving tax credits to people who do not pay taxes, a feature of the proposed “stimulus” bill, may seem crazy, bailing out slots parlors may even be too crazy for Congress. So that leaves us with higher taxes, as truly trimming state government is anathema to most state legislators.
We have long supported slots in our three-year run at The Examiner. We do not think other states should reap revenue for their treasuries from Maryland citizens that should be coming to us. But projecting wildly optimistic revenue that gaming economists around the country questioned even before the economic collapse this summer was a small lie that has now morphed into a huge one because of the credit freeze and tough times for the gaming operations anticipated to bid on the locations.
Add the prohibitive 67 percent tax rate for operating slots casinos, and the projected windfall was doomed from the start. How ironic would it be for the one thing supposed to save us from new taxes to be the reason legislators hike them?
