Finally. After a month of tax talk, the governor is pushing a way to raise money for the state that doesn?t include forced raids on residents? bank accounts: Slots. On Tuesday, he said he favors adding about 9,500 slot machines in four locations across the state.
We have long favored slots as a way to capture money that residents now spend in neighboring states. Gov. Martin O?Malley says it could raise about $600 million a year for Maryland.
But the key is in the details. O?Malley did not release the minutiae of the plan but said he favors state ownership and would use the plan that passed the House of Delegates in 2005 as a model. That calls for four locations, none in Baltimore ? which would exclude Pimlico from the cash cow.
O?Malley should rethink state ownership of slots. The state has no expertise in running businesses. And if the $1.7 billion “structural” deficit can serve as an example of its financial expertise, it should not even touch the idea.
Instead, the state should auction licenses to those who would return the highest portion of the proceeds to the state ? a proposal outlined by the Maryland Public Policy Institute in its 2003 report, “Legalizing Video Slot Gaming in Maryland: A Business Analysis.”
As the report says, that would allow many groups to bid for them, not just mega corporations that could afford to put cash up front if the state auctioned the licenses to the highest bidder. A “reverse auction” would also allow the state to find out how much the licenses are really worth. A number of state proposals set the split between license holders and the state arbitrarily without much analysis outside of talking to those who would benefit from them.
That process would also allow those who know how to run slot operations to do so instead of asking the state to learn a whole new business. Besides, do we really need unions to dictate slot operations as surely would happen if the state owned them?
If legislators jump the philosophical hurdle and pass slots, they must do so in a way that will best fill the state treasury. Auctioning licenses to those who would return the most money to the state is the clearest path to that goal.
