And They're Off . . .
Slots are leading at the first turn, but concerns are moving up on the outside.
Sunday, August 17, 2008; B06
ADEBATE over slot machines that has simmered in Maryland for years is coming to a head with a November referendum on a proposal to install 15,000 machines. Maryland has a budget shortfall, and slots would provide a cash infusion -- but they could also lead to crime and gambling addictions. There are reasonable arguments on both sides; we hope that the coming campaign goes beyond slogans.
State officials estimate that slots would generate $600 million or more annually, half of which would go to education. Supporters of the referendum, including Gov. Martin O'Malley (D), the Maryland State Teachers Association and local unions, say that without slots the state will have to slash its budget or raise taxes. But the $600 million estimate was made last year, before the economy worsened. Casino revenue in many parts of the country, including neighboring states, is down, and Maryland slot-goers aren't likely to spend as much as the state expects.
The state estimates that Marylanders travel to Delaware and West Virginia to spend up to $400 million annually on slot machines. Machines in Maryland, they argue, would help recapture the lost revenue. But University of Maryland economist Robert Carpenter argues that the methodology used to reach that figure is unreliable. Mr. Carpenter also points out that residents may just divert dollars they spend on clothes, food and entertainment to slots. Such spending would produce higher tax revenue but not healthy economic growth for the state. Other state officials, including Comptroller Peter Franchot (D), also question the accuracy of the estimates.
And, of course, there's crime. J. Joseph Curran Jr., Maryland's former attorney general and the current governor's father-in-law, issued a report in the mid-1990s that concluded slots would lead to "violent crime, more crimes against property, more insurance fraud, more white collar crime, more juvenile crime, more drug- and alcohol-related crime, more domestic violence and child abuse, and more organized crime."
Advocates say that slots would save the state's sagging horse racing industry by subsidizing race purses. A report this month that showed most of Maryland racehorse winnings go to out-of-state owners debunked that argument. The state would give one-sixth of the money generated by slots, or about $100 million (it hopes), to the horse racing industry. Eighty percent of that money would go to out-of-state owners and Maryland's wealthiest breeders, leaving what amounts to pocket change for local owners struggling to get by. The report, by the Maryland Tax Education Foundation, a nonpartisan taxpayer advocacy group, also concluded that lucrative purses do not necessarily increase the number of bettors.
About six in 10 voters support the referendum, according to a January survey by the Baltimore Sun. But support softened when respondents learned more about the machines. For instance, 56 percent of respondents said they thought it was inappropriate to use state money to subsidize horse racing. Most Marylanders won't have pollsters calling to inform them about the issue. Let's hope that the lobbying groups don't drown out this debate by bombarding voters with promises they can't keep.
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