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Question 7: A Primer on Maryland's Expanded Gambling Referendum

A look at what's at stake—and how the battle is being waged.

Note: This article was originally published on Oct. 25 but is being featured again ahead of Tuesday's election.

WHAT IT'S ABOUT

Question 7 asks voters whether they favor a plan to expand gambling in Maryland that would:

  1. Allow table games in addition to existing slot machines;
  2. Increase the statewide cap on the number of slots;
  3. Permit a sixth casino in the state to be located in Prince George's County (most likely at National Harbor).

The ballot question is a result of legislation passed by the Maryland General Assembly during its 2012 special session (view the House and Senate roll calls) and signed by Gov. Martin O'Malley. Several other portions of the law are not subject to a referendum.

Slot machines have been permitted in the state since voters approved a gaming referendum (59 percent to 41 percent) in November 2008. Passage of Question 7 would mark a significant shift, however, bringing Maryland's casinos closer in line with those of Atlantic City and Las Vegas.

Under the law, casino operators would be allowed to keep a larger share of revenue—somewhere between 39 and 51 percent—as compensation for the added competition. But new business brought in by the expansion is expected to boost overall proceeds for the Maryland Education Trust Fund, which provides school aid to local jurisdictions.

According to The Washington Post, the nonpartisan Maryland Department of Legislative Services projects the current setup to generate $260 million for the trust fund this fiscal year and $580 million four years from now. Introducing table games and a sixth casino would add another $60 million to that tally this year and $199 million in fiscal year 2019, the DLS estimates (view a Post graphic on the projected changes).

Question 7 has fueled enormous advertising efforts by supporters and opponents alike. Leading the charge are casino operators that stand to benefit, including MGM Resorts International, CBAC Gaming LLC, and The Peterson Companies.

Those expecting to lose revenue—particularly Penn National Gaming, which runs the competing Hollywood Casino at Charles Town Races in West Virginia—are largely bankrolling the campaign against the measure.

 

WHAT IT SAYS, EXACTLY

"Do you favor the expansion of commercial gaming in the State of Maryland for the primary purpose of raising revenue for education to authorize video lottery operation licensees to operate 'table games' as defined by law; to increase from 15,000 to 16,500 the maximum number of video lottery terminals that may be operated in the State; and to increase from 5 to 6 the maximum number of video lottery operation licenses that may be awarded in the State and allow a video lottery facility to operate in Prince George’s County?"

  • For the Additional Forms and Expansion of Commercial Gaming
  • Against the Additional Forms and Expansion of Commercial Gaming

 

WHAT THEY'RE ARGUING

In support

  • The measure will funnel tens of millions of new dollars into the Maryland Education Trust Fund, which supports schools in communities across the state.
  • The law will prevent a significant amount of gambling revenue from leaving Maryland each year while drawing in many out-of-state customers.
  • The expansion will create new jobs, including both short-term construction work and permanent positions.
  • With the introduction of a casino, National Harbor can become a true resort destination, bringing additional non-gambling income into the state.

In opposition

  • The measure won't actually stimulate Maryland's schools, as the state formula for disbursing educational funding is not directly affected by the new law. Instead, the trust will simply be used to free up existing revenue streams for other purposes.
  • The new law is effectively a giveaway to the companies that run the casinos, offering lower tax rates than they pay now and opening the door to further breaks in the future.
  • There's little evidence that the changes will generate as many jobs as supporters claim—or that those jobs will go to Maryland residents.
  • Gambling has a disproportionate impact on low-income communities and breeds corruption. It should not be relied on further as a source of revenue.

 

WHAT THEY'RE WRITING

In support

In opposition

Unaligned

 

WHAT THEY'RE REPORTING

Sandy Irving October 25, 2012 at 04:18 PM
Anyone know what "lower tax rates" means? If the measure passes, will the casino companies pay lower taxes than other non-gambling businesses in the state? Or lower taxes than gambling businesses now pay?
John Davisson October 25, 2012 at 04:46 PM
Hi Sandy-- 'Lower' here means relative to what they're paying now—not relative to other businesses. At the moment, 67% of the revenue Maryland casinos bring in goes to the state for one purpose or another. If question 7 is approved, that figure would eventually drop to 49-61%, depending on the casino. The Post has a couple of helpful articles that lay out the before/after rates: http://www.washingtonpost.com/blogs/maryland-politics/post/the-house-rules-for-md-slots-operators/2012/08/14/705bb2e4-e60f-11e1-8f62-58260e3940a0_blog.html http://www.washingtonpost.com/local/dc-politics/maryland-gaming-revenue-projections/2012/10/22/1a9a40c0-1c9a-11e2-9cd5-b55c38388962_graphic.html --John
jag October 25, 2012 at 05:36 PM
"The measure won't actually stimulate Maryland's schools, as the state formula for disbursing educational funding is not directly affected by the new law. Instead, the trust will simply be used to free up existing revenue streams for other purposes." I love that this this the "con" that all the commercials (funded by casinos in WVA/Penn. who want to keep all the money going to their casinos in their states) bring up. As if having an extra couple hundred million a year to help close the state budget gap without having to cut funding for law enforcement, transportation, etc. is a bad thing!
MocoLoco October 25, 2012 at 06:25 PM
Awesome. Thanks, Patch! This is the first even-handed analysis I have seen. I'm ticked off that the casinos (on both sides) have drowned out the merits of this referendum with a flood of ads. The problem is that a vote for or against rewards one casino or another.
Joni Williams October 26, 2012 at 12:12 PM
Thank you Patch and John Davisson for a great article. So far this has been the best information I have seen about question 7. It is refreshing to get an article that seems like it is truly unbiased. I would love it if Patch offers the same kind of coverage on the other issues we will be voting on.
Pachacutec October 26, 2012 at 04:51 PM
Very, very interesting how this has blown up as SUCH an urgent issue all of a sudden! Why now? At any rate - some years back, when local charities, etc., had casino nights, the counties and the State weren't getting any of the money and the games were closed down. There was all kinds of pious bleating from government officials about how the games were taking money from the poor people, how criminal elements were involved in gaming, and so on. But now that the governments are pushing for games, everything is ok? Hypocrisy at its finest.
Brigitta Mullican October 28, 2012 at 05:00 PM
Your comment is interesting at best.
Brigitta Mullican October 28, 2012 at 05:07 PM
Regarding the statement, "Passage of Question 7 would mark a significant shift, however, bringing Maryland's casinos closer in line with those of Atlantic City and Las Vegas." I ask, "who knows how bad the economy really is in Las Vegas? I was told the housing market is worst in Las Vegas than most other states. Gambling hasn't solved their problems. My concern is how the money is collected and allocated. It is difficult to believe what will actually happen. I have received many calls on this question. It is very interesting how much money is spent to get the message out to voters. Wish that money could be spend on the deficits or shortfalls of budgets.
Frank November 03, 2012 at 11:39 AM
Still, it's a shell game scam to say "money for schools, THINK OF THE CHILDREN". I think adding table games is a good idea, and I don't care one way or the other about National Harbor, but the measure's backers are lying to our faces, so I'm inclined to oppose them on principle. Try again next year with an HONEST proposal that respects our intelligence.
Frank November 03, 2012 at 11:48 AM
To be fair, the housing crash in Vegas isn't related to gambling. It's because zillions of people built property there at the same time thinking it was a good investment, then they all realized "wait, we're in the middle of the f***ing desert with giant neon signs, a bunch of showgirls, and no water".
Al-Tony Gilmore November 05, 2012 at 03:52 PM
Why is there no discussion on the percentage of each gambling dollar that is won by the Casinos --- over 85%. We have usury laws for lending money, but nothing to protect the gambler as a consumer. There is a reason why organized crime latched on to the gambling industry. It's legalized robbery. Slot machines need to change payout rates. Left unchanged --- we understand why the casino industry spends hundreds of millions just to get their feet in the door. There is "no risk" that a Casino will ever lose money. What other business has that guarantee. Al-Tony Gilmore Bethesda, Maryland
RC November 06, 2012 at 12:51 AM
I hear all of these negatives to it - like that it stipulates Union Labor and that labor will come from outside MD. So, where does it stipulate that and where are the specifics? And, certainly their will be some jobs for MDers. If there are other jobs created because of this, even outside of MD (if need-be) isn't that a good thing too. Like taxes expected to generate from hotel taxes, extra gaming/entertainment taxes, etc... I just am so bothered that this info. is not readily available, at least not that I've found. Can you point me in the right direction for full information on the exact legislation this refers to?

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