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Analysis Concludes Md. Can Support Prince George’s Casino

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ANNAPOLIS, Md. (AP) — Maryland’s gambling market could support a casino in Prince George’s County and generate more money for the state by allowing the new site and table games there and at five casinos currently allowed under state law, state analysts and consultants concluded in a report released Tuesday.

The joint study by the Maryland Department of Legislative Services and PricewaterhouseCoopers found that the amount of gambling expected to occur in Maryland is well within the thresholds met or exceeded in other metropolitan areas around the nation.

“And on top of that, our analysis does conclude that significant additional revenues could be generated by the addition of gambling outlets,” said Warren Deschenaux, the General Assembly’s chief budget analyst. “The question then is: What we do with those additional revenues?”

It’s hard to know how much money a new casino and table games would bring in. Lawmakers are considering changes in the state’s unusually high 67 percent tax on gambling revenues.

The report projects the state could receive about $101 million more annually for education and lottery revenue with no additional compensation to operators beyond new table game revenues and a regular Prince George’s facility. It’s also unclear how much would be made from table games, because lawmakers would need to decide how much they would tax those. A 20 percent tax rate on table games would raise about $50 million a year for the state at the five currently authorized locations and $60 million with a Prince George’s facility.

“It would be hard not to get to $100 (million) making reasonable allowances,” Deschenaux said, after he was asked to consider whether the projections turn out to be high.

A work group comprising mostly lawmakers and members of Gov. Martin O’Malley’s administration is examining ways to expand gambling. The governor has indicated he would hold a special session next month to take up the issue, if the group can reach a consensus.

Deschenaux said the analysts who made the projections were working in a peculiar environment. That’s because they do not have a lot of hard data on actual revenues. Only two of the five now-legal casinos have been open for more than a year, one in Perryville and another in Berlin. The state’s largest, in Anne Arundel County, only opened last week. Two more casinos — one in Baltimore and one in western Maryland — are still in the works.

“So what we will be sharing is our best judgment in a world of uncertainty,” Deschenaux said.

While pondering expansion, the work group heard Tuesday from William Rickman, the owner of the Ocean Downs casino in Berlin, which lost $2.5 million in its first year of operations.  

Rickman told the panel that the demographics of his location near Ocean City is strongly susceptible to seasonal dropoffs. He said he did not believe his casino would remain in business with only 33 percent of the gambling proceeds. He said Ocean Downs needs more like 50 percent to make a decent return.

“If you want us to only limp by, we need to be about 45 percent,” said Rickman, who said he expects significant loses again this year. “If you want a failure in the future, it would stay where it is now and there would be a failure in the future.”

A key part of the debate will involve how much lawmakers lower the tax rate to help allay losses at other venues caused by a casino in Prince George’s. For example, the report released Tuesday estimates the Anne Arundel casino would lose $37 million in slot machine revenue, and Baltimore would lose about $21 million.

However, the report projects that adding table games would increase revenues overall by $31 million at the Anne Arundel casino and $12 million at a Baltimore facility.

But the Cordish Cos., which owns the Anne Arundel casino, contends it’s too uncertain how a Prince George’s venue could potentially affect the others. Cordish underscores that revenue projections for Ocean Downs were off by about 50 percent.

(Copyright 2012 by The Associated Press. All Rights Reserved.)

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