Republicans push to auction off Maryland casino license

Originally published in the Washington Examiner

MPPI in the News Matt Connolly | Examiner Staff Writer Feb 7, 2013

Some Maryland lawmakers are pushing for the state to auction off its coveted sixth casino license to the highest bidder.

The bill, sponsored by 19 Republican delegates, would award the license "to the applicant whose application represents the highest prospective total revenues to be derived by the state." Maryland put out a call for applications on Feb. 1, setting a May 10 deadline.

"Under current law, if you are the successful bidder, all you have to do is pay a one-time $18 million fee to the state," said Del. Mark Fisher, R-Calvert County, a sponsor. "Why is that necessary when we're leaving as much as $450 million on the table?"

The new casino in Prince George's County was approved by voter referendum in November after a bitter fight that cost pro-expansion MGM Resorts International and anti-expansion Penn National Gaming more than $90 million combined. While MGM has made no secret of its intention to bring an $800 million luxury casino to National Harbor, Penn spokeswoman Karen Bailey said the company is still considering its own bid.

Under the current system, casino operators are charged a flat fee of $3 million for every 500 slot machines. Bidders are chosen based on their planned location as well as the economic and development potential of their proposals.

Fisher cited a study from the nonpartisan Maryland Public Policy Institute that said a casino company could pay $500 million for the license and still turn a profit. Institute President Christopher Summers said the ideal scenario would be a system in which the company that promises the most money upfront and the highest rate of slot money for the state would be handed the license.

"Whoever is the holder of this license basically has a license to print money," Summers said. "For once, Maryland government would be employing market forces and allowing the market to work."

Some experts pushed back against the $500 million figure -- Maryland gambling analyst James Karmel called it "prohibitive," adding that the state already has high gambling taxes.

Even if the fee isn't that high, Fisher said, the state could do better than $18 million.

"If the industry spent $100 million during the referendum process, wouldn't they be willing to spend $100 million on the license?" he said.

A spokeswoman for Gov. Martin O'Malley said it was "unlikely" that the casino licensing fee structure would be changed this far into the process.

Maryland's three current casinos brought in $44.3 million in January -- down from $45.2 million in December. Nearly $36 million, or 81 percent of January's total revenue, came from Maryland Live! in Anne Arundel County, a figure almost identical to last month's haul. January was Maryland Live!'s first full month of 24/7 operation.

Hollywood Casino Perryville near the Delaware border made $5.5 million in revenue, well down from the $9.8 million it made in January 2012, while the Casino at Ocean Downs near Ocean City made $2.9 million, down from $3.1 million a year earlier.