Blair Lee: Mending Humpty Dumpty -- Gazette.Net


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Maryland’s gambling expansion, like Humpty Dumpty, took a big fall last week. And now all the king’s horses and men are trying to put gambling expansion back together again.

Humpty’s fall was a big shock because it looked like the skids were well-greased for a gambling expansion deal: MGM Resorts International announced an agreement to build an $800 million casino at National Harbor, several consultant studies dutifully reported that gambling expansion was an economic winner and a “work group” of state lawmakers was working out the political details behind closed doors.

It sure looked like the expansion deal — an additional gambling venue at National Harbor, legalizing table games (craps, roulette, black jack) at all six slots venues and lowering the state’s share of gambling proceeds to make the gambling operators happy — was a sure bet.

But the deal rolled snake eyes because House of Delegates leaders, including Speaker Mike Busch, worried about how voters might view a high-profile special legislative session in May to raise income taxes followed by a high-profile special session in July to lower taxes on the gambling industry.

But lowering the state’s share of gambling revenues was the key to the whole deal: Giving some of the state’s revenues to the five existing casino venues was the payoff for their acceptance of the sixth new, competitive National Harbor casino. Without the state’s bribe, the five slots venues would fiercely oppose the addition of National Harbor.

Mending Humpty Dumpty now looks like a long shot; Gov. Martin O’Malley gives it 50/50 odds. One problem is the acrimonious political fallout. When a gambling expansion bill, pushed by Senate President Mike Miller, died in the waning hours of this year’s regular legislative session, O’Malley blamed Miller for holding the state’s budget’s revenue bill hostage, causing a fiscal crisis. In turn, Miller blamed Speaker Busch for “misleading” him that they had a gambling bill/revenue bill package deal.

Then, last week, when the latest gambling deal went bust, O’Malley blamed Busch for being in the pocket of wealthy developer David Cordish, who just opened the state’s largest casino, Maryland Live!, in Busch’s county and who never signed onto the gambling expansion deal. Adding to the acrimony, PG County Executive Rushern Baker, who desperately wants a casino in his county at National Harbor, called Busch a liar.

Sidebar: Didn’t the media and the Democrats blame the 2005 failure of slots legislation on Republican governor Bob Ehrlich’s inability to harmonize with the legislature?

OK, let’s get back to mending Humpty Dumpty. Here’s a strategy that might satisfy Speaker Busch while moving the expansion deal forward:

After the gambling expansion bill/revenue bill package failed on the last day of this year’s regular legislative session, O’Malley and the legislative leaders wisely separated the two bills into two special sessions — one in May to pass the revenue bill, the other in July to deal with gambling.

Likewise, now that the gambling effort is stalled, why not separate the gambling issues that are causing the impasse? You see, the different elements of the gambling deal travel much different paths to approval because of how the original 2007 slots legislation was written.

If they’d wanted to, Gov. O’Malley and the legislature could have legalized slots in 2007 by simple legislative action (i.e., passing a bill). But, believe it or not, back then many liberal lawmakers were morally opposed to slots. So, instead of voting to legalize slots, they voted to legalize slots by way of an amendment to the state constitution, which requires voter ratification at the next (2008) general election.

Crazy? Yes, but it gave the liberals political cover. Now they could say, “I didn’t vote for slots, I simply voted to let the voters decide.”

Unfortunately, enshrining slots in the constitution means that to expand gambling, another constitutional amendment, approved by the voters, is necessary.

That’s the reason for the big rush, in order to put a gambling expansion constitutional amendment on the November 2012 ballot, the legislature must OK the amendment by mid-August, the printing deadline for election ballots. The next chance for voter approval isn’t until the 2014 general election.

But, no surprise, the devil is in the legislative details. Back in 2007, O’Malley and the legislature limited the slots constitutional amendment to three items: legalizing slot machines, limiting their number to 15,000 and designating the five slots locations.

All the other gambling issues — the state tax rate, operating hours, etc. — were left out of the constitutional amendment and, thus, can be changed by simple legislative action.

So, if Speaker Busch is nervous about lowering taxes on casinos so close to raising taxes on taxpayers’ incomes, here’s a solution: Call a special session to send the voters a November 2012 constitutional amendment that simply permits table games and adds the sixth casino at National Harbor.

Lowering the casinos’ tax rate and mollifying the five other casino venues are matters for the legislature, not the voters, and can be deferred until next January’s legislative session, long after the voters have approved the constitutional amendment and have forgotten about the income tax hikes.

Sounds like playing the voters for suckers? You bet, but that’s how casinos operate and, after all, isn’t Maryland’s State House just a big political casino?

Blair Lee is CEO of the Lee Development Group in Silver Spring and a regular commentator for WBAL radio. His column appears Fridays in The Gazette. His email address is blair@leedg.com.