Perhaps the best way of describing Maryland’s gambling debacle is by using wagering terminology:
Shell gamesNow you see it, now you don’t. State-sanctioned gambling was sold to the voters with a bunch of promises that never materialized or were phony to begin with.
For instance, remember how we needed slots to save the horse-racing industry? The slots parlors were supposed to be at Maryland racetracks (“racinos”) to bring gamblers back to the tracks like at Dover Downs, Delaware and Charlestown, W.Va.
Well, how many of Maryland’s five authorized slots parlors are at racetracks? Only one, at a harness track near Ocean City. Instead of slots at Laurel, Pimlico and Rosecroft, we have slots at a suburban shopping mall, a western Maryland golf course, in downtown Baltimore and along I-95 in Cecil County. And the last time I was at National Harbor, I didn’t see any race horses.
But the big sell was slots as a pain-free way of increasing school spending (“slots for tots”) without raising taxes. However, just the opposite happened — taxes kept increasing, while education spending didn’t.
With great fanfare, Gov. Martin O’Malley and state lawmakers created the Education Trust Fund, into which most of the state’s slots revenues are, by law, directed. But it’s a shell game — O’Malley is using the new slots money to replace, dollar for dollar, the education money that was coming from the state’s general fund. He’s simply switching funding sources; funding levels stay the same.
By using slots money to supplant, not increase, school aid, O’Malley frees up general fund dollars for noneducation spending elsewhere. In fact, the state actually has decreased school spending by shifting $250 million of its teacher pension obligations onto the counties!
This year, O’Malley and the legislature imposed a “maintenance of effort” mandate on the counties — each county’s school spending level must never decline. But state lawmakers chose not to impose the same mandate on themselves.
Much is made of Maryland’s 67 percent tax on slots operators, one of the nation’s highest. But no other state buys the slot machines for the operators. That’s right, Maryland’s taxpayers are spending $133 million to buy and lease the 15,000 slots machines authorized at the five slots venues. And the taxpayers are on the hook, again, when the machines need replacing because they are “outdated” (i.e., the operators decide they want new ones).
Wild cardsBack in 2007, state legislators didn’t have the courage to legalize slots. Instead, they tossed the decision to the voters. But because state law provides no vehicle for the legislature to delegate its decision-making to the voters, state lawmakers were forced to take the only route available — sending the slots issue to the voters as a constitutional amendment which, first, requires approval by a three-fifths vote of each legislative chamber.
Some gambling issues (limiting gambling to slots, only; limiting the slots venues to five, only; the exact slots parlor locations; limiting the number of slot machines to 15,000) were enshrined in the constitutional amendment. So, any change means going back to the voters.
However, the other gambling issues (the state’s tax rate on slots operators, operating hours, etc.) were left to the legislature to change by simple statute. So last year when the state wanted to lower the tax rate from 67 percent to 50 percent for the Rocky Gap slots operator, it merely took an act of the legislature.
The 2007 slots constitutional amendment contained sneaky language enabling the legislature to expand gambling (table games, additional venues) by sending any expansion issues to the voters by a simple legislative majority, not by the three-fifths vote otherwise required to launch a Constitutional Amendment. This makes expansion much easier.
The jokerSo, somebody was doing some very sophisticated long-range planning for gambling expansion. But they made one colossal blunder that may doom future expansion efforts.
Here’s the joker: The same 2007 constitutional amendment that lets the legislature send gambling expansion to the voters says that any such referendum must be approved “by a majority of the qualified voters in the state.”
Please read that phrase carefully. It doesn’t say “by a majority of the voters who participate in that election” or “by a majority of the votes actually cast on that measure.”
It says that gambling expansion must be passed by a majority of all Maryland’s “qualified voters” whether they vote in that election or not.
The only ambiguity is whether the universe of “qualified voters” means all Marylanders who are 18 years or older, or whether it means all Maryland’s registered voters. Either way, obtaining a majority is almost impossible: If 1 million voters are qualified to vote, then a majority is 500,001 voters — even if only 400,000 voters actually vote in that election.
Attorney General Doug Gansler has issued his opinion that the “qualified voters” language is a typo — state lawmakers meant to say “a majority of the votes cast on the measure.” But Maryland’s courts won’t wish away the law’s plain English language, like Gansler is doing. The courts will say that someone screwed up and the legislature, not the courts, must fix it.
So, in addition to all the political hurdles, this legal roadblock makes the odds of Maryland gambling expansion a handicapper’s long shot.
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 email@example.com.