Maryland's last casino
But it opens at a time of intense competition for gambling dollars — not just in Maryland, where two existing casinos are within an hour's drive, but all up and down the East Coast where gaming, once largely confined to Atlantic City, has become ubiquitous. Meanwhile, younger people aren't devoting the entertainment dollars to gambling the way older generations did, and they certainly aren't playing the slots, the most lucrative part of the business for casinos and state tax collectors alike.
We certainly hope to be proven wrong about this, but count us as skeptics that this latest expansion of gambling will pay off for Maryland taxpayers on anything close to the scale we were promised when the state voted in 2012 to allow it. There's already plenty of reason to doubt.
Maryland's existing casinos — Maryland Live in Anne Arundel County, the Horseshoe Casino in Baltimore, Ocean Downs on the Eastern Shore, Hollywood Casino in Cecil County, and Rocky Gap in Western Maryland — have been producing revenue at or near record levels for the last several months, topping out at $104.4 million in May. But the state is nonetheless reaping far less revenue than state fiscal analysts estimated we would by this point.
When voters decided whether to authorize a sixth casino in Prince George's County and allow table games (along with a variety of other changes to state gaming law), budget analysts projected that Maryland would net $662.5 million for its Education Trust Fund in the fiscal year that ended in June — $612.6 million from slots and $49.8 million from table games. The good news is that table games are far more successful than analysts predicted. The bad news is that the state gets less than half as much of the table game revenue as it does from slots. The result is that Maryland got only $402.5 million for education that year, 40 percent less than it expected.
That reality now forms the baseline for expectations when MGM comes online, and the picture isn't pretty from the state's perspective. The opening of MGM triggers provisions in state law that drop the slots tax rates for Maryland Live and the Horseshoe to help them cope with the new competition; Maryland Live will get to keep 49 percent of slots proceeds, up from the current 41 percent, and the Horseshoe's take will go up from 39 percent to 46 percent. Those shares for the casino operators could go up even more in the coming years depending on how much MGM hurts their business, and Hollywood Casino could get up to a 5 percent bump in its take, too.
Consequently, the new projections adopted by the Board of Revenue Estimates in September forecast a nearly $170 million increase in revenue for the Education Trust Fund in the next five years — and a $443 million increase for casino operators. Taxpayers can now expect to benefit less with a fully mature MGM in 2021 than we were told we would get by now without it.
To be sure, there are substantial ancillary benefits to the casino building boom in Maryland. MGM is a $1.2 billion project that has boosted Prince George's economy already and will do so further as some 4,000 people go to work there. Meanwhile, anticipating the competition, Maryland Live is moving forward with a $200 million hotel on site. Expected to be Anne Arundel's tallest building when it is completed, it will add about 400 more employees — and provide space to hold high school graduations in the county, something that hasn't been possible before. And before voters approved table games, Caesars Entertainment Corp. planned to open a less-upscale casino brand in Baltimore.
But let this be Maryland's last casino. There are signs that the market is near the saturation point even without MGM, and while that facility has the potential to tap new markets in the gambling-free zones that are Washington and Virginia, no other comparable opportunities exist elsewhere in Maryland. There can be little doubt that at some point, the gambling industry will be back in Annapolis with big promises of easy money. But lawmakers should learn the same lesson all gamblers do: The house always wins eventually.