Reckless Slots Politics

If former Gov. Robert L. Ehrlich Jr. is looking for evidence to bolster his claims that current Gov. Martin O'Malley has been fiscally reckless, he need look no further than the Democratic incumbent's public stance in favor of the referendum to overturn the Anne Arundel County zoning law that would allow slots at Arundel Mills Mall. In a move that smacks of political opportunism, Mr. O'Malley has recently publicly supported the referendum and has indicated that he will seek to make an issue of Mr. Ehrlich's ties to the effort to bring slots to the mall. That would be well and good if this were some ordinary local zoning issue, but it is actually a matter of profound statewide importance that will mean a difference of hundreds of millions of tax dollars during the next several years. By casting his lot with the racetrack-funded opposition to slots at Arundel Mills, Mr. O'Malley is shooting himself — or Mr. Ehrlich, or whoever the next governor is — in the foot, and Mr. Ehrlich should hammer him for it. 

When Mr. O'Malley proposed expanded gambling during a special legislative session in 2007, he made clear his hope for a relatively limited slots program at the racetracks. If Mr. O'Malley held such a strong conviction that slots didn't belong at the mall, that might have been a good time to mention it. But to his credit at the time, Mr. O'Malley was also willing to make what compromises were necessary to get slots through the legislature, and in the General Assembly, simply handing lucrative gambling licenses over to the racetracks was a political nonstarter. The fact that Arundel Mills Mall was in the area designated for a potential slots license was well known in Annapolis when the legislature voted to put slots on the ballot as a constitutional amendment. Mr. O'Malley accepted that fact and laid his political capital on the line to ensure the measure's success in the General Assembly and, a year later, at the ballot box.

He might also have made his objection to slots at the mall known when the Cordish Cos. announced its Arundel Mills proposal, or when it became the sole qualified bidder for the Anne Arundel site after the Maryland Jockey Club, owned at the time by the bankrupt Magna Entertainment Corp., failed to put forward the required licensing fee with its application. Instead, he sat on the sidelines while the Anne Arundel County Council spent months debating slots zoning, while the jockey club funded the petition drive for the referendum and while both sides battled over the legality of the referendum in court.

The timing of Mr. O'Malley's stance vis-a-vis the governor's race cannot be seen as coincidental. The governor has indicated that he will seek to use the issue to bolster his narrative that Mr. Ehrlich has spent his post-political career as a high-powered lobbyist for special interests, a theme he recently used in a bogus attempt to tie the Republican to the BP oil spill. At least this time Mr. O'Malley is using guilt by association to attack Mr. Ehrlich for something he's actually associated with. It seems that David S. Cordish, the head of the Cordish Cos., briefly contracted with Mr. Ehrlich's law firm for "strategic and communications advice" about the effort to bring slots to the mall. Unless that "strategic and communications advice" amounted to convincing the jockey club to bungle the slots license application process, it's hard to see how Mr. Ehrlich bears much responsibility for the current sequence of events.

Mr. O'Malley is seeking to deflect the realization that his support of the referendum amounts to fiscal suicide by claiming that if the effort succeeds at the ballot box, a new license (presumably at Laurel Park) could be awarded quickly. But that's just not plausible.

The slots commission would have to strip Cordish of its slots license and reopen the bidding process. That probably wouldn't be easy; the commission stripped the developer of a Baltimore slots site of its license after repeated delays and problems with its proposal more than six months ago, but it has still not been able to reopen bidding because of legal challenges. There's no reason to expect that things would go more smoothly in Anne Arundel.

If voters reject slots zoning for Arundel Mills, they would, in the process, also reject slots zoning at Laurel Park, meaning the council would have to go through a zoning debate all over again. If it decided to zone Laurel for slots, Cordish could fund its own petition drive and potentially put the matter on the ballot in 2010.

And there's the added complication that the new owner of the Maryland Jockey Club — a corporate sibling of Magna Entertainment — recently entered into a partnership with Penn National Gaming, which already has a license to operate a slots parlor in Maryland and is planning to open that site, in Cecil County, within two months. Maryland law prohibits any one entity from holding multiple slots licenses. In order for slots to wind up at Laurel, that law would either have to be changed, or Penn National would have to divest itself of either its current slots license or its interest in the jockey club. It has no incentive to rush, since the main effect of an Anne Arundel County casino would likely be to divert business from Penn National's Charles Town, W.Va., casino, the most lucrative property in its portfolio.

While all that's going on, Maryland will be losing millions in tax dollars. Fiscal analysts in 2007 estimated that an Arundel casino would generate $366 million a year in taxes for the state. Critics think that number may now be too high because of the increased gambling competition in the area and the weak economy. Mr. Cordish thinks it's too low. Whatever the case, Maryland, facing billions in projected budget shortfalls, needs the cash, and it needs it now. Mr. Ehrlich, who lives in Anne Arundel, has said that he will vote against the referendum but doesn't plan to urge county residents to vote one way or another. He should rethink that. It's the fiscally responsible thing to do.