Democratic dilemma on casinos

October 8, 2012 8:59 am

One of the more baffling back stories in the government-backed push to expand gambling is that the elected officials often leading the way are Democrats. (See California, Massachusetts, Pennsylvania and New York.) It makes no sense for Democrats to support casinos and other forms of gambling, considering that those most often fleeced by the casinos are the poor, working class, elderly and minority.

In other words, the Democratic base.

In Maryland, Gov. Martin O’Malley, a Democrat who once opposed the idea of casinos, is now leading the way for more gambling. Washington Post columnist Robert McCartney says an upcoming referendum to add another casino and table games at existing casinos poses a moral dilemma for Maryland voters. Should voters support “expanding gambling to create jobs and raise government revenue (especially in Prince George’s County), even if it tends to pick the pocket of the poor?”

Polls indicate many Maryland voters oppose more gambling, despite millions of dollars in advertising telling the public that gambling is good. Not to mention, the media does a poor job of detailing the economic and social costs of gambling, and instead just regurgitates the talking points raised by lawmakers and casino supporters. Even still many voters understand the money from casinos comes mainly from the pockets  of those who can least afford to gamble. In the end, all taxpayers pay for those costs.

Perhaps the reason Democratic lawmakers support casinos can be found in McCartney’s warped rationale. The Post columnist is willing to vote for more casinos even though he knows they are bad.

“On the one hand, I hate that state government is actively supporting an activity that contributes to addiction and extracts money disproportionately from lower-income peope,” he writes.  ”Casino companies’ campaign contributions have tainted the political process. Their endless, confusing advertisements befoul the airwaves.

“But I’m willing to cover my nose and support Question 7 for one reason: It’s the only way right now to quickly help the Prince George’s economy. And heaven knows the county needs a boost.”

That is one twisted argument.

Maryland casino troubles

August 6, 2012 8:15 am

Maryland’s casino industry is just getting off the ground and already some lawmakers want to add more locations and table games. But one of the slots parlors is struggling in the face of competition.

The manager of the Hollywood Casino in Perryville asked the state to eliminate up to 500 video lottery terminals because it has lost 40 percent of its business since  Maryland Live! opened in June at Arundel Mills. The steep drop in business does not bode well for the Perryville casino, and is a sign the Maryland gambling market may not be able to support more casinos.

The move comes as Gov. Martin O’Malley has called a special session for lawmakers to add a sixth casino near Washington, D.C. and to add table games like blackjack and poker. Ironically, the owner of Maryland Live! – which is located in a suburban mall – is opposed to adding another casino, arguing the market is saturated. Indeed, all five of the casinos previously approved by lawmakers have yet to open, including a planned location in Baltimore. The early trouble in Perryville may indicate that gamblers in Maryland are tapped out.

The casino mirage

July 31, 2012 10:25 am

In state after state, lawmakers tout casinos as the answer to budget and job woes. But the experience of other states shows that gambling often fails to deliver the promised benefits.

Maryland Gov. Martin O’Malley is the latest lawmaker to get hooked on gambling, calling for a special session Aug. 9 to add a sixth casino in the state. But analysts say adding another casino will shift spending rather than deliver more revenue.

“There’s no doubt Maryland will generate additional revenue in the short-term, but it’s likely not sustainable over time,” Lucy Dadayan, a senior policy analyst at the Nelson A. Rockefeller Institute who studies state gambling returns, told the Washington Examiner. “The pool of gamblers really doesn’t expand. It just shifts.”

A recent study by the Pew Center on the States showed that of 13 states that legalized casinos or lotteries in the past decade, two-thirds failed to meet projections — including some that missed benchmarks by more than half. (See graphic here.) Tax rates are mostly higher in states that adopted gambling recently, analysts said, showing that casinos are relied on to raise revenue after other options have been exhausted, The Examiner reported.

“It’s kind of interesting when jobs and the economy and spending and debt are the big issues and the focus in Maryland has been on advocating for gay marriage and benefits for illegal immigrants and now it’s expanding to gambling,” Virginia Republican Gov. Bob McDonnell told The Washington Examiner. “Some people would call it a volunteer tax.” Meanwhile, Maryland’s tax collector, Democratic Comptroller Peter Franchot, called the expansion of the state’s casino network “fool’s gold.”

O’Malley’s casino folly

July 26, 2012 11:40 am

Lawmakers do the darndest things when it comes to pushing more legalized gambling. Take Maryland Gov. Martin O’Malley. He has got himself so far out on the proverbial limb in his effort to round up enough votes to add another casino that he is agreeing to all sorts of convoluted deals. (Disclosure: I like O’Malley; think he is a good politician; and even shared a few pints of Guinness with him when he was a city councilman and played in his Irish rock band, which recently played the White House. But he has lost his way over gambling.)

The Baltimore Sun editorialized on O’Malley’s plan to call a special session to approve a bill to expand gambling. In effort to get enough votes to pass the bill, the governor has backed several provisions that make no sense and are virtually impossible to guarantee. The Sun called the measure a “Rube Goldberg of a bill.”

But this is often what happens when lawmakers get in bed with casinos. Like the addicted gamblers that flock to the casinos, lawmakers keep rolling the dice hoping to strike it rich.

Will MGM’s alleged mob ties scuttle Maryland casino deal?

July 24, 2012 9:46 am

Gov. Martin O’Malley has spent the summer working behind the scenes on a deal to expand gambling in Maryland. His goal is to clear the way for MGM Resorts to partner with a local developer to build a large casino in Prince George’s County.

One issue that has not been addressed: MGM is partners with a family in China that has alleged ties to organized crime? Those ties were enough for New Jersey gambling regulators to balk at MGM’s co-ownership of a casino in Macau with Pansey Ho, the daughter of China casino magnate Stanley Ho who has been linked to organized crime in China.

An investigation by New Jersey gambling regulators did not accuse Pansey Ho of illegal activity but found her “unsuitable” as a business partner because of her financial dependence on her father, who provided 90 percent of the funds she contributed to the MGM casino in Macau. The scrutiny prompted MGM to sell its stake in an Atlantic City casino, choosing instead to keep doing business with Ho in more lucrative Macau.

The question raised by The Washington Post is whether Maryland gambling authorities would have the same concerns as New Jersey regulators. Some think it won’t be an issue, pointing to Las Vegas where MGM owns casinos.

Elected officials all talk about making sure that casinos avoid doing business with organized crime. But in Maryland, where casinos are just getting off the ground, the governor is working overtime to change the state laws to pave the way for a casino company with alleged ties to organized crime. That says all you need to know about how lawmakers look the other way when it comes to doing business with casinos.

O’Malley falls for gambling

July 23, 2012 4:53 pm

As the mayor of Baltimore, Martin O’Malley described slot machines as a “morally bankrupt” way to fund education. Suddenly as governor of Maryland, O’Malley is obessed with gambling, as Baltimore Sun columnist Dan Rodricks writes.

O’Malley’s conversion is especially troubling since his rise in politics was based on doing the right thing and keeping his word.

Even more troubling is the way Curt Anderson, leader of Baltimore delegates in the Maryland General Assembly, is feeling from negotiating a casino deal with O’Malley: “This thing is all so murky, it really makes you feel kind of unclean. You need to take a shower when you get done because I think everybody is scratching everybody else’s back, you know what I’m saying?”

Welcome to what happens when lawmakers, gambling lobbyists and casino backers get in the room. Gambling is a sleazy business that often leaves everyone feeling dirty. In many states, the road to casinos is paved with positions that changes and backroom deals that get cut.

There’s a corruption influence from gambling that gets injected into the state and never goes away. Then again gambling is a business that produces little economic spinoff and thrives by making people poorer. So it’s no wonder lawmakers exit the gambling negotiations feeling dirty.

Casino flip floppers

July 19, 2012 9:20 am

It is true that money talks. That’s why in the debate about casinos, some of the harshest critics often sell out.

That’s what is going on in Maryland. David Jones, the head of an activist group that opposed a casino at a mall in Arundel Mills, now defends the Maryland Live Casino. Oh, and he is also asking for the community’s revenue cut to be devoted to math and science programs. He is not alone in changing his position.

Gov. Martin O’Malley is pushing to add another casino and table games at the existing casinos. But in 2008, when O’Malley was mayor of Baltimore, he said that using gambling money for education was a “morally bankrupt gimmick that targets the poor.” (In Philadelphia, Mayor Nutter opposed casinos in the city as a candidate and shortly after his election in 2007. Now, he is a champion for a second casino in the city, calling it a “top priority.”)

Other Maryland lawmakers have also flip flopped. As a state delegate, Prince George’s County Executive Rushern L. Baker III opposed slots, but he spent the first half of this year lobbying state lawmakers to expand gambling into his county.

Anne Arundel County Executive John R. Leopold also worked against slots as a state delegate, but now Leopold is one of the highest-profile defenders of the casino at Arundel Mills. Leopold said “job creation and revenue generation” prompted the change.

It is understandable that lawmakers are scrambling to create jobs and raise revenue. But the short-term games from gambling do not offset the long-term social and economic costs. Casinos that were thought of as bad during a good economy, do not morph into something positive in the midst of a sluggish economy.

Pay to play

July 5, 2012 10:32 am

Gov. Martin O’Malley has been twisting arms to get Maryland lawmakers to call a special session to expand gambling in order to add another casino and allow for full-blown table games like poker and blackjack.

Big surprise. While O’Malley and other lawmakers have been working mainly behind closed doors to help the casinos, the gambling interests have been spending big bucks on lobbying.

Penn National Gaming – which owns the Hollywood Casino in Perryville and is pushing the legislature to authorize a sixth casino in Prince George’s County at Rosecroft Raceway, which it also owns – spent almost $900,000. CBAC gaming, the Caesars-led group applying for a casino license in Baltimore, spent $163,000, according to The Sun.

The list of top paid lobbyists included two convicted felons. Gerard E. Evans, who went to prison for extracting payments from a client using a phony threat of legislation, made more than $1 million in the past six months. Bruce Bereano, who was convicted of mail fraud, made $772,500.

The combination of players begs the question: What do you get when you mix ex-con lobbyists, lawmakers looking for easy money, and casino operators? An inside straight.

Casino profits from others’ losses

July 3, 2012 1:04 pm

The headline in the Baltimore Sun says “Maryland Live Casino makes big money during first month of operation.” Of course, a more accurate headline could read: “Maryland casino empties gamblers’ pockets.”

Because that is what really happened. But too often the media’s gambling coverage is more breathless than probing of what is really going on inside the casinos. Such cheerleading leaves the impression the casinos are all fun and games, and no one gets hurt.

But the reality is gamblers lost almost $1 million a day at the Maryland Live Casino. That is $1 million that didn’t get invested or saved. That is $1 million that didn’t spent in restaurants, movies or theaters. Or worse, that is $1 million that didn’t get spent for medication, food, rent or child support. Not to mention, local casinos are essentially a regressive tax that make the bulk of their money from the poor, elderly and minority gamblers who can least afford to lose.

Studies show casinos make anywhere from 30 to 60 percent of their revenue off of problem and repeat gamblers. Local casinos in the Philadelphia area have said their customers come an average of three to five times a week. Casino like Maryland Live – located in a mall – feed off of locals. The money spent in the casino is money that didn’t get spent in the local economy. In short, that is $1 million a day in wealth stripped from the community.

Lawmakers in Annapolis may be happy because they tax the casinos at a much higher rate than other businesses. But the Maryland residents those lawmakers are elected to serve and protect are $1 million a day poorer. How Gov. Martin O’Malley or other elected officials can argue that is a smart economic policy requires a major leap of faith. Just like rolling dice.

O’Malley still looking to deal

June 27, 2012 9:04 am

Despite the collapse of his mostly handpicked gambling group, Gov. Martin O’Malley is still working on a backroom deal to expand casinos in Maryland.

Or to use his phrase, O’Malley is trying to reach ”a consensus” that would allow another casino and permit table games at the existing slots joints.

“I would very much like to get the lingering issues around gaming resolved,” O’Malley told reporters in Ocean City, where only a handful of people showed up for a fundraiser. (A long ride for O’Malley for such a lame turnout.)

O’Malley said opposition in the House is the problem, before adding that he needs to get a better sense of whether the three delegates on the work group reflected the broader will of the chamber. “I need to now quickly reach out … to take the full measure of the House.” Translation: see what deals can be made to get everyone on board the gambling the train.

A work group that met in private recommended allowing a sixth casino, most likely at National Harbor in Prince George’s County; Las Vegas-style table games at the state’s five existing slots sites; and reducing the tax rate on casinos. But House members said they would only agree to a sixth site if the state maintained its existing 67 percent tax rate on casino owners.