Maryland vote pits bully, new kid

Penn National Gaming is the playground bully.

MGM Resorts International is the new kid wearing the expensive clothes.

The bully wants to steal the new kid’s lunch money.

But the new kid is not giving up without a fight.

In a sense, that’s what will play out Tuesday following a very public two-month tussle.

But there is more at stake than simply pocket change.

Maryland voters will determine if the state becomes a multimillion- dollar gambling jurisdiction or a multibillion-dollar casino-resort destination.

We’ll also find out whether MGM Resorts puts the bully in its place, or, if Penn National is still king of the school.

Passage of Maryland’s Question 7 would approve a sixth casino for the state, which would be located in suburban Prince George’s County. Also, approval by voters allows the five existing or planned slot machine-only casinos to add table games and lowers the state’s industry-high 67 percent gaming tax.

MGM Resorts is backing the measure and the company is expected to gain the license if Question 7 passes.

The Strip gaming giant plans to build an $800 million hotel-casino at National Harbor, a 350-acre retail, dining, residential and entertainment complex along the Potomac River, 10 miles from Washington, D.C.

Penn National opposes Question 7.

The regional gaming company operates a slot machine casino in Maryland’s Cecil County, a racetrack in Prince George’s County and a full-scale casino in neighboring West Virginia.

The two companies have nearly matched each other in financial contributions to what has become the most expensive campaign in Maryland history. With almost $72 million raised by both sides of the question, the campaign could surpass the total spent on Maryland’s last three gubernatorial elections – combined.

As of last week, MGM Resorts had invested $34 million into the pro-gaming expansion campaign.

Penn National has kicked in $35 million to the No on Question 7 side.

At times, it’s gotten personal.

Early on in the campaign, Penn National Chairman Peter Carlino said the company was not given a fair shake when lawmakers authorized the sixth casino. Penn believes its racetrack, which is near National Harbor, is the best location for the casino.

"It’s pretty clear to us that the fix is in," Carlino said

Late last month, Carlino toned down the rhetoric, saying the state would go back and "re-craft a more and reasonable (gaming expansion) bill" if Question 7 loses.

Proponents of Question 7 said Penn National is only trying to protect its West Virginia casino from competition. Some analysts estimate half of Penn’s customers come from Maryland.

Gov. Martin O’Malley got into the fray, telling reporters in early October that Penn was spending "buckets and buckets of money" on "total crap, hogwash (and) a bunch of West Virginia casino hooey."

But the No on Question 7 ads have been effective, somewhat blunting the proponents’ messages that Maryland casino expansion would halt $550 million annually in wagering by residents from leaving the state. New and expanded casinos also mean jobs and tax revenues for Maryland.

Supporters said the question puts Maryland on equal footing with other gaming states in the Northeast and mid-Atlantic region that have full-scale casinos.

Polls show the issue to be a toss-up and falling either way on election day.

"I honestly don’t know how this will go," MGM Resorts Chairman Jim Murren said last week. "We’ve attempted to clarify our position on what we would build and what this would mean for Maryland in the jobs that would be created and the taxes that would be collected."

He added, "It’s been difficult for people to glean through all the information to get to the facts on why Question 7 should pass."

Penn National has a track record in this type of effort. Four years ago, the company spent $38 million to kill a casino bill in Ohio that could have meant lost business for Penn’s casino in Indiana. A year later, Penn spent millions more backing a successful Ohio ballot measure that gave the company two of the state’s four casino sites.

That history hasn’t been lost on Murren.

"We have focused our attention on developing and managing luxury resorts, not political campaigns," Murren said.

MGM Resorts has friends in the fight.

Caesars Entertainment Corp., which will operate a new Baltimore casino and wants to offer table games, contributed nearly $4.6 million to the pro-Question 7 cause. The Peterson Cos., developers of National Harbor, kicked in $2 million.

Union leaders, educational groups, teachers, county officials and former members of the NFL’s Washington Redskins have been rallying support for Question 7. Even The Washington Post, which has editorialized unfavorably on gaming in past, endorsed passage of Question 7.

Penn National has fully funded the No on 7 campaign. The Baltimore Sun editorialized against the measure.

Question 7 is the only statewide gaming ballot issue drawing any national focus this election cycle. Oregon’s casino initiative will lose badly and two measures in Rhode Island to allow table games are small stakes.

Deutsche Bank gaming analyst Carlo Santarelli said Question 7 has been "one of the most hotly contested ballot initiatives in recent years. Parties on both sides of the issue are pulling no punches in their efforts to sway Maryland voters."

We’ll know Tuesday who won the fight.

Howard Stutz’s Inside Gaming column appears Sundays. He can be reached at hstutz@reviewjournal.com or 702-477-3871. He blogs at lvrj.com/blogs/stutz. Follow @howardstutz on Twitter.