Maryland governor sees slot solution to budget woes

Maryland’s governor officially put his state on the radar screen for gaming expansion.

In calling for a special session of the legislature to deal with a $1.7 billion budget shortfall, Gov. Martin O’Malley wants lawmakers to legalize slot machines with the tax revenues used to reduce the deficit.

The initial idea proposed by the governor could bring 9,500 slot machines to Maryland racetracks and other locations. But the matter has been met with opposition and the state has failed in several attempts to bring slot machines to the market.

In a note to investors Tuesday, Wachovia Capital Markets gaming analyst Brian McGill said he thought the issue might not be resolved until Maryland lawmakers meet in their regular 90-day session starting in January.

“Slots has been a rather controversial issue in Maryland,” McGill said. “It remains to be seen whether or not a plan can be agreed on to legalize slots and balance the budget in a special session. As of now, our contacts are not confident it can be accomplished.”

According to The Washington Post, the president of the state Senate and the speaker of assembly, both Democrats, opposed the special session and the slot machine proposal. However, both would be in favor of placing a slot machine referendum on the state’s November 2008 general election ballot.

The governor, who is also a Democrat, thought the slot machines, which would be housed at racetracks in four Maryland counties, could generate gaming tax revenues of $550 million for state budget coffers. No tax rate percentage was given.

Nevada’s slot machine makers, hungry for any signs of domestic gambling expansion, said Maryland’s proposal would create a need for a significant number of gambling devices.

“It’s a decent number and it would be a new market,” Bally Technologies spokesman Marcus Prater said. “Maryland has been down this road before and we’re a long way from shipping machines. But it seems to be headed in the right direction.”

Prater said a 20 percent market share of the potential Maryland sot market could be worth $24 million to Bally Technologies.

A statewide referendum on slots would add to a growing list of gaming expansion referendums nationally, including potential votes in California, Miami and Baton Rouge, La.

Gaming analysts thought letting Maryland voters decide if they want slot machines might be a way of seeing the matter pass. The slot machines could be located at racetracks in counties where a majority of the voters were in favor of the issue.

Bear Stearns gaming analyst Joe Greff said letting the voters decide might give politicians some cover. He said the assembly speaker’s opposition might soften if the voters decide they want the machines.

“In a move to gain more backing for his slot proposal, in recent weeks, the governor has said he will support a statewide referendum on the issue,” Greff said in a note to investors.

Contact reporter Howard Stutz at hstutz@reviewjournal.com or (702) 477-3871.