Cumberland Times-News

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December 29, 2012

Gambling push may force rivals to fold

States continuing trend of cannibalizing one another’s markets in race for revenue

WASHINGTON — Maryland’s incursion into the world of legalized gambling is likely to bring the state millions of dollars in tax revenues, but industry experts predict the decision to allow table games will continue a decades-long tradition of states cannibalizing one another’s markets for personal gain.

Maryland voters on Nov. 6 approved Question 7, which legalized table games and around-the-clock gambling, and bumped the number of planned casinos in the state from five to six. The change means every mid-Atlantic state, except Virginia and the District of Columbia, allows some form of gambling, from virtual slot machines in New York to online gambling in Delaware.

“I never dreamed in a zillion years that it would be as prevalent as it is now,” said Jim Kilby, a gambling consultant and author who has spent 43 years in the business.

Maryland, in its attempt to reclaim the money gamblers have spent in neighboring states’ casinos, has shoehorned itself into an industry already straining from a user base fragmented across an ever-expanding playing field of gambling destinations.

A February 2012 market analysis by Business Research & Economic Advisers of Maryland’s emerging gambling industry showed the state could potentially gain about $200 million in tax revenues a year if voters approved Question 7.

After a historically expensive fall campaign fueled by about $90 million in advertising spending, Election Day resulted in a 52-to-48-percent win for casino proponents. The passage cleared the way for a casino to be built at National Harbor in Prince George’s County, which is likely to be operated by MGM Resorts International — the world’s second-largest gambling company.

“Most of the dire predictions about getting a gambling culture and the negative effects of gambling ... is probably less than what was originally envisioned, so if people have a desire to gamble, then you might as well get a piece of that dollar and use it for productive purposes,” said Robert W. Burchell, director of Rutgers University’s Ur-ban Planning and Policy Development Program.

Casinos of any kind were illegal in Maryland as recently as 2008. The decision to allow slots in 2008 — and now table games — is likely to hurt the casinos closest to the state’s borders, where Maryland gamblers have spent millions of dollars.

“By far the most important factor is geography,” said Bill R. Eadington, the director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada, Reno. “Location is really the driving factor for an awful lot of customers.”

Eadington predicted the future casino at National Harbor would be successful because it will be better positioned to attract customers visiting Washington — which will in turn draw customers away from more rural casinos.

“Casinos that used to have a relative monopoly are going to find themselves losing market shares,” Eadington said. “It’s going to have a very dramatic effect, but nothing unusual compared to an industry where you introduce more supply.”

At Dover Downs Hotel & Casino in Dover, Del., visitors from Maryland in 2011 contributed about half of the casino’s gaming win, according to its annual report. The casino, which last year raked in over $217 million in gaming revenues and funneled $87 million into the state’s coffers, is Delaware’s most profitable. Gambling expansion in Maryland and other states is expected to have a “significant adverse effect” on its visitation numbers over the coming years, the report said.

Dover Downs president Ed Sutor declined to be interviewed for this article. None of the casinos closest to Maryland in Delaware, Pennsylvania and West Virginia responded to requests for comments on how Maryland’s gambling expansion could affect their business.

 

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