State may seek local lotto revenue

Kevin Spradlin
Cumberland Times-News

June 29, 2008 12:44 am

— A report being prepared by the Maryland State Lottery Agency has some locals concerned about whether some state lawmakers are trying to regulate gaming in Western Maryland — and control the revenue generated by that gaming.
Language in the law passed during this year’s legislative session that bans video lottery terminals, or gaming machines that look and operate similar to slot machines, also mandated a study to be completed by the state agency. The report is to discuss statewide gaming regulations, enforcement procedures and revenue projections.
Ultimately, Paul Dorsey, director of policy and development for the state Lotto, is to make recommendations as to how the state may exercise additional or improved oversight of gaming activities. His report to Gov. Martin O’Malley is due by Dec. 15. In November, Maryland voters will approve or reject a constitutional amendment that would permit slots, including 1,500 machines at Rocky Gap Lodge & Golf Resort.
Gerald Joy, Allegany County gaming administrator, said he’s provided as much information as possible and answered everything he could. After e-mail correspondence, Dorsey followed up Thursday with a phone interview with Joy. Then, Joy said Dorsey asked primarily about bingo.
“I told him our gaming office does not regulate bingo,” Joy said. “Nor do we control any raffles fire departments may hold.
“I did not have the impression that they were out to capture the paper gaming (revenue) in Allegany County,” Joy said. “I think he was more concerned with how much resources, untapped revenue, pertaining more to bingo ... than with Allegany County gaming.”
Presumably some areas in recent years have been caught failing to regulate gaming adequately, including the city of Baltimore as well as Baltimore and St. Mary’s counties. The lack of oversight has allowed some private businesses and nonprofits to avoid paying their fair share in state taxes.
“Apparently, there was no accountability down there at all,” Joy said.
Sen. George Edwards, who cast the lone vote against Senate Bill 959 among 46 senators, said he understands some people are concerned the state’s ultimate intent is to regulate all gambling operations in Maryland.
“We don’t agree with that,” Edwards said of him and his District 1 legislative colleagues, Delegates LeRoy Myers, Kevin Kelly and Wendell Beitzel, all who voted against the bill in the House. “We think Allegany County is doing it the right way now.”
Edwards said that Washington County, too, has been praised for its regulatory and enforcement efforts.
Meanwhile, the immediate impact of SB 959 is that by the close of business Monday, all slots-like gaming machines must be removed from Allegany County’s private businesses and nonprofit organizations. The gaming hall at the LaVale Volunteer Fire Department on National Highway, renovated for a cost of some $8,000, is dark. Platinum Gaming Corp. of Oklahoma City, Okla., removed the machines early this month.
Mike Pfaff, the fire company’s financial secretary and former chair of the now-defunct gaming committee, said gaming officials conceded.
“There’s no point in fighting it anymore,” Pfaff said of the consensus. “We were expecting, of course, that we’d have them for a long time.”
The fire hall cleared nearly $1,000 a week, Pfaff said, allowing the budget to project about $50,000 in earnings for fiscal 2009, which starts Tuesday. “Now we’re taking another $50,000 out of our budget. It’s tough.”
As electric bills for that building alone reach $16,000 a year, “it’s not easy” to find a substitute funding mechanism, Pfaff said, and company leaders are forced to “make hard decisions.”
Pfaff said the fire hall has stopped advertising its bingo nights. It’s still too early to see how much of a direct impact, if any, that will have on revenue. Either way, “we’re hurting,” Pfaff said. “Bingo income is down, bingo attendance is down. Now gaming is zero.”
He said he can’t imagine the state “going to nonprofit groups like fire departments” and trying to get bingo revenue, which is the company’s top income-producing fund-raiser. If the state takes control, Pfaff said, “We’ll be done.”
State Lotto officials said Friday they were unaware of SB 959 and that their role in any report wasn’t discussed with them beforehand.
Contact Kevin Spradlin at kspradlin@times-news.com.