Photo by Dana Amihere. State legislators are considering bills that could bring casino-style gaming to Prince George’s County. Penn National Gaming, Inc. purchased Rosecroft Raceway in Fort Washington last year in hopes of establishing an integrated gaming facility offering slots, table games and horse racing.

Published on: Thursday, February 16, 2012

By Dana Amihere

Casino-style gaming in Prince George’s County is back on the table again, thanks to a referendum bill introduced last week in the state Senate.

Bringing slots to Maryland has been a contentious debate since 2008, when voters approved gaming at five locations around the state. Prince George’s County wasn’t one of them.

Penn National Gaming, Inc. purchased Fort Washington’s bankrupt Rosecroft Raceway in early 2011 in hopes of opening an integrated racing facility with slots, racing and table games. Another possible site is National Harbor in Oxon Hill.

A 2007 report prepared by Maryland Labor Department Secretary Thomas Perez for Gov. Martin O’Malley asserted that in failing to legalize slots Maryland “has already left hundreds of millions of dollars in potential general fund revenue on the table, and the tables are located in West Virginia and Delaware.”

Penn National — which owns the Hollywood Casinos in Charles Town, W.Va. and in Perryville, Md., straddling the Delaware border — agrees that Maryland’s traveling gamers make up a substantial part of their out-of-state clientele.

“Thirty percent of the gaming population at Charles Town Races comes from Maryland,” said Penn National’s public affairs director Karen M. Bailey. Bailey reported that Penn National was able to recapture the Maryland market with the Perryville casino in its ability “to stop them at the border.”

Penn National is targeting gamblers in Washington, D.C., and Northern Virginia, who currently have no casino options within approximately 20 miles, to spend their entertainment dollars at Rosecroft.

In its heyday, Rosecroft, the state’s oldest harness-racing site, could hold up to 20,000 patrons. A proposed $380 million investment to revitalize facility is projected to attract 7.6 million visitors in its first five years, according to a recent fiscal impacts report prepared by economics professor Dr. LaTanya Brown-Robertson of Bowie State University.

“That’s the important thing to understand about the Mid-Atlantic gaming region. Really, the question is do you want that money going someplace else or do you want it staying here? We’re not talking just a couple dollars,” Bailey said.

In the construction phase alone, Brown-Robertson estimated $655.6 million will be infused into Maryland’s economy. Predicted revenue from operation will range from $624 million in the first year to $747 million within the first five years.

The economic outcomes for Prince George’s County are equally as positive. The local economy, reported Brown-Robertson, will see $214 million in new revenues once the casino is operational.

Taxes are the primary revenue generators for Prince George’s County, Brown-Robertson said. The installation of 6,500 slots and 100 tables games at Rosecroft, the projected number the facility can financially sustain, will generate $39 million in licensing fees during the construction phase. Over five years, total state and county tax revenue is expected to exceed $2.3 billion from the ongoing operation of Rosecroft as an integrated casino facility.

Some public policy experts, such as Robert Carpenter with the Maryland Institute for Policy Analysis and Research at the University of Maryland, Baltimore County, have argued that increased revenues will result in large part from a substitution effect.

“Legalizing slot machine gambling would take dollars that people are already spending here on other goods like food, clothing, entertainment, the state lottery, etc., and reallocate them toward slot machine gambling,” Carpenter reasons. 

Notwithstanding, current law dictates that 67 percent of slots revenues collected by the state are earmarked for public goods and services programs. In the case of slots and gaming, 48 percent of this allotment is devoted to an education trust fund.

Unlike Nevada’s gaming revenues — which are deposited in a general fund and disbursed by legislators at will —said Carolyn Mills-Matthews, chief development officer for the Cammay Group, Maryland has seen this as “lessons learned.” In 2010, Nevada had the worst K-12 education in the nation, according to an annual survey by Education Week magazine.

“We’ve seen other states and what they’ve done, and Maryland has done a really good job to make sure those dollars are directed where they’re needed, in particular to education,” Mills-Matthews explained.

Another 5.5 percent of revenues would be put toward local governments. Though County Executive Rushern Baker has remained mum on an official position on slots, Bailey says she’s more optimistic about a referendum on slots this time around.

“We know that the coffers are dry, the state is looking at all different aspects as to how to pay for programs,” Bailey explained.

Several legislators are proponents of slots, such as Senate President Tomas V. Mike Miller, who endorses slots as revenue to build a new teaching hospital, and Delegate Barbara Frush, D-Prince George’s, who filed an identical slots bill in the House.

Conversely, Delegate Heather R. Mizeur, D-Montgomery, has remained adamantly opposed to slots.

“We must close our budget deficit while maintaining the quality of life that makes Maryland a great place to live,” Mizeur said.

Bailey asserts that several Penn National casino raceway success stories, like the Hollywood Casino in Kansas City, Mo., are comparable to Rosecroft and Prince George’s County.

“We have a track record, so everything we say and everything we do, you can find everywhere else we operate,” Bailey said.

The Kansas Speedway became the anchor of what was previously farmland. Economic and urban development in the area followed with retail outlets, a professional soccer stadium and a major healthcare provider installing a new 3,000-employee headquarters.

“People like to say crime, drugs and prostitution come (with a casino). No, actually they don’t. What comes is mid-level retail, mid-level restaurants, different chain restaurants, some residential ... that’s our footprint,” Bailey explained.

“Adults make decisions on what they do, whether its coming to a casino facility, whether they choose to drink alcohol, whether they choose to go shopping and use their credit cards,” Bailey said.

Penn National encourages problem gamblers to get help and in extreme cases can put them on self-exclusion lists, Bailey added.

A 2011 study on gambling prevalence in Maryland spearheaded by MIPAR’s Judith Shinogle described persons aged 18 to 29 as the most at risk of developing a gambling problem.

However, responded Bailey, there are many misconceptions about who casinos’ target clientele is. According to Penn National data, the average Hollywood Casino customer is female, age 55 and older with disposable income. The demographic skews male, and slightly younger — that is, 45 years old — when adding in table games.

Penn National, Bailey contends, has a reputation as and responsibility to be a “good neighbor.” Strict surveillance for underage drinking and presence on the casino floor and responsible alcohol service and drunk driving preventative measures are standard practices.

Penn National is the largest publicly traded peri-mutuel and gaming company in the country and is subject to gaming industry regulations and Securities Exchange Commission monitoring.

“We’re the most highly regulated industry probably outside of nuclear in this country,” Bailey said.

Penn National operates 26 gaming facilities under the Hollywood Casinos banner in 19 states, mostly in the Midwest.

“We’re almost the small business operator of casinos. We work locally. All of our decisions are based on what’s good in Prince George’s County or in Kansas City or in Sioux City, Iowa,” Bailey said. “We’re designed and our culture of our company is built toward local communities, local marketplaces.”