Maryland Race Is On for Slots

When she boards the shuttle bus for the half-hour ride across the Maryland line to the Delaware Park casino, Phyllis Treadway always keeps $50 tucked away in her purse to feed the slot machines. Carefully counted out in small bills -- no more, no less -- the stipend is the retired dietitian’s “one little extravagance.”

Hunched over the pulsing lights of her favorite “Five Times Pay” slot machine, Treadway, 71, watches her quarters disappear while Maryland gamblers all around her shell out their own extravagances to another state’s coffers. “We go where the fun is,” she said.

For almost a decade, Maryland officials looked the other way while residents gambled away as much as $200 million a year at Delaware’s casinos. The lost revenue was tolerable only as long as Maryland’s economy soared. The boom deflated last fall, confronting Maryland officials with a $1.2-billion budget shortfall.

Now craving millions lost to casinos in neighboring Delaware and West Virginia, Maryland’s new Republican governor, Robert L. Ehrlich Jr., and political leaders from both parties aim to build their own gambling halls. Ehrlich wants to install 10,500 slot machines at four Maryland racetracks, including Pimlico, the site of the elite Preakness Stakes thoroughbred horse race.

Hard times have advanced state-backed gambling proposals up and down the Atlantic seaboard. Legislatures from Massachusetts to Florida are studying new statewide casino initiatives, with similar efforts underway as far off as Kansas and Oklahoma. And just as California Gov. Gray Davis is moving to expand Indian casino growth, Ehrlich, newly elected Pennsylvania Gov. Ed Rendell and New York Gov. George E. Pataki are all floating casino plans that would turn the mid-Atlantic region into a gambler’s playground.

Racetrack slot casinos hold out the promise of balancing budgets without tears -- avoiding the voter rage that comes with the unpalatable options of tax increases and belt-tightening. But the casino stampede in Maryland and neighboring states has gathered momentum so quickly, some say, that political leaders have failed to reckon with gambling’s darker tolls in addiction, spiraling crime rates and political corruption.

The competing casino proposals are triggering an “arms race of casinos” saturating the Northeast, said William Eadington, a professor of economics and director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada, Reno. “The degree of desperation we’re seeing from state governments is quite historic.”

Delighted gaming industry officials say they are on the verge of establishing their biggest beachhead since the Rust Belt recession of the 1980s spurred Midwestern legislatures to turn to riverboat casinos to solve their statewide economic downturns.

“Racinos” are what Frank J. Fahrenkopf Jr., the gaming industry’s top Washington lobbyist, calls the racetrack-based casinos that Maryland and other states are considering to replicate Delaware’s profits from gambling. For years, track owners in Maryland and other Northeast states begged for casino permits to boost their stagnant industry. They have showered political donations and lobbyists in Annapolis, the state capital. But in Maryland, it took massive deficits and the exit of former Gov. Parris N. Glendenning -- a casino foe -- to finally turn the tide.

“It produces quality jobs,” Fahrenkopf said. “And it’s great for the states because they can tax the gaming industry at higher levels than other businesses.”

The projected takes are intoxicating. In Maryland, Ehrlich wants to bolster an ambitious education funding plan with slot revenue from four proposed casinos -- at Baltimore’s Pimlico, two tracks in the Washington suburbs and one in western Maryland. Ehrlich’s top policy aide, Joseph M. Getty, said the first year’s revenue alone would approach $400 million.

Ehrlich has asked the Maryland General Assembly to approve a ratio that would give the state a hefty 68% of slot profits, leaving 32% to casino owners. Even that figure pales compared to Pataki’s proposal in New York, which would take 75% of slot profits.

When they scanned the details of Ehrlich’s plan, Maryland’s horse owners bridled. They warn that the state’s take is so steep they would be left with little to build attractive casinos to lure throngs of repeat customers.

“The way the bill’s now written, it would be impossible for us to cover our costs,” said Tom Bowman, president of the Maryland Horse Breeders Assn.

But even growing opposition from an anti-gambling faction led by delegate Michael Busch, speaker of Maryland’s House, will not alter the inevitable, seasoned legislators say.

Racing industry officials have lavished campaign donations on both parties, spreading more than $500,000 between 1999 and early this year. At least $121,000 went into Ehrlich’s campaign treasury, said James Browning, executive director of Common Cause of Maryland, a nonpartisan political reform group. Similar amounts sluiced into Democratic campaign chests.

Several Democrats have introduced a measure to outlaw all gambling industry donations. But gaming interests would likely challenge any ban if it passed, said Fahrenkopf, former national chairman of the Republican Party.

Both Ehrlich aides and horse industry officials say privately they expect to work out a compromise on profits. “We’ll get a bill,” said Delegate Howard P. Rawlings, a Baltimore Democrat who has offered up his own casino proposal. “This is the year.”

Phyllis Treadway had never given much thought to the economic fallout of her border crossings. But she has heard the dire forecasts of state cutbacks. She worries that Maryland’s aging programs could suffer, wondering if the ax might even fall on the shuttle buses that are hired by the Cecil County Department of Aging to ferry Treadway and her 60 fellow gamblers to the Delaware casino.

She would happily play the slots at Pimlico, even if it meant an extra half-hour bus ride to Baltimore. “Maryland is my state, after all,” she said. “If I can help a little bit, why not?”

Living “near the poverty line” on $12,000 a year in Social Security benefits, Treadway does not have much to offer. She gambles $300 a year on her six trips to the Delaware Park casino. On her latest jaunt, she pocketed $10 in change, grinning at the sound of quarters clanking in her plastic cup. “I usually win,” she said proudly.

The notion that Maryland would shore up its budget deficits on the tautly stretched incomes of retirees and the poor is derided by casino foes as a hidden tax on those who can afford it least.

“The governor justifies it as a way of avoiding taxes,” said Dick D’Amato, a former Maryland legislator and counsel for No Casinos, a group arrayed against Ehrlich’s plan. “It may be voluntary, but it’s still a regressive tax.... It’s just irresponsible.”

D’Amato and other casino opponents are urging state politicians to “slow the process down,” holding off a crucial vote for at least a year to allow the state time to research casinos’ economic and social effects. Some foes are clamoring for voter referendums.

The ravages spawned by gambling addiction -- bankruptcies, divorces, crime, suicide -- represent “a hidden iceberg,” Eadington said. “There’s a tremendous amount of anecdotal evidence.” But at the same time, Eadington said, there have been few comprehensive studies, leaving politicians with little definitive data about gambling’s human toll.

Ehrlich’s administration opposes any moratorium. Gaming industry officials insist any public hesitation about gambling has been swept away by the threat of rising budget deficits.

“Our polling shows that 85% of Americans are not opposed to gambling,” Fahrenkopf said. “They see it as perfectly acceptable, a fun night out.”

Perched by her favorite machine, chatting with old friends as her quarters disappeared, Treadway said she would be just as happy to do all of her gambling inside Maryland’s borders.

“If I can do something for the state, I’m all for it,” she said, her voice dropping to a whisper. “As long as I keep winning.”