Franchot insists on slots vote delay
The Maryland Board of Public Works today reluctantly delayed until next year a decision on whether to award an Italian-owned company a $21.5 million contract to manage the state's slot machine operations after Comptroller Peter Franchot (D) raised concerns the deal could be unconstitutional.
Franchot, a slots opponent, said it didn't appear the state, which faces a projected budget gap of nearly $2 billion next year, had carefully considered how it might pay for the services if slots casinos fail to materialize on schedule.
State lottery officials attempted to blunt the criticism, testifying that under the terms of the negotiated deal, GTECH would not be paid for its "central system" computer and other management services until the first slot machines in the state become operational.
But board members Gov. Martin O'Malley (D) and Treasurer Nancy Kopp (D) deferred to Franchot after he charged that an 18-year-old state legal opinion used to support the deal did not apply, and he called it "a slippery slope" for the state to enter into a contract before its revenue source was clear. He contended that a delay over the holidays, until the board's next meeting on Jan. 5, would be prudent.
With a slight hint of sarcasm, O'Malley declared that "In deference to the comptroller, 'tis the season to be jolly, we'll defer." The attorney general's office was directed to review the proposed deal in detail in coming weeks.
Lottery officials warned that the delay could limit the state's ability to open slot machines in May or June at Ocean Downs if operators there move forward with a plan to locate slots in a temporary area near its race track while construction problems with its planned permanent casino are mitigtated.
The board did not seemed concerned about a Baltimore Sun report Wednesday that GTECH has faced legal issues in other states, and was once tied to a scandal in Maryland.
The board's delay comes at a time of great uncertainty for Maryland's fledgling slots program.
A state commission is scheduled to meet Thursday to discuss the status of a planned 3,750-machine casino in downtown Baltimore, which would be Maryland's second largest. Last week, the developers of the project, the Baltimore City Entertaiment Group, told the commission in a letter that it needed more time to complete "advanced negotiations" with an additional investor. The Post reported this week that the investor being courted is York Capital Management.
Commission members have grown increasingly frustrated with the Baltimore group because the developers have yet to submit updated plans for the casino or an additional $19.5 million licensing fee that is required.
Meanwhile, the Anne Arundel County Council could take a key zoning vote Monday affecting the future of the state's largest planned casino, a 4,750-machine facility envisioned at Arundel Mills mall.
The state commisison has already awarded a license to Cordish Cos., the project's developers, but plans cannot move forward without local zoning approval. The county council has been deeply divided over that issue for months, and the outcome of Monday's much-delayed vote remains uncertain. Homeowners around the mall remain vocally opposed.
State officials also learned recently that the first slots operator to receive a license -- the owner of Ocean Downs racetrack on the Eastern Shore -- has run into problems with abestos and other construction-related issues and will not open as soon as advertised.
"Due to these unexpected site conditions, there will be an undetermined delay in the projected opening date of Memorial Day 2010," wrote William M. Rickman, owner of the harness-racing track located about five miles west of Ocean City.
The only bright spot for Maryland's slots program of late has been a planned casino in Cecil County being built by Penn National Gaming. That facility has secured a state license and local approval, and operators say it will open by late next year.
There were no qualified bids received in February for a fifth Maryland slots license in Allegany County. State officials say they are likely to rebid the license at some point in the future.
-- Aaron C. Davis and John Wagner
December 16, 2009; 11:29 AM ET
Categories: Aaron C. Davis , John Wagner , Slots
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