A color war is raging outside the Anne Arundel County Council building in Annapolis. One team wears green shirts and hats, carries signs that read "Slots=Jobs," and hands out leaflets detailing potential benefits to the area. The other, clad in red, sports large "Stop Slots" buttons and circulates a petition to do just that. The squads glare at each other from opposite sides of Calvert Street, sizing up the competition.
The skirmish intensifies when the crowd—more than 200 in all—marches inside the brick building for a public hearing. They spar over zoning bills before the Council that would allow the Cordish Companies to build a casino with 4,750 video slot machines in a parking lot adjacent to the Arundel Mills Mall. By 6:30 p.m., the room is packed beyond capacity for the 7 p.m. meeting, a sea of red and green filling every seat and standing four rows deep in the back.
For three hours, they fire off facts, logic, and passionate rhetoric. The green team's Pasquale Hernandez talks about layoffs in the county. "We desperately need jobs—a lot of people are barely making it," he says. "And if it's gonna generate funds for education, too, we are 100 percent for it."
Red team leader Joseline Castaños, who runs the website stopslotsatamm.com and lives just blocks from the mall, says those supporting slots won't have to deal with the traffic congestion, pawn shops, and crime she says will come to the area if the casino is built. "Who will protect our communities?" she asks.
It's enough to make you wonder: "Didn't we do this already?"
When, after a costly and divisive campaign, Maryland voters overwhelmingly passed a referendum allowing slot machines at five state sites last November, casual observers thought the battle was over. Before long, we'd see slot machines dotting the landscape alongside Keno monitors, lottery terminals, and racetracks. Citizens would soon reap the long-promised benefits of increased state revenue, including $660 million in annual funding for education and $100 million in subsidies to the beleaguered horse racing industry.
But seven months after election day, no one can say for sure when, or if, Maryland will ever see its first slot machines—or the promised benefits. Just weeks ago, the proposed Cordish facility at Arundel Mills seemed likely to proceed, but it's future is now in doubt: A week after the public hearing, the Council, facing significant opposition from the community (the red team, anyway) added another amendment to the zoning legislation, requiring more parking at the site, and delaying a vote for at least another month.
In the meantime, national gaming company Penn National—who bid to build a small slots casino in Cecil County—resuscitated the idea of slots at Laurel Racetrack (which had been considered dead when Laurel's bankrupt owner, Magna Entertainment, couldn't come up with the licensing fees), though the gaming company is only in tentative discussions and, of course, would have to endure the same zoning process as Arundel Mills.
Add in a shifting proposal to build a slots casino in south Baltimore and another small site proposed in Worcester County, and you get a muddled outlook, with very little chance that voters will see any benefits by 2011, as they were promised in November.
Part of the problem is that many potential developers balked at building slots casinos in Maryland because of sky-high taxes and fees the state demanded of bidders.
The slots legislation proposed by Governor Martin O'Malley, passed by the state legislature in 2007, and approved by voters last year, was designed to make gaming as palatable to taxpayers as possible. This meant that gaming revenues would be taxed 67 percent—among the highest rates in the nation—and developers would have to pay millions in licensing fees, meet exacting standards to prevent crime, increased traffic, and other infrastructure problems, and be approved by local governments and the state gaming commission.
Add in the crumbling economy and many of the investors who had developed casinos in neighboring states decided to sit Maryland out. The extent of the problem became apparent in February, when the Maryland Gaming Commission unsealed bids to develop gaming facilities for the five approved sites. Four of the sites received a single bidder each, and one—Rocky Gap State Park in Western Maryland—received none. Only the Cordish proposal at Arundel Mills Mall included plans to build the maximum number of machines for its location, 4,750. Bids for Baltimore City and Cecil County sites requested just 500 machines each, and a bid to build a casino adjacent to Ocean Downs racetrack in Worcester County requested 800. On Nov. 4, voters approved 15,000 slot machines in Maryland, but all the bidders combined asked for permission to bring in just 6,550.
The most anticipated bid—the plan to develop slots at Laurel Park Racetrack—was rejected because Magna Entertainment didn't submit the required $28.5 million licensing fee. (Magna is challenging the rejection in court.)
"We hoped there would be more bids," admits Donald C. Fry, chairman of the slots commission. "If you're looking for competitive bidding, you hope to have more than one bid at each location."
In recent weeks, the developers behind the Baltimore City bid announced a deal with the City Council to vastly expand their plans to include a 3,750-machine casino—the maximum allowed for that location under the new law—that could dramatically increase revenue to the city, but also could have a tremendous impact on the communities of southern Baltimore, and will certainly stir local opposition. In Anne Arundel County and in the city, local officials are betting that they can reap slots' rewards—in revenue, tourism, and jobs—without enduring the increased crime and congestion that opponents say come with legalized gambling.
David Cordish, whose Baltimore-based Cordish Companies stepped in to propose the casino at Arundel Mills after the initial Laurel bid was rejected, predicts the Anne Arundel County Council will pass the zoning bill, the state gaming commission will approve his bid, and he will break ground on a new facility by the end of the year. "I'm very optimistic," says Cordish, who has already begun drawing up architectural sketches for the site. "It's gone through an orderly, thorough due diligence. And the bottom line is, it's good for the county, it's good for the people of Anne Arundel, it's creating a lot of jobs and a lot of taxes, it's good for the state, and they're going to pass it."
And while many developers bailed on building casinos in Maryland because of the tax rates, Cordish says he can turn a profit. "It'll be a good solid single, not a home run," says Cordish, whose company has developed casinos in Kansas City, Indiana, and Hollywood, FL. "I'm happy hitting singles. You're on base."
Cordish's bravado aside, the proposed Arundel Mills casino could pay much of the $650 million in state tax revenue that voters were promised. "Our site, I guarantee, will give the state over $400 million in the first year," says Cordish. "The [budget] deficit for next year is about $900 million, so we'll take care of half of it."
The key to their project's success is that Arundel Mills comes with a built-in infrastructure, access to transportation and, most importantly, a consumer base.
Cordish Companies president Joe Weinberg, who spearheads plans for Arundel Mills, says that, given the heavy tax burden, the only way for his Company to turn a profit is to build on a developed site. "The location at Arundel Mills, where there's already this 1.4 million square foot retail-entertainment attraction, where all the roads were already in place, where people were already predisposed to come, and where we could turn that attraction into an even bigger and greater attraction, was the ideal location on every front," he says.
The company's other casinos are generally built around restaurants, retail stores, and, often, hotels. "If Arundel Mills didn't exist, we would have to develop something like it," Weinberg adds. "At the tax rate that the state has, we would not have been able to do that."
Many in Anne Arundel County were happy that an established developer like Cordish, who also operates Power Plant and Power Plant Live! in Baltimore, and clearly knows how to turn a profit, was interested in building in the area. "The plan that's been put together by the Cordish [Companies], combining the retail and entertainment with the gaming, will maximize the revenues that we can expect," said Norman Mason, an Anne Arundel County resident who spoke in favor of the casino at the public hearing. "This plan has been used in other areas and is very successful."
The kind of modern gaming facility that Cordish has built in other cities and plans to build at Arundel Mills is a far cry from the Keno terminals and betting windows—and even the slot machines—that many Marylanders pictured during the referendum debate. The facility at Arundel Mills will be a glittering casino, similar to ones in Las Vegas and Atlantic City, complete with complimentary drinks, gilded furnishings—and a lot more ways to gamble than you might expect.
"We play poker on a slot machine, we play blackjack, we play roulette—you wouldn't know the difference [between a slot machine and a gaming table]," says Cordish, adding that in places like Las Vegas, where most forms of gambling are legal, slots machines make up 80 to 90 percent of revenue. "My prediction is that, 10 years from now, you will see very few dealers in Las Vegas and Atlantic City. You gotta have a guy watching, you gotta have a guy watching him, you gotta have a guy watching him watch him—it's expensive."
As a result, Cordish isn't concerned about increased competition from facilities in Delaware, where there is a push to legalize table gambling. "Do I really care? No," he says. "I think the hardcore card player is going to come to Arundel Mills the day we open and be very happy."
If David Cordish is unabashedly optimistic about his plans at Arundel Mills, Peter Carlino, CEO of Penn National, which is based in Pennsylvania and operates gaming facilities in 11 states, has been unabashedly pessimistic about his company's plans to develop a 500-machine slots casino in Cecil County. "We are not obviously enthused about Maryland," Carlino said in February. "We are there simply because we gotta be. It's right next door."
So, it came as something as a surprise when Penn National spokesman D. Eric Schippers told The Sun that the company has "been having some early discussion" with officials about the possibility of developing a slots casino at Laurel. Of course, since they've already bid to build a casino in Cecil County, Penn National would have to circumvent rules barring companies from owning multiple slots facilities in the state.
Schippers clarifies that Penn National would only propose to build a casino at Laurel if the County Council prevents the Arundel Mills project from going forward, and then would work out some kind of ownership-management arrangement with another company, possibly Magna, to avoid breaking the ownership rules.
"We're going to wait and see what the County Council does," says Schipper, who adds that many Anne Arundel County residents expected slots to be at Laurel and Penn National is interested in exploring that possibility. "If you look at the genesis of this discussion, it related to slots at the racetrack—many people thought they were voting for slots at the racetrack, specifically."
So far, the other proposed casinos don't exactly look like statewide rainmakers. The $75 million Cecil County facility Penn National proposed to build in Perryville, 35 miles northeast of the Baltimore Beltway, will initially have 500 slot machines, or about one-tenth of what has been proposed at Arundel Mills (although the facility has room to expand up to 1,500 machines). Accordingly, the facility is not expected to have nearly as big an impact on local and state revenues, or on the local communities.
The similar-sized casino proposal at the Ocean Downs racetrack in Worchester County (800 machines), will largely be an expansion of the operation there and is not expected to have a tremendous impact on local or state coffers.
The only other proposal that could net voters the kind of revenue they were promised is the expanding plan to build a casino among the warehouses south of M&T Bank Stadium in Baltimore. Local entrepreneur Michael Cryor—a Charm City Zelig who has, at various times, served as a dean at Morgan State, chair of Maryland's Democratic Party, and a talk-show host on WJZ—teamed up with Florida-based developers to form Baltimore City Entertainment, and initially submitted a bid to build a 500-machine facility on a city-owned parking lot among the warehouses south of M&T Bank Stadium, known as Lot J.
But recently, the developers announced intentions to build a larger facility, with 3,750 slot machines—the most allowed at the site—on waterfront property adjacent to Lot J. The city, which owns the land, had promised development rights to a team of investors led by Baltimore Ravens linebacker Ray Lewis, who planned to build a sports-themed complex of restaurants, retail, and office space, but their plans have been stalled by the stagnant economy. In May, with the city's blessing, Lewis's group reached a tentative agreement to hand development rights for the site to Cryor's team.
"This is an important opportunity for the city," says Cryor, who worries that Baltimore City will not get its share of gaming revenues once they begin to flow. "We are wedged between a number of cities and states here in the Mid-Atlantic who are all competing and in some cases thriving off of the gaming dollar, much of it at the expense of Baltimore City and the state of Maryland."
The city and state stand to make a lot more revenue with Cryor's expanded plan and that has everyone from the Baltimore City Council to the Maryland Gaming Commission rooting for it. "[The new plan] is certainly more advantageous than a proposal of just 500 machines," says commission chairman Fry. "Obviously, there's an interest on the part of the commission and the citizens of Maryland to see proposals that provide the maximum benefit for the state."
While some observers fret over the murky future of slots in Maryland, David Cordish—who is perhaps more personally invested in their success than anyone, but is also one of the most experienced gaming-industry vets in town—says difficult times might prove beneficial in the long run. "You have the stronger companies responding, those who have the money," he says. "Maryland's gonna get the revenue they expect—and then some." And while Cordish claims that he bases his judgment strictly on the numbers, as he would with any of his national projects, he admits he's rooting for the city and the state.
"Psychologically, you don't want to fail in your hometown," he says. "You care about the people—you really want to make it work."