Maryland slots bid process in jumble

Feb 7, 2009 12:48 AM
Staff & Wire Reports |

Maryland's Senate president said Thursday that the dismal outcome of the state's slot machine bidding process is "just unacceptable" and a commission should explore the possibility of starting over. The General Assembly's other leader disagreed.

Senate President Thomas V. Mike Miller said he intends to ask the chairman of a state commission overseeing the bidding to report back to the General Assembly by next week with recommendations to address disappointing turnout from bidders.

As far as the recent bids go, Miller said he envisioned the potential of "accepting some, maybe rejecting others," but he didn't mince words about the overall result.

"The product we have currently is just unacceptable," Miller said.

But House Speaker Michael Busch said he believes the process should move along as planned.

Busch, D-Anne Arundel, described the bids that were submitted for a Monday deadline as "the first step," and now the commission needed time to review proposals with the help of a consultant.

"All of those things have to take place," Busch said. "The idea that somehow this should all come back to the General Assembly ... why would anyone respect the process any more?"

Maryland voters approved a constitutional amendment in November to legalize slot machines in five locations, including Anne Arundel, Cecil, Worcester and Allegany counties and Baltimore city. A companion bill that outlines the process for implementing the machines was approved by lawmakers in the 2007 special session, along with a bill that put the matter on the ballot.

Many Maryland officials had been hoping to see a competitive bidding process for the maximum 15,000 slot machines, which would have required developers to pay $90 million in upfront licensing fees to help ease the state's $2 billion budget deficit.

But the bidding process has been a victim — at least partly — of the recession, and only six groups made bids for 6,550 machines. Two groups also failed to include any licensing fees with their proposals. As a result, Maryland only received about $39.3 million in upfront fees from bidders.

Miller, however, believes the economy is only part of the problem.

Critics have pointed to the fact that slot machine operators will receive only about a third of the proceeds, which is a lower cut than operators receive in other states. Maryland is set to receive half of the revenue generated from slots.

"I'd have to believe that the bidding process at the present time is in disarray and that someone needs to analyze the problems with the bidding process — apart from the economy — and recognize that if adjustments are to be made they need to be done as rapidly as possible," Miller told reporters.

Miller also criticized a stipulation tacked on by Baltimore city officials for the site there, where $36 million in rent is being required by city officials, a decision Miller described as "greedy."

Miller then lashed out at Magna Entertainment Corp., which failed to include the required $28.5 million in their plans to bring 4,750 slot machines to Laurel Park, a horse racing track.

The company said Wednesday it has put the money in an escrow account in a Maryland bank. But the move was unappreciated by Miller, who declared: "Magna needs a new set of lawyers."

"This business about putting money in escrow, that's nonsense," Miller said.

The Senate president said the commission that will review the proposals is going to need attorneys to help sort out the mess.

"I mean, they've got to decide whether they've got to go through the whole process first before they decide whether or not to start all over again," Miller said.

The commission has scheduled a meeting on Thursday to discuss the bids and the implications for the two that did not include licensing fees.

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