State may not be able to count on slots revenue for years

Slot machine gambling has been legal in Maryland for 367 days. You probably haven’t noticed.

Last election day, voters approved legalizing slots as a way to generate more than $300 million a year for public education. But a year and two days later, it’s questionable when the money will fill the state’s coffers and how much of it will ever arrive. Public officials’ dream of a new revenue source to close the state’s stubborn budget gap has been partially battered by the economic downturn and local opposition to slot parlors.

While officials had always said it would take a few years before slots revenue began making an impact, the process so far has been stagnant. Multiple bidders were expected to compete for the right to operate a total of 15,000 slot machines at five locations scattered throughout the state, but that hasn’t happened.

Four of the five sites ended up with a single bidder. The fifth received no bids.

“It’s not exactly what people imagined,” said Warren Deschenaux, the state legislature’s chief fiscal analyst.

Without the additional revenue slot machines were supposed to generate, the state — and the university — could have a bigger, longer fiscal problem on its hands.

The state is already facing a $2 billion deficit next year, and further cuts to the university’s budget are likely. University officials are making drastic slashes, including possibly eliminating  entire departments, laying off adjunct faculty and increasing class sizes. Any more cuts would come close to the bone.

“Doing something like slots is never easy, and doing it in the midst of the worst recession since the Great Depression is even worse,” university lobbyist Ross Stern said. “You have to hope a new revenue source is going to be successful and coming online because it would be a huge help to the state’s budget situation.”

The two largest sites — one in Anne Arundel County, the other in Baltimore City — were expected to generate a massive portion of the slot revenues, but they haven’t had licenses awarded yet. At its last meeting, the commission charged with handing out the licenses set a Dec. 17 deadline for those two licenses to be awarded. Construction plans are underway for the other two sites.

The delay in awarding licenses has caused concern in Annapolis, particularly in looking to future budgets. Even with the slots revenue, the state is still projecting deficits of more than $1 billion in both of those years.

“We’re not quite behind yet, but if we don’t get licenses at the two big locations in the next six weeks, we’re going to have to adjust the timing of the cash flow,” Deschenaux said.

But Deschenaux remains confident, insisting both will eventually be built and that, at some point, the state will earn $660 million a year.

“Ultimately, we’re expecting those sites to generate the revenue,” he said.

robillard at umdbk dot com