Gaming Program Charles LaBoy CPA Assistant Director for Gaming - PowerPoint PPT Presentation

Overview of Maryland’s Gaming Program Charles LaBoy CPA Assistant Director for Gaming Maryland Lottery and Gaming Control Agency April 24, 2014

History of Slot Machines in MD  1937 – 1939: Slot machines authorized statewide  To provide revenues for the needy  Near the end of the Great Depression.  Original legislation set to expire on April 30, 1939  Several legislative attempts to continue slots in certain counties – Anne Arundel, Charles, Montgomery, and Prince George’s.  Governor Herbert O’Conor vetoed bills: “Using gaming devices to raise revenue was detrimental to the overall interests of the State .”  1941: Governor O’Conor vetoed legislation for slot machines in Anne Arundel and Garrett counties  1943: Governor O’Conor signed bill allowing slots in Anne Arundel County.

History of Slots Continued  Late 1940s: legislation for slots in Calvert, Charles, and St. Mary’s counties  By 1949, Southern Maryland was the only place in the continental United States outside of Nevada with slot machines.  About 6,000 slot machines licensed licensed in the four counties.  Supporters: Revenues and jobs  Opponents: Political corruption  1963: Governor J. Millard Tawes abolished slots  Gradual reduction in the number of machines over 5 years  Complete prohibition by July 1, 1968

“Little Reno” Casino in Colonial Beach, VA A Nickel Slot Machine

History of Slots Continued  Despite prohibition, many fraternal organizations continued to operate slots, using State laws permitting charitable activities as the legal rationale.  1984: AG ruled operation of these slots illegal  1987: legislation authorized slots in Eastern Shore counties (except Worcester County – has since been added)  Veterans’ organizations can operate no more than five machines, and 50% of the proceeds must go to charity.  Machines are licensed by the local jurisdiction  Annual audits by the Comptroller’s office.  In the 2003 legislative session, there were a number of pieces of legislation considered by the General Assembly relating to video lottery terminals (VLTs).

2007 Legislation (Special Session) 2008 Referendum  2007: General Assembly enacted legislation to allow Marylanders to vote on a limited number of slot machines in the State  Maximum of 15,000 slots statewide – Slots Only  Only one license per specified location in Anne Arundel, Cecil, Worcester, and Allegany Counties, and Baltimore City.  Any additional forms or expansion of commercial gaming in Maryland is prohibited, unless approved by a voter referendum.  On November 4, 2008, 58.7% of voters statewide approved the referendum.  Voters in all 24 jurisdictions approved the referendum.

2012 Special Session 2 2012 Ballot Question  Why is Prince George’s County being added now?  Politics  New leadership  Realizing the lost potential in local revenue  In 2012, some people wanted table games but not a 6 th location; others wanted both.  Compromises were made  Special Session 2, SB 1 added:  A 6 th location in Prince George’s County  Table Games  24-Hour Operations at all casinos  Ballot question had to pass statewide and in Prince George’s County.

2012 Ballot Question Spent $44 million Spent $46 million Election Results: • • 51.9% voted for Question 7 statewide 59.4% Voted for Question 7 in Prince George’s County • Only passed in 12 Counties •

Vote YES on Question 7

Vote NO on Question 7

Purpose of the Gaming Program  Raising Revenue for:  education of children in public schools;  pre-kindergarten through grade 12;  public school construction and improvements; and  construction of capital projects at community colleges and higher education institutions.  The majority of revenues go to the state’s Education Trust Fund (ETF)  Funds also go to:  Horseracing Purse Dedication Account (PDA)  Racetrack Facility Renewal Account (RFRA)  Minority and Women-Owned Businesses Account  Maryland Lottery and Gaming Control Agency  Local Impact Aid

Current Casino Locations

Casino Jurisdictions Anne Arundel County Cecil County Perryville, MD Allegany County Worcester County Baltimore City

Distribution of Proceeds Hollywood Baltimore City The Casino at Rocky Gap Casino Prince George’s Maryland Live! Casino at (CBAC/Horseshoe) Ocean Downs and Resort Casino (MGM) Perryville Pre-July 2013 33% 33% 33% 33% 50% - Operator’s Share *43% 33% 33% 33% *43% 50% - As of July 1, 2013 Machine 8% 6% 8% 6% 0% 0% 6% Ownership: April 2015* Issuance of Prince **7% **8% **7% **8% 0% 0% 0% 38% George’s license (7/1/16) Addt’l Up to adjustments Up to 3% Up to 2% 0% 0% 0% allowed 5%** (7/1/19)**** *Casinos with less than 1,000 VLTs – state will continue to own/lease ; casino gets 43% operator’s share, provided they spend 2.5% of VLT proceeds on capital improvements each year; Horseshoe and Prince George’s get 6% upon opening. **To be used for marketing, advertising, and promotional costs and capital improvements. ****If Commission increases percentage in Anne Arundel County, the Commission shall increase the percentage for Baltimore City by at least the same percentage point increase as for Anne Arundel County.

Distribution of VLT Proceeds (All casinos except Rocky Gap) 7/1/14 – 4/1/15 – 4/1/15 – FY 14 FY 16 FY 17 3/31/15 6/30/15 6/30/15 Local Impact 5.50% 5.50% 5.50% 5.50% 5.50% 7.00% 6.00% PDA 7.00% 7.00% 7.00% 7.00% 6.00% 1.75% 1.00% RFRA 1.75% 1.00% 1.00% 1.00% 1.00% Small, Minority and 1.50% 1.50% 1.50% 1.50% 1.50% Women-Owned Businesses Account MLGCA 2.00% 2.00% 1.00% 1.00% 1.00% 2.00% 1.00% Operations

Rocky Gap Casino and Resort Distribution of Proceeds FY 14 FY 23 Licensee 50.00% 43.00% Local Impact 2.75% 5.50% PDA 2.50% 6.00% RFRA 0.00% 1.00% Small, Minority and Women-Owned 0.75% 1.50% Businesses Account MLGCA 2.00% 2.00% Operations Education Trust Fund (ETF) 42.00% 41.00%

Table Games Distribution FY 14 – FY 17 FY 17 - ongoing Licensee 80.00% 80.00% ETF 20.00% 15.00% Local 0.00% 5.00% Baltimore FY 17 - ongoing City Casino Division of 50% to fund school construction the 5% projects 50% to fund maintenance, operation, and construction of recreational facilities

GAMING PROGRAM CONTRIBUTIONS TO THE STATE OF MARYLAND TOTAL $1,376,017,296 INSTITUTION TOTAL Maryland Education Trust Fund $613,744,263 Casino Operators $500,923,076 Horse Racing Purse Dedication $81,921,154 Account Local Impact Grants $64,543,027 Racetracks Facility Renewal Accounts $22,836,610 Maryland Lottery $24,694,542 Small, Minority, and Women-Owned $17,603,616 Business *As of January 31, 2014

Local Development Councils (LDC)  LDCs must be in each geographic area where a casino is located  15 members, appointed by the chief executive of the county in which the LDC is located ( In consultation with the Senators and Delegates who represent the communities surrounding the casino and the respective county councils, city councils, or county commissioners.)  1 Senator who represents the casino’s district  2 Delegates who represent the districts where the communities surrounding the facility are located  1 representative of the casino  7 residents of the communities in immediate proximity to the casino; and  4 representatives of business or institutions located in immediate proximity to the casino

Use of Local Impact Grants  Generally: Improvements primarily in the communities in immediate proximity to the casino and for the following purposes:  Infrastructure improvements;  Facilities;  Public safety;  Sanitation;  Economic and community development, including housing; and  Other public services and improvements  Allegany County: uses above and pay down debt incurred by the county in the construction and related costs.  Baltimore City: Improvements in the immediate proximity to the casino for uses above.  Prince George’s County : 40% (not to exceed $15 million) shall be used to address infrastructure needs related to Maryland Route 210.

Anne Arundel County Local Development Council Primarily in the communities in immediate proximity = 3 Mile Area

Baltimore City Local Development Council ( Immediate Proximity ) 3 miles

Responsibilities of the Local Development Council and County Government  A county shall develop a multi-year plan for how to spend the funds  Submit the plan to the LDC for review and comment before adopting the plan or expending any funds  LDC shall advise the county or municipality on the impact of the casino on the communities and identify needs and priorities to address the impacts.

Baltimore City Local Development Council MISSION The Council has three primary roles and missions: (1) consultation on the expenditures of the local impact funds (2) review of the Casino licensee’s master plan for the development of the Casino site (3) consultation on transportation planning