The first gaming operation will become reality in Maryland by mid-2010, when the Ocean Downs racetrack opens up with approximately 800 Video Lottery Terminals, as approved the other day by the Location Commission.  This is good news: that Maryland gaming is really moving forward, creating economic opportunity and will begin bringing revenue to the state (not much, but any will help right now, really). 

And, if Ocean Downs does open in by May or June to get summer beach traffic, Maryland will actually be doing fairly compared to other states by opening up the first casino/racino within @18-20 months from legalization (Nov. 2008).  Penn National's approval is probably coming soon & that will also be very good news-- better than Ocean Downs, for the more lucrative potential of its new 'Hollywood' casino in Perryville, MD.   But good news here doesn't translate into great news on Maryland gaming, in general.

The Baltimore Casino Entertainment Group has yet  to pay the additional license fee to max. its VLT bid to 3,750, as indicated in the Aug. 26 hearing in Baltimore. So far, it has only officially applied for a 500-VLT site, though with plans for the larger casino.  Meanwhile, there's still no zoning bill  in place for the 4,750 VLT Arundel Mills casino, and the exasperating chicken-egg situation appears in effect with the commission waiting on local zoning approval and the county council waiting on commission approval.  

The Arundel Situation has prompted this opinion from a recent Baltimore Sun editorial:

It's probably naive to hope that the sight of slots rising in Worcester County will inspire the Arundel County Council to finally make a decision. But when Maryland voters overwhelmingly supported legalizing slot machines in the 2008 election, they expected more than a few hundred machines on the far eastern edge of the state. They expected a successful, responsibly run program that would help fund state government without more tax increases. Arundel officials need to follow Worcester County's lead to get us there as soon as possible.

 The Sun's right - the Arundel county council should act soon, to fulfill the promise of Maryland gaming.  I would go further --however-- in light of what's changed in the mid-Atlantic gaming universe since Maryland voters approved gaming last year. 

Since then, all of the the state's neighboring gaming states have moved ahead on gaming: sports betting, table games, proposed new casinos, etc.  Because the political and constitutional process is complicated and lengthy, Maryland leaders really shouldn't spend too much time taking a wait-and-see approach: we've waited and we're seeing that Maryland gaming will need to be more competitive.  This means that officials should explore expanded gaming, a lower tax rate (to facilitate destination gaming resorts) and a real open-minded attitude towards gaming in the state's future.

Well, at least that's the name of the planned casino by the Baltimore City Entertainment Group (BCEG).  Here's some details from BCEG's proposal, up for consideration by the location commission with a decision due this Fall (also pending the financial investigation).  Some highlights, learned from yesterday's public presentation:

• BCEG has already done a lot of planning work with various city agencies: traffic, police, planning, etc.
• BCEG plans a mid-2011 opening
• the Baltimore Development Corp. (BDC) is firmly behind the proposal & supports the switch in venue
• according to BDC, BCEG controlled the rights to various properties in the casino development region from the get go
• the casino will be called "Celebration" and have a Baltimore theme: history, architecture, tourism, etc.
• the 90,000 square foot casino will have 3,750 VLTs and BCEG is planning to submit the remainder of the application fee
• a shuttle bus service to/from downtown Baltimore hotels
• the plan includes a five-level parking garage across the street (Warren St)
• it will have four restaurants and be visible from both M&T Bank Stadium (Ravens) & Oriole Park (Camden Yards)
• traffic is a concern - BCEG is wroking to make sure traffic will flow easily around
• the facility will create 926 direct FTEs, 2,332 construction jobs and approximately 6,292 multiplier-effect (indirect) jobs
• projected revenues @$500 million in 2011 to @$650 million in 2015
• any potential chemical contamination on the site -- formerly Maryland Chemicals- should be alleviated with remediation, inclulding a vapor barrier under the foundation

Yesterday's site visit & hearing was relatively smooth: again no public opposition to the project (like Cecil Cty. & Worcester).  The commission was very open and relatively friendly to all presenters, in some contrast to Penn National's hearing of Aug. 13, which had some contentious moments over the outstanding application fee.  Some commissioners did raise some good questions over the somewhat rosy revenue projections & there will be follow-up on this with the commission's consultant and BCEG's analysts who developed the numbers.

A focal point of the concern has to do with potential competition with Arundel Mills -  I'm wondering if the revenue projections assumed a Laurel racino, thus reducing head-to-head competition between the two properties?  Arundel Mills Mall is closer and much more familiar to more Baltimore-area slots players than is Laurel racetrack.

Yet, there are still real questions here, with both Cordish and Laurel people expressing a viewpoint that bidding was unfair because of the site switch.  Legal action is still a possibility -- so like Cordish's Arundel Mills proposal, there's still a real chance of delays here, beyond the normal approval process.

Later today, the Video Lottery Facility Location Commission will be holding a site review and open hearing in downtown Baltimore to learn more about the plans for a Baltimore casino. 

What's controversial?  Mainly, the controversy stems from the city's recent approval to allow the Baltimore City Entertainment Group (BCEG) use of a different plot than it had made available before the VLT bids were due last February.  This has led to objections from both Cordish Company execs and Magna/Laurel folks who are unhappy because they didn't know about the new parcel earlier.

According to a Baltimore Sun piece from yesterday, a Cordish vice president suggested that this could very well have caused them to consider a bid for the Baltimore site license.  Of course, we know what happened instead: Cordish bid on the Anne Arundel VLT site and is now embroiled in a zoning battle in the county council over it's Arundel Mills mall casino application. 

The new site is clearly in the interests of Maryland gaming, because it should allow for a better end product.  Supposedly, there will be more floor space for one-story casino floor: usually preferable to a two-story design, for example.  Atlantic City's ill-fated Atlantis (originally Playboy) learned that the hard way in the 1980s, despite a great location in the middle of AC's Boardwalk.  The new space will supposedly allow for more amenities: a hotel, restaurants, entertainment/convention space, bars, retail,etc. -- crucial to creating a resort that at least resembles the destination casino resorts and that will maximize gaming revenue.  

I'll be able to attend much of the hearing today, so I'm really looking forward to learning more about BCEG's proposal (and BCEG itself) .  Of the four VLT bidders in Maryland, BCEG is by far the most mysterious--an investor group that sprung up for this purpose unlike the existing gaming-involved firms with track records that bid for the other properties.   

Update 1: Apparently, there is a two-story design for the casino, though I'm not sure that includes placing the VLTs on both floors.  If so, I'll be curious to hear/read how BCEG intends to operate-- it could work, but will take creativity.  I'll have more on this tomorrow, probably...

Since I've been gone, there's been a few key developments in Maryland gaming as follows:

• 1-Baltimore City Entertainment Group(BCEG)  sought and received approval from Baltimore's Board of Estimates to move its planned casino to a lot adjacent to Russell St. -- a busy thoroughfare.
• 2-In a public hearing today (8/13/09), Penn National  announced that it is planning to build a facility to hold 1,500 VLTs in Perryville, MD even though it has only officially applied for 500 VLTs and paid the application fee for the lower amount (this is clearly a problem for some on Maryland's Location Commission)
• 3-Penn National executives have significant problems with regards to ambiguity in the MD gaming statute over procurement of the video lottery terminals. They want to know who the vendors will be, and to what extent PN can choose the games that go on the casino floor. 
• 4-Penn National moved up its projected Perryville opening to October 2010 from March 2011 despite the outstanding issues described above, a smaller concern about location improvements and an issue with regards to stockholder information.  
• 5-Both Gov. Martin O'Malley and Senate Pres. V. Mike Miller have publicly spoken about the frustrating delay over Cordish's proposal for an Arundel Mills casino: still stalled in the county council's zoning process after all these months...

Analysis:

1-A casino more accessible to Inner Harbor foot traffic is ideal-- but significant questions remain on the deal itself: why wasn't the parcel on the table last winter before the bids were due?  Also, presumably, the MD Location Commission has been reviewing the former site: could this delay approval?   

2-PN executives have a point: there needs to be more clarity on this, given the high investment requirement in officially committing to the higher number of VLTs.  However, I think it makes sense to plan for a bigger facility regardless, as there's a good chance this will happen.  A year ago, PN was very public with preliminary plans for a 2,000-VLT facility and execs are confident they can attract players from the Balt/Wash. area and peel off some Harrah's Chester and Atlantic CIty traffic to prosper.  I also think PN will do well via cross-marketing with its Hollywood racino in central PA and Charles Town Races and Slots in West Virginia.

3-Of course, PN wants clarity on key decisions over VLT procurment and placement: why wouldn't the executives want to know this?  The specific games on the gaming floor and their placement are key to success and gaming professionals ought to be able to exercise their judgment on these decisions.  They need the legal clarity on this issue: hopefully it can come soon, without requiring a legislative amendment to the statute.

4-  Very, very ambitious schedule projection here, but I doubt PN would go public with it if the company wasn't ready.  There's definitely some advantage to be the first Balt-Wash. I-95 corridor casino to open and will give the first operator to do so a head start in building a customer base and establishing loyalty via players clubs, etc.  This puts some pressure on Cordish and BCEG to move as quickly as possible- I think Cordish is probably ready to start the digging as soon as it wins its license (and zoning!);  BCEG -- more ambiguous picture.

5-I totally agree with O'Malley and Miller: what's going on with the Anne Arundel County Council is bad for Maryland gaming: this situation needs resolution one way or another.  With 4,750 VLT's, the Anne Arundel site is vital to the success of the project and O'Malley and Miller are right to begin applying some political pressure to get this thing moving.

While the Anne Arundel County Council ponders Cordish's Arundel Mills proposal, Baltimore is moving forward.  A special committee of the city council just approved zoning for the south Baltimore casino.  Full council approval for the Baltimore City Entertainment Group's (BCEG) proposal could happen as early as this Monday (6/8).  Last week's commitment by BCEG's spokesman to increase VLTs from 500 to the maximum 3,750 probably eased the approval.

Here's more from wbal.com:

City Council President Stephanie Rawlings-Blake says slots will bring with it, "job creation, increased education funding, and the largest city property tax reduction in recent history." According to the agreement, by the fifth year the facility will generate an estimated $25.4 million annually in new City revenue enabling an 8-cent reduction of the property tax rate. The construction of the facility will create 1800 jobs, and once operational, the facility will contain 700 full-time jobs and 450 part-time jobs with average wages of $41,000. Under state law, Baltimore Entertainment Group will pay the state $22.5-million in annual license fees. Rawlings-Blake's office says the slots parlor will generate $250-million for the state's Education Trust Fund, and Baltimore City will get $44.5-million of that money.

The revenue numbers sound good, though I'm always a little wary of specific revenue projections.  Too specific projections don't account for variability and unforeseen variables in gaming.  What's nice, however, is to read Rawlings-Blake affirmative quote.  She clearly understands that the economic impact is more than the revenues generated by gambling, its also about jobs, etc. & for a city that could always use economic rejuvenation in this way.  Kudos to you, councilwoman.