* Measure before voters on Tuesday would add another casino
* Gambling revenues increasingly crucial to state
* Spread of casinos, lotteries sets up state rivalries
By Nanette Byrnes
Nov 5 On Election Day, Marylanders will vote on
a proposal to expand casinos in their state, choosing whether to
raise their bet on the hottest hand going in state government -
Like many U.S. states, Maryland in recent years has upped
its ante, responding to competition from neighbors such as West
Virginia and trying to keep gamblers interested. First came the
lottery, then video slot machines. Now the state is weighing an
embrace of full-on, Las Vegas-style gaming 24 hours a day.
True to form, casino backers are promising more funding for
education if they are allowed to open for business on the banks
of the Potomac River, within view of the nation's capital, and
to expand their operations in other Maryland locations.
This promise has been made many times, in many states as
gambling has risen in recent years to become the No. 4 source of
revenues for state governments across the United States,
trailing only taxes on personal income, sales and corporations.
The evidence is mixed on gambling's capacity for giving a
meaningful boost to education. Georgia's lottery has pumped
billions of dollars into college scholarships, but for most
states there is little evidence that lotteries increase
education spending. Some research found states with lotteries
spent less on education over time than states without them.
Yet, the lure of increasing state revenue - without having
to raise taxes - is strong. So it is no surprise that
Marylanders will not be alone with their voting booth decision.
Similar votes are being held on Tuesday in Oregon and Rhode
Island. Massachusetts approved casinos last year. New York and
Florida are expecting pro-gambling campaigns in 2013 backed by
what has become a profitable and thriving U.S. industry.
Commercial casinos are now open in 23 states, not counting
ones located on Native American land. Forty-three state
governments sponsor lotteries. Nationwide $23.9 billion in
revenue came to states in fiscal 2010 from gambling of all
kinds, up from $23.5 billion in fiscal 2009, and $15.8 billion
in fiscal 2000, the Rockefeller Institute on Government found.
No winning streak lasts forever though. As gambling revenue
has grown and become increasingly central to state budgets,
competition among states for gamblers also has intensified.
The result? The aggressive marketing of a parade of new
lottery products and an arms race of casino offerings, all in a
bid to get citizens to spend more money on games of chance.
"Revenue, revenue, revenue, it's all about revenue," said
Joseph Weinert, a n executive at gambling industry consultancy
Spectrum Gaming Group. "Legislatures see gambling as a painless,
tax-free way of gaining revenue."
A RISKY BET?
Four years ago when Maryland authorized its first five
casinos with video s lot machines only, it was billed as a way to
support education. This year that is again the major theme.
Question 7, as the latest casino gambling measure is called,
would authorize the opening of another casino. Plus, all state
casinos would be allowed to have table games such as blackjack
and roulette, and stay open 24 hours a day.
Maryland lottery and casino revenues last year hit $664
million, but the funding source has not always met expectations.
Programs including education, which casino gambling is supposed
to support, have been short-changed, critics said.
Maryland Comptroller Peter Franchot , a Democrat, opposes
Question 7. He said he doubts casino expansion will produce the
kind of revenue and benefits being predicted. He said increased
reliance on gambling revenue undermines the state's economy.
"If there were not gaming revenues, we would be considerably
stronger from an economic standpoint," he told Reuters at a
recent anti-casino rally.
Question 7 has the support of Maryland Governor Martin
O'Malley, also a Democrat, and many legislators. O'Malley
spokeswoman Raquel Guillory cited "jobs and education money" as
the governor's two main reasons for backing the measure.
"Maryland schools are No. 1 in the nation because of our
investment in them. This will bring more money to education,"
THE HOUSE WINS?
But a September report by the Maryland Budget & Tax Policy
Institute said private casino operators could keep more revenue,
while the share going to education would decline, under Question
7. The report said nearly three-fourths of additional casino
revenue would go to operators; less than a fourth to education.
Casinos in Maryland already have fallen short of their
initial 2008 revenue estimates. Construction of those already
approved has been slow. Despite the state's $266 million
investment in slot machines for them, in fiscal 2013, casinos
are expected to generate just $260 million for education, far
below the $660 million originally predicted, the report said.
A Reuters analysis of the Maryland lottery's annual reports
showed that, over time, more revenue has gone to prizes and less
to the state.
Unlike most states, Maryland did not dedicate lottery
revenues to education 39 years ago when the wagering game got
started there. Instead, lottery revenues go into a general fund
and support a variety of government programs.
The Maryland Lottery in 1998 paid out $571 million in prize
money and sent $400 million to the state. That split each
lottery dollar at 53 cents for prizes; 37 cents for the state;
and the balance for operating expenses and retail commissions.
In fiscal 2012, ended in June, the split was closer to 59
cents in prizes and less than 31 cents to the state. As a
result, gamblers got over $1 billion; the state, $556 million.
The Maryland Lottery declined to answer questions about its
program, including about this decline and the reason for it.
CHRISTMAS IN OCTOBER
Like other states, Maryland heavily promotes its lottery,
spending $14 million on advertising, and constantly introduces
new games to stoke consumer demand. Examples: a $20 book of
scratch-off tickets called Lucky 7s; a poker-style game called 5
Card Cash; a game tied to the National Football League's
Baltimore Ravens, offering team jet trips and cash prizes.
In October, the state rolled out two holiday products: a $10
scratch-off called "A Wreath of Franklins" and a second called
"$weet Riches" with $5 scratch-off tickets on a background of
green or red peppermint candies.
And Marylanders are enthusiastic gamblers. According to the
Maryland Lottery Commission, annual lottery sales per capita in
the state was $299 in 2011, up from $208 in 1999. That is far
above the national average last year of $184.
With the nation's 19th largest population, Maryland has the
sixth highest per capita lottery sales. A 2007 study found the
highest per person sales in the poorest zip codes of Baltimore
City and Prince George's County.
Barbara Knickelbein, a Marylander who led citizen opposition
to the 2008 casinos, called gambling "a tax on the poor."