Laurel Slots Bid Called Into Question

A bid by Laurel Park for 3,000 slot machines is being questioned by state officials.

In a jaw-dropping revision, Maryland received requests for far fewer slot machines in five license proposals than previously thought, and two of the six bidders—including Laurel Park owner Magna Entertainment Corp.—failed to pay $22.5 million in required up-front fees, a state official said Feb. 3.

The change reflects a far bigger setback for Maryland’s slots plan, which already appeared to be disappointing to anyone hoping it would help the state tackle budget deficits. Instead of 15,000 allowable machines, bidders have only put up the money for 6,550 machines, compared with the 10,500 officials first believed after a Feb. 2 deadline.

“I would certainly think it’s fair to say that the economy certainly has had some impact on the submissions,” said Donald Fry, chairman of the commission charged with reviewing the proposals and deciding on licenses.

Both MEC, which bid for 3,000 slot machines at Laurel in Anne Arundel County, and Empire Resorts, which made a proposal for 750 machines in Allegany County, did not include the required $3 million fee for every 500 requested machines. While it’s unclear what that will mean for the two proposals, Maryland has only collected about $39.3 million in up-front fees from bidders instead of the $90 million that fees for the full 15,000 allowable machines would have brought in to help fight the state’s $2-billion budget deficit.

The bids also have long-term implications, because state budget analysts had estimated the state could have raised more than $600 million a year after full implementation in several years.

Fry said the seven-member commission the week of Feb. 8 will discuss the implications of the two bidders that didn’t pay the licensing fees. Fry said the commission needs to hear from procurement specialists and the attorney general’s office, but he pointed out “it appears that these do not meet the basic requirements.”

The Baltimore Sun reported MEC chairman Frank Stronach met privately with Maryland Racing Commission officials Feb. 3 and told them the company is reluctant to pay the license fee because it’s not sure if it would get the money back should another bidder be selected for the Anne Arundel County slots parlor. Baltimore-based Cordish Co. also made a bid for the Anne Arundel site, seeking to put 4,750 slot machines at Arundel Mills Mall and creating the only competitive bidding scenario in the process.

Cordish paid the licensing fee.

Among the bidders for other sites is William Rickman, the Ocean Downs harness track owner who has bid for 800 machines in Worcester County on the Eastern Shore, with the possibility to expand to 1,500. Penn National Gaming Inc. wants to put 500 machines at a Cecil County site, with the potential to grow to 1,500.

Senate President Thomas V. “Mike” Miller, a strong backer of slot machines to help raise money for the state, sounded glum about the bidding results, even before the slots commission chairman revised the number of machines requested. Miller was particularly frustrated about the failure to submit the license fees.

“The way this was set up is you got to pay to play, and anybody who didn’t put up their initial payment in my opinion is not a significant investor,” Miller said.