Magna Entertainment Corp. said Feb. 4 it has arranged to pay a $28.5-million licensing fee for slot machines—but the money will be placed in an escrow account at a Maryland bank.

MEC, when it submitted its bid for slot machines at Laurel Park Feb. 2, didn’t pay the fee, which is $3 million for each 500 machines a bidder seeks. MEC bid for 3,000 slots at Laurel, which is located in Anne Arundel County between Baltimore and Washington, D.C.

In a release, MEC said Laurel Racing, the bidder, has asked the state commission overseeing the bids to “undertake that it will utilize its discretionary authority to refund the initial license fee in the event Laurel Racing is granted a (slot machine) license but is unable to obtain all proper zoning and permits” necessary for operation.

MEC said the fee, along with interest, will be paid to the commission provided it agrees to refund the initial license fee. The Maryland slots law apparently doesn’t specify whether fees will be refunded if selected bidders are unable to build slots facilities.

MEC said funds for the license fee were advanced pursuant to a Dec. 1, 2008, loan agreement among MEC, certain MEC subsidiaries as guarantors, and a subsidiary of MEC controlling shareholder MI Developments Inc.

The Anne Arundel site, one of five named in the slot-machine legislation, is the only one with more than one bidder. Cordish Co. submitted a bid for 4,750 machines at Arundel Mills Mall and paid the full license fee Feb. 2.

State officials said they would meet the week of Feb. 8 to decide whether the MEC bid was incomplete because the license fee wasn’t submitted with the bid.

Senate President Thomas V. “Mike” Miller indicated he was frustrated about the failure to submit the license fees. A bidder for slots at a western Maryland state park also failed to submit the fee.

“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 told the Associated Press.

Maryland lawmakers hoped to use the license fees to help reduce a $2-billion budget deficit.

More than $100 million in projected slots revenue is to go to the horse industry in Maryland whether or not the machines are located at tracks. The only two tracks that qualify under the law are Laurel and Ocean Downs, an Eastern Shore harness track that submitted a bid for 500 machines at the outset of operation.

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