State leasing slots at $168M

State leasing slots at $168M
Maryland Lottery director says leasing makes more sense than buying
By EARL KELLY, Staff Writer

The state Board of Public Works yesterday approved spending more than $168 million to lease 4,719 slot machines for a casino being built near Arundel Mills mall in Hanover.

Board member Comptroller Peter Franchot expressed outrage that the law was written so taxpayers must pay for the machines.

"It should be the responsibility of the casino operators, who are getting rich off this," Franchot said when Maryland Lottery Director Stephen Martino made the formal presentation.

Franchot used the occasion to repeat his opposition to slots as a source of state revenue.

"I like you, I think you do a good job, but I remain disgusted that we as a state are hanging on to the idea that slots are the solution," Franchot said.

Franchot called the law that authorized slots - and which obligated taxpayers to provide the machines - "preposterous."

He voted against authorizing the contract, while board members Gov. Martin O'Malley and Treasurer Nancy Kopp voted for it.

Martino said there are benefits to leasing slot machines for Maryland Live! in Hanover, instead of purchasing them. Some machines are more popular than others with gamblers, Martino said, and leasing the terminals gives the state a chance to cull the less popular ones.

Under the terms of the lease, the state can require the vendor to take back a machine if it fails to attract enough players. Any machine that attracts less than 85 percent of the average will be subject to return, Martino said.

The lease for machines from eight companies runs until March 2015, at which time it may be renewed for up to five years.

Over the past two years, the state has purchased 2,300 terminals, for $99,033,288, or about $43,058 per machine.

The new lease will allow the state to use an additional 4,719 machines, for a lease of $168,552,009. This translates into about $37,718 per leased machine.

Martino told the board that the Hanover casino is generating 2,500 construction jobs and will create about 1,500 permanent jobs.

On Monday, the state Video Lottery Facility Location Commission discussed creating a casino at Rocky Gap Lodge in Washington County. The state-owned resort is reportedly on the verge of financial collapse, and the state hopes to rescue it by opening a slots casino.

Lottery officials say slots generated about $69 million for the state's education trust fund in 2011, plus about $8 million for local impact grants.

The new facility at Arundel Mills is expected to open in June.