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Posts Tagged ‘Magna Entertainment’

Arundel Mills Casino: Win For Cordish

Posted by jkarmel on June 26, 2010

Big win for Cordish yesterday when a judge threw out the anti-casino
referendum from the “Stop Slots at Arundel Mills” group, clearing the way for the Maryland Live! casino. Expect an appeal. Both sides have a lot at stake in this battle of gaming interests: Cordish vs. MD Jockey Club/Magna Entertainment:.
Fox 45 article
Baltimore Sun article

The ruling is a bit of a twist and very good for Cordish because it nullifies the principal behind the referendum drive itself, adding a significant legal hurdle to the forces to grapple with on appeal. The judge viewed the zoning approval as an “appropriation” and therefore not even subject to a referendum, using a similar failed effort to block Oriole Park at Camden Yards in the 1980s. Now, the casino opponents must demonstrate 1-why the zoning approval really is legitimate, and 2-the signatures are valid.

Importantly, the judge also noted that the 2008 voter approval would be essentially reversed if the referendum were allowed to go through and wrong. This has been a significant point for Cordish from the beginning – that Maryland and Anne Arundel voters have already spoken via the original referendum, and that decision should stand.

I’ve written this before and again want to emphasize that this really is a battle between two gaming interests, with a little NIMBY aspect thrown in. Magna and its MD Jockey Club partners have been behind the effort from the beginning, and have capitalized on the grumblings of some local residents to make their case. This reminds me a lot of the battle over the tunnel-connector in Atlantic City in the late 1990s, really a battle between gaming titans Steve Wynn (then of Mirage) and Donald Trump – but that played out publicly as a movement led by a few local homeowners.

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Moving Fast in Maryland

Posted by jkarmel on June 2, 2010

[Originally published by GA on November 6, 2008]

According to the Baltimore Sun, the state is moving quickly to get its new casinos established within the two year window mandated by the law. Of course, this is necessary in order to meet a February 1, 2009 deadline for the license applications. The new commission may in fact be up and running next month (December) to start administering the application process. The Sun also pointed out that Baltimore moved quickly to make designated property available for purchase — something which will smooth the process for a potential gaming firm to make a bid.

Right now, the Cordish Company is clearly eyeing the area, along with other designated spots. The Maryland Jockey Club (parent company: Magna Entertainment) is pulling together its bid for the Laurel site even as slots opponents in Anne Arundel County declare intent to keep the fight going with a zoning battle (as I predicted in yesterday’s post).

With all the potential for sensationalized obstruction, I’m confident that Maryland officials will go about this efficiently & publicly to get things done fast. The pitfalls otherwise loom large in the charged political climate surrounding Maryland casinos. I doubt that local forces will be able to block the new casinos via zoning, but in Laurel & Ocean City, they could delay proceedings for a while. There appear to be no substantive local hurdles in Baltimore, which is good news for bidders there. From an industry standpoint, the fact that Maryland is a closed market could also be advantageous: despite the restrictions, gaming companies won’t need to constantly be concerned over competitors opening up and carving up the market.

I’m still wary of the financial commitment involved in a stalled gaming market, but also encouraged that things are moving in a more positive direction. The great locations of MD’s three I-95 corridor casinos should attract sufficient interest for viable casinos to open within the law’s 2-year timeframe. The Rocky Gap location is a big question mark right now: will its remote location hinder development?

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Archive: Markets, Taxes & Maryland Casinos

Posted by jkarmel on May 27, 2010

[Note:  This is an archive version of GA’s original post-  published November 1, 2010]

In recent days, there’s been some discussion about the possibility that Maryland’s tax rate (67%) may be too much to attract desirable gaming operators. I think there’s some validity to these concerns, having spoken with various people in the know and having studied this a lot over the past year. This is especially the case if major gaming firms remain in constriction mode for a while if the market stays soft.

In an article from the Oct. 31 Baltimore Sun, an MGM Mirage executive underscored the potential difficulties facing the problematic market timing of Maryland’s nascent gaming industry:

Alan M. Feldman, senior vice president for public affairs with MGM Mirage, scoffed at Maryland’s proposed tax rate as incompatible with the type of high-end developments civic leaders are hoping for. “Clearly, the state of Maryland has decided … they want boxes with slots in them,” he said. “That’s all you could do at that tax rate.” A national crunch has “tightened up credit incredibly,” Feldman said, causing MGM to suspend two $5 billion projects in Atlantic City and Las Vegas.

Now, the likes of MGM Mirage, Las Vegas Sands or Wynn Resorts were very unlikely to bid on one of the projects anyways, with only a few thousand VLTs allowed. More importantly, the high tax rate may limit the interest of mid-size players like Penn National or dynamic, expansion-oriented operations like Mohegan Sun and Foxwoods, both of which have now expanded to Pennsylvania. Remarkably, yesterday’s Sun piece quoted MD House of Delegates Speaker Michael Busch – a powerful gaming critic- on the potential for legislative flexibility with regard to the tax rate depending on the bids that do come in.

Yet, so far, the high tax rate hasn’t prevented interest in the Maryland facilities and its doubtful that Magna Entertainment owner of Laurel & Pimlico, would have kicked in $2 million for the pro-slots campaign if it didn’t see great revenue potential regardless of the high tax.

This may have to do with the great locations of at least 3 of the Maryland properties just off I-95 (Laurel, Baltimore & Cecil County) AND the reality that Maryland will be creating a closed market, so that once-established firms need not be concerned about competitors moving in to carve up the market share — at least in the short term, maybe 3-5 years.  As of this writing, I’m aware of at least two potential bids for the Baltimore site from solid players and one for the Cecil site (Penn National). And this is what will be good for the state and the industry: a genuinely competitive bidding process for the five licenses.

However, a big question mark is the extent to which the Rocky Gap site will attract good bids with its current limitation of 1,500 VLTs.  That’s a relatively small property and with the requirement of $25 million investment for every 500 VLTs may be viewed by firms as simply not worth the price.

What’s vital for Maryland voters to realize is that what’s good for the gaming firms that do invest in the state is also good for Marylanders. If voters decide to commit to gaming on Nov. 4, they should also be prepared to take measures to support the industry’s viability: the more succesful the companies are, the more revenues come in and the more money the state has for it’s budget- the entire point of the venture in the first place.

What’s clear amidst the ambiguity above is that Tuesday’s vote is really just the beginning of this process, even if it has a culminating feel given the many years it took Maryland to evevn get to this point.

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