Call increases for state rules on Maine casinos

AP News
Posted: Nov 03, 2011 5:22 PM
Call increases for state rules on Maine casinos

As voters weigh whether to embrace developers' plans to build up to three new casinos in Maine, the call is growing louder for the state to regulate the expansion of gambling.

Tuesday's vote will be Maine's eighth casino or slot-machine referendum in 11 years, prompting some to suggest the state has become a Wild West of sorts for casinos because state law allows prospective developers to essentially write their own proposals and let voters decide their fate.

Placing casino decisions in voters' hands on a case-by-case basis is not a good way to establish gambling policy or a gambling industry, said Clyde Barrow, who heads the Northeastern Gaming Research Project at the University of Massachusetts Dartmouth. Barrow knows of no other state where voters have been asked repeatedly to approve so many casino proposals.

Unlike most states that allow casino gambling, Maine has no state regulations addressing issues such as how many are allowed, where they can be located or how their revenues should be shared with the state, Barrow said.

"It's an industry that's growing ad hoc by referenda, and the referenda are being written by casino developers," Barrow said. "So it's really private industry legislation without any regard to the appropriate distribution, number or type of facilities. It's just a free-for-all."

Thirty-eight states have some form of casino gambling _ commercial casinos, Indian casinos, or horse racetracks with slot machines, known as racinos. Maine's only racino, Hollywood Slots of Bangor, opened in 2005 and has 1,000 slot machines. Voters a year ago approved a casino now under construction in Oxford, which will have slot machines and table games such as blackjack.

This year's ballot has two separate questions seeking approval for three new gambling sites. One asks voters if they want to allow racinos in southern and eastern Maine; the other seeks approval for a casino in the south-central city of Lewiston.

The interest in the state developing a wide-ranging gambling policy is keener now that Massachusetts legislators are considering a proposal to allow casino gambling there, said state Rep. Linda Valentino, who for years has been calling for comprehensive casino legislation. The Massachusetts proposal would license three resort-style casinos and allow one slots parlor.

Valentino has submitted a bill she said would serve as a starting point for creating a regulatory framework.

Her proposal calls for creating four districts in Maine where casinos would be allowed, open up the process to competitive bids and subject casino developers to a $3 million fee for a slot-machine facility and a $5 million fee for a casino with slots and table games. The bill would also create a formula stipulating how casino revenues should be divided between the state and the casino operator.

"I'm against the way the state of Maine has been handing out these licenses," Valentino said. "We basically let the developer draw up the proposal and they tell us what they're going to do, they tell us where they're going to do it and they tell how much they're going to pay us. It's ridiculous."

Casino developers are going the referendum route because it's been the only path available, said Larry Gilbert, the mayor of Lewiston and the spokesman for a local group that wants to build a downtown casino.

"To sit and wait for a Legislature to act, we just can't afford that," Gilbert said. "People need jobs now, and we need economic development now."

Vince Keely, owner of the Wonderbar Restaurant in Biddeford, welcomes the chance have a racino in his city, where residents last year approved a local ballot question by a 61-39 percent margin in favor of it. If the statewide racino question is approved, developers say they'll build one racino in Biddeford, while the Passamaquoddy Tribe is proposing another in or near Calais.

Rather than having statewide elections on casino proposals, Keely thinks it would be fairer if they were voted on at the city, town or county level.

"If people want it locally, they should get it," said Keely.

The state's current approach isn't helping it much, said Dennis Bailey, executive director of the Casinos No! anti-casino group.

Under the proposed legislation in Massachusetts, competitive bids for casinos would start at $85 million, he said. There is no competitive bidding in Maine, and the license fee is $225,000.

"I don't think we should charge $85 million, but maybe $5 million, $10 million," Bailey said. "What is the going price? We don't even know."

Maine also does not set a uniform formula stipulating how much casinos have to pay to the state and where the money goes. Instead, the formulas are written on a case-by-case basis and can be written by casino developers or the Legislature.

Hollywood Slots, for instance, pays 1 percent of the gross slot machine income and 39 percent of net slot machine income _ the amount wagered after payouts _ to the Maine Gambling Control Board. The board then distributes the revenues in differing amounts for a wide range of purposes, including harness racing purses, college scholarships, and a state health fund.

By contrast, the Oxford casino will pay 46 percent of its net slot machine income to the board after it opens next spring. One-quarter of that will go toward education and the rest will go elsewhere.

States that allow casino gambling typically have goals of either generating tax money for the state or creating jobs and economic development _ or a balance of the two, Barrow said.

"Is the goal to generate tax revenues or is the goal long-term economic develop and job creation, or some balance of the two?" Barrow asked. "That question's never been asked in Maine, or at least at the appropriate level."