State’s racino share may be substandard

PORTLAND – During the campaign leading to Election Day, casino foes focused on whether the state was getting its fair share under a proposal to build a $650 million casino resort in southern Maine.

There was little debate, however, over whether the state was getting its due under the “racino” proposal that was ultimately approved.

The law written and promoted by a Las Vegas developer and approved by Maine voters on Nov. 4 allows track operators to keep 75 percent of slot proceeds – a larger share than in most other states.

“It’s unprecedented,” Stan Bergstein, vice president of the Harness Tracks of America Inc., based in Tucson, Ariz., said recently.

Racinos, which are racetracks with slot machines, have become one of the hottest trends in gambling today. They began sweeping across the nation in the last decade because they’re viewed as a way of overhauling aging horse-racing tracks while bolstering state coffers.

Already, roughly a half-dozen states have approved slots at race tracks. More states are considering allowing them.

In Maine, the racino law requires 25 percent of the slot proceeds to be divided among several state services and racing and farm-bolstering programs. No money would go to the state’s general fund, though.

The rest – 75 percent – goes to track owners, who’ll share some money with the host community. That 75 percent figure compares to roughly 40 to 50 percent in West Virginia, New Mexico, New York, Iowa and Delaware, all of which either have racinos or soon will, Bergstein said.

In Ontario, there is a thriving industry with 15 tracks even though the government takes 80 percent of slot profits, he said. The tracks keep 10 percent and another 10 percent goes to horsemen, he said.

So far, only Louisiana has given a sweeter deal to racino operators, and the entrepreneur who helped lead the referendum drive to allow racinos there was the same behind the ballot measure in Maine: Shawn Scott.

Scott’s Capital Seven LLC funded the petition drive to put slots on the ballot in Maine. Attorneys working for him wrote the legislation, and he helped to fund the campaign in support of the measure.

Bergstein marveled at Scott’s rise to prominence in the racing industry since buying Delta Downs in Louisiana for $10 million four years ago and selling it two years later for more than $100 million.

He described Scott last week as “the man who sold the racino version of the Brooklyn Bridge to the trusting burghers of Bangor.”

Bergstein isn’t the only one questioning the ramifications of the Maine racino law. Kurt Adams, who is Gov. John Baldacci’s legal counsel, said the racino law allocates no money to the general fund.

Yet factors including administration costs, law enforcement costs and loss of lottery proceeds will carry a price tag of $27 million a year starting in June 2004, he said.

“Effectively, what you have here is an enterprise that doesn’t come close to paying its own freight,” Adams said.

Scott did not return messages seeking comment for this story. His attorney did not immediately return a message Sunday.

Maine’s racetrack industry has gotten together and agreed to changes in the payout formula. Maine legislators also have the right to alter the law as they see fit when they reconvene in January.

Already, Baldacci and six state lawmakers have requested that Attorney General Steven Rowe clarify several aspects of the law involving regulation, location, and the number of slot machines permitted.

For now, Baldacci’s primary focus is to ensure the state has regulations in place to deal with a racino, and he is proposing a new state commission to regulate slot machines.

Some in Bangor also are questioning the deal they cut with Capital Seven.

The Bangor City Council has approved a deal with Capital Seven, which intends to spend $30 million to make improvements to Bass Park and to build a hotel and casino with as many as 1,500 slot machines.

But a petition drive is afoot to initiate a referendum intended to overturn the deal with Capital Seven. Critics say the deal was struck in haste and the city should consider other proposals.