Slots bill would crack down on operators

Those who want to operate slot machines at the state’s harness racing tracks would have to pony up millions of dollars more each year and share more of that money with others in the struggling industry, based on a Baldacci administration bill designed to crack down on the state’s newest form of gambling.

The emergency legislation, a new version of which was released Monday, would allow the state to collect millions more in administrative costs beginning in fiscal year 2004, based on a variable percentage determined each year by state financial officers.

It also would tighten licensing conditions and increase annual state licensing fees to distribute and operate the slots from $1,000 to $200,000.

The substantive changes pave the way for a Wednesday showdown between the state and racing industry officials in front of the Legislature’s Legal and Veterans Affairs Committee, which will hold a public hearing on the bill at 2 p.m.

The governor’s 39-page bill would essentially replace legislation approved by voters in a November referendum that allowed slots at the state’s two harness racing tracks. The original legislation provided 25 percent of the revenue from slot machines to the state, but state officials said the 1 percent dedicated to administrative costs didn’t begin to cover the state’s expenses.

A spokesman for Gov. John Baldacci, a gambling opponent, said Monday that the bill’s new restrictions were not designed to harm the racing industry or derail efforts to introduce slots to Maine.

“The point is not to discourage people, but there are a lot of costs connected to getting this started and those costs have to be covered,” said Lee Umphrey, the governor’s communications director.

The state’s Office of Fiscal and Program Review estimated that oversight of the new industry in fiscal year 2004 would cost the state more than $3 million – more than five times the amount provided in the original bill.

Other than the administrative costs, the governor’s proposed bill does not change the amounts of slot revenues dedicated for other purposes, including 10 percent to the Fund for Healthy Maine and 7 percent to supplement harness racing purses.

Beyond its financial aspects, however, the governor’s bill bears little resemblance to the referendum legislation approved by voters two months ago, according to a spokeswoman for the company seeking to install slots at Bangor Raceway.

“These are substantial changes,” said Christen Graham, spokeswoman for Capital Seven LLC, the company proposing slots in Bangor. She said the original legislation already included strict guidelines under which to operate the slot machines.

Among the changes proposed by the governor are the creation of a gambling regulatory board with expanded powers to fine slot operators and revoke gambling licenses.

While creation of the five-member board is unlikely to raise many objections among gambling proponents, other aspects of the bill might.

Included among those is one that allows owners of off-track betting parlors and high-stakes beano operations to collect “impact fees” if they can show that a so-called “racino” has caused them to suffer financially.

The bill also limits the number of slot machines to 3,000 in the state, or 1,500 at each track. The original bill had no limit, and industry officials are expected to argue that any limits should be based on market forces.

As it stands, Bangor Raceway is the only track eligible to host slots. Voters in two southern Maine towns rejected a proposal to have slots at Scarborough Downs, the owners of which are seeking to extend the deadline to gain needed local approval.

Baldacci has said he would not support such an extension. But another provision in his bill could benefit the southern Maine track by requiring tracks with slot machines to share that revenue with other tracks regardless of whether they have slots.

Under the original bill, a track needed slot machines to be eligible for the funds.