Slots bill a ‘disaster’ if OK’d, Penn warns

The Pennsylvania company poised to operate slot machines at the Bangor Raceway contends a last-minute change to the bill could “spell disaster” for the project by giving the state millions more in slots revenue.

“This absolutely does not work for us,” said Eric Schippers, a spokesman for Penn National Gaming. “There is no way a Bangor facility could support this kind of tax rate.”

The bill, which imposes strict controls on the new industry, appears destined for a fierce fight on the House floor in coming days, with both gambling opponents and supporters pushing for major changes.

Upon the bill’s Wednesday arrival in the House, Penn focused its criticism on the eleventh-hour change giving the state 1 percent of the amount wagered on slots at the Bangor track.

In addition, the state would receive 39 percent of the slots revenue after winnings are paid – as opposed to the total wager – leaving 61 percent for Penn.

In its latest form, the bill also requires Penn to pay back 89 percent of the amount wagered back to gamblers.

For example, for every $100 spent in a slot machine, the state would receive $1. Eighty-nine dollars would be returned to gamblers. From the $10 remaining, the state would receive $3.90, leaving $6.10 for Penn.

Based on projections for 2004, before the facility reaches its maximum of 1,500 slot machines, the state would collect roughly $7.8 million in revenue, much of which would go to the Fund for Healthy Maine and harness racing purse supplements.

When and if the facility reaches its capacity, the state’s take would reach nearly $40 million, $8.2 million of which would come from the extra 1-percent of total wagers recently added to the bill.

The proposed increase came in response to an expected $500,000 shortfall between what the state expected to collect in revenues under the bill and what it expected to pay in administrative costs and other services.

An expensive central computer system – the cost of which is estimated at $2.4 million a year – appears to have contributed to the initial cost overrun. Designed to give the state total control over the slots, the system is needed, according to Maine Public Safety Commissioner Michael Cantara.

“Nothing dealing with this industry comes cheap … and there’s a different kind of cost if the state’s ability to manage the system is limited. That price tag could be called corruption,” Cantara said, noting that officials in several gaming states advised him to adopt the central control system.

Schippers said Penn intended to push for a less costly, but equally effective alternative that would allow the state to monitor the machines but leave the slots, which will be owned by Penn, under the company’s control.

“It’s like shooting a flea with an elephant gun,” Schippers said of the more restrictive system, which he noted isn’t even used in such gambling savvy states as Nevada and New Jersey.

Gov. John Baldacci proposed the strict controls as part of LD 1820, designed to replace a citizen-initiated bill that legalized slots at the state’s harness racing tracks.

The bill advanced Wednesday is supported by the majority of lawmakers on the Legislature’s Legal and Veterans Affairs Committee.

Beyond the fight over how strictly the state will regulate slots, gambling opponents are expected to offer their own amendments in floor debate beginning with one that would send the matter back to a statewide referendum.

“The voters have changed their minds and I believe would like an opportunity to repeal the racino,” said Rep. Kevin Glynn, R-South Portland, noting three southern Maine communities rejected hosting a racetrack casino after the statewide vote allowing the new form of gambling.

Glynn, who helped author the committee’s minority report, also said he anticipated amendments limiting the number of slot machines in the state to 1,500, rather than 3,000 in the current bill.

“I’m predicting a lengthy debate,” Glynn said.