NO GAMBLE ON REGULATION

Some pitfalls lie ahead as the Legislature prepares this week to finish up the enactment of a bill to authorize the placement and operation of 1,500 slot machines at the Bangor Raceway. LD 1820 is essentially a good bill, far better than the original proposition approved in a referendum last November. That measure had been drafted for the operator of the slots and contained only minimal protection against manipulation and fraud.

The Legal and Veterans Affairs Committee has been working against unprecedented lobbying. Horse and racing interests want their share and a revival of harness racing. Penn National Gaming, the prospective operator of the Bangor racino, alone is said to have paid lobbyists $100,000 in the month of January.

Penn National hopes to persuade the Appropriations Committee early this week to knock out a state tax of 1 percent of “coin-ins,” the gross amount paid into the machines. The company seeks to substitute a tax of 6 percent of adjusted slot machine income, meaning the total after the machines’ payout averaging 90 cents for each dollar bet. The legal affairs committee chairman, Sen. Ken Gagnon, D-Waterville, supports the change if the reduced tax will cover enforcement and other state expenses of around $3 million a year. He is awaiting final estimates.

The 1 percent tax would produce $7.5 million a year when all the slots are operating, while the substitute would produce only $4.5 million, based on Penn National’s estimate of $750 million maximum gross income. But the gross would be far less in at least the first and second years of operation.

Critics say even the 1 percent tax is too generous, since Penn National would get 53 percent of the profits, while the operators of slot machines in New York get only 30 percent.

Sen. Ethan Strimling, D-Portland, noticed what he sees as another pitfall. On the chance that Penn National might try to get the contract to operate a complicated central-site monitoring system – becoming, in effect, the fox guarding the chicken coop – he has proposed an amendment that would prohibit any licensee for the Bangor slot machines from operating the monitoring system. Sen. Gagnon calls the amendment unnecessary but says it would do no harm.

Suspicions are understandable, considering the rocky history of the Bangor slot machine project. Shawn Scott, a wheeler-dealer who made millions buying and selling race tracks and spas, was the first applicant. When Mr. Scott’s spotty record of licensing disputes in Nevada, Louisiana and New York came to light, he sold out to Penn National, rather than face continuing investigation.

Penn National’s record will be probed by the new Gambling Control Board in judging its “suitability” before granting a license to operate the Bangor slots. One target of the investigation is sure to be the recent arrest of 14 employees of its Casino Rouge in Baton Rouge, La., on charges of skimming at least $50,000 in a slot machine scam.

When these out-of-state gambling enterprises came to Maine, they sometimes acted as if they thought they were dealing with rubes who would accept anything handed them by city slickers. The November referendum seemed to bear this out, when voters rejected proposed casinos for southern Maine but approved the Bangor slots. Few if any had read the 17-page bill.

The Legal and Veterans Affairs Committee has come up with a respectable alternative bill. Let’s hope that it survives any further efforts to weaken it.