PREPARING FOR SLOTS

The newly appointed Interim Gambling Council can be expected to hit the ground racing, since Penn National Gaming is ready to put 1,500 slot machines in the Bangor Raceway and rules will be necessary to govern their operation.

Gov. John Baldacci, in signing the bill that sets guidelines for Maine’s newest form of gambling, also issued an executive order creating the interim council to begin drafting the rules. He named five members: Jean Deighan, a Bangor investment adviser and lawyer; Mike Peters, a Dixfield small businessman; Larry Hall, a retired state trooper from Dedham; George Hale, a sports broadcaster from Orrington; and Peter Danton, a former state legislator from Saco. The governor said he would likely nominate the same five for the permanent Gambling Control Board, subject to Senate confirmation.

Far more than just rule-making lies ahead for the interim council and the eventual permanent board. They should explore thoroughly the background of Penn National, to make the required judgment of the company’s suitability to run the slot machine operation at the racetrack. Penn National will need a permanent license by a Sept. 30 deadline to replace a conditional license granted in February by the Maine Harness Racing Commission. The company has widespread operations across the country.

Penn National’s financial relationship with Shawn Scott, who sold the racetrack and the conditional Bangor license to Penn National, also needs exploration. The company disclosed to its stockholders that the purchase price for the Bangor track depended on the terms of the final racing bill.

The company’s prospects for making a profit at the Bangor slots operation also merits independent study. Penn National strongly opposed parts of the gambling bill, LD 1820, especially an unusual 1 percent tax on the “coin-ins,” the gross amount paid into the machines. The company also paid huge amounts in advertising and consultants’ fees in its failed campaign in Saco and Westbrook to install slots at Scarborough Downs.

It finally said it would install the Bangor slots under the bill’s terms, although a spokesman said there were “a number of issues we’re continuing to work our way through.” The company has enhanced its prospects by changing the slots’ payback ratio from 90 percent to 89 percent – a 10 percent increase in its income.

A question that lurks in the background is whether Penn National will resume its efforts at Scarborough Downs. The southern Maine market has proved more resistant to slots than the Bangor market, but an operation in the south could be far more profitable.

Here is what Penn National told its stockholders about Scarborough Downs in March: “Penn entered into a five-year agreement to fund the lobbying and legal expenses associated with legalized slots at Scarborough Downs. On slot approval, Penn agrees to fund design and development of new harness facility. Penn pays Scarborough owners a percentage of slot revenue.”

Dennis Bailey, spokesman for the anti-gambling group CasinosNo!, warns that Penn National will face strong opposition if it ventures south again. He said, “If they make a move to expand beyond Bangor, it will trigger a repeal effort. It’s not an idle threat.”

Get to it, council members. Protect the interests of the city of Bangor, the state of Maine, bettors, taxpayers and the general public.