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Hey, Kids! Let's Pay Taxes!

You know, if you would have told me 30 years ago that there would be casino owners in the year 2010 who give more than 60 percent of the money they make to the state in taxes, I never would have believed you.

Hey, Kids! Let’s Pay Taxes!

You know, if you would have told me 30 years ago that there would be casino owners in the year 2010 who give more than 60 percent of the money they make to the state in taxes, I never would have believed you.

Well, if you would have told me that 30 years ago, you probably would have gotten a blank stare, because I hadn’t started writing about casinos yet, and I knew absolutely nothing about the industry.

However, if you would have told me, say, 26 years ago that there would be casino owners in 2010 who give six or even seven of every $10 to state government, I would have told you to wear a hat out in the desert next time. The only entity of official authority that had ever taken that much of a casino’s money was the mob. And I don’t even think those guys took that much.

Developers going into new gaming states, though, think nothing of handing over most of the money they make to the state, for the privilege of operating their businesses. It’s like a fruit-cart pusher having to pay protection money to the neighborhood boss, except the casinos don’t get protected from anything. Well, except a healthy profit margin.

I’m kidding, you state governments out there. You’re the best, really. You crazy guys.

It was in this newfound spirit of public-private cooperation—call it “Let’s Legalize Casinos and Suck the Life’s Blood Out of Anyone Who Wants to Open One”—that the state of Maryland accepted bids last year for newly legalized slot casinos to be put in five locations around the state.

Now, mind you, the call for bids went out in the middle of the recession, before we began to enjoy the prosperity in which we bask today. (Yes, I’m being a wise guy.) But still, the response to the bid request was, shall we say, less than enthusiastic.

OK, there were more volunteers to test the first electric chair.

For the first time anyone could remember, there were more available casino licenses in a new jurisdiction than there were developers who wanted one. Even now, a year and a half later, out of five licenses, only two are hanging in actual, under-construction buildings. One other one has been tied up in the courts, and two casino licenses are, well, vacancies.

Maryland officials seemed baffled at this development. “Why, we’re offering the right to pay us millions of dollars up front in the hope of getting a license, and then the right to guide guests to slot machines that we own. Not only that, they get to keep three of every $10 they take in. What do these people want??”

That’s right, the state of Maryland will own all slot machines that operate in the casinos. A state agency just bought a bunch for the Penn National casino opening next month in  Perryville, along with a five-year maintenance contract. Some state officials wanted to lease the machines—you know, in case maybe a few of the games quit making money before five years pass—but others shot that idea down. “That would just make too much sense,” one official said.

The state is trying hard to fill one of its casino-license vacancies, the one at Rocky Gap State Park. Here’s a license that will give some lucky developer a crack at buying a time-worn, money-losing hotel lodge from the state, along with the chance to give Maryland most of his money.

Oh, but Maryland is sweetening the pot for Rocky Gap. The legislature passed a bill to create more favorable rules for the Rocky Gap license, in the hopes of luring more suitors. (It’s officially titled the “For The Love Of God Take This Casino Act of 2010.”) To help you pay for the lodge, they’ll lower the state skim—I mean, tax. Whoever gets the Rocky Gap license will only have to pay 65.5 percent of casino revenues to Maryland, instead of the 67 percent everyone else pays.

Such a deal. I don’t know about you, but I’ve got goosebumps.

The lucky winner of the Rocky Gap license gets to keep a little more than a third of what he makes, instead of a little less than a third. But the really remarkable part? Someone is actually going to think this is a good deal, and someone is going to snatch up that license.

Just like a fruit vendor would pay the neighborhood boss. It’s an offer he can’t refuse.

Frank Legato is editor of Global Gaming Business magazine. He has been writing on gaming topics since 1984, when he launched and served as editor of Casino Gaming magazine. Legato, a nationally recognized expert on slot machines, has served as editor and reporter for a variety of gaming publications, including Public Gaming, IGWB, Casino Journal, Casino Player, Strictly Slots and Atlantic City Insider. He has an B.A. in journalism and an M.A. in communications from Duquesne University in Pittsburgh, PA. He is the author of the books, How To Win Millions Playing Slot Machines... Or Lose Trying, and Atlantic City: In Living Color.  

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