Casino license competitors have strengths, weaknesses

Although Maryland has handed out five casino operating licenses, the state is entering uncharted territory with the allocation of its sixth.

For the first time, there's real competition. Three serious operators submitted bids to run a casino in Prince George's County, making the choice more competitive than the selections for other jurisdictions.

"We're going to have to figure out how we do a fair evaluation," said Donald Fry, chairman of the state commission that will select the winner. "It does present a different dynamic than what we had previously done."

The three bidders seem prepared to fiercely defend their applications, submitted just over a week ago to Maryland's gaming agency. The winner is expected to be chosen by the end of the year, and the new casino would be licensed to open in 2016.

Although MGM Resorts International helped push for voter approval of a sixth casino in the state, is partnered with the prominent National Harbor development and is endorsed by Prince George's County Executive Rushern L. Baker III, there does not seem to be a clear front-runner. The other bidders are Penn National Gaming Inc., a casino and racetrack operator already present in Maryland, and Greenwood Racing Inc., the owner of one casino — Pennsylvania's most successful.

"It's very positive for Maryland casinos in general that you've got three strong operators bidding on this," said James Karmel, a gambling industry analyst and history professor at Harford Community College. Interest among major players in the state's last license demonstrates that the market remains desirable, he said, even though several casinos in Maryland are up and running.

The competitors' proposals have significant overlap. All are suggesting resort-style facilities with overnight accommodations, a range of dining options, ample parking, entertainment venues and hundreds of slot machines and table games.

Each facility would cost hundreds of millions of dollars and is planned for a small section of the county, near where the Capital Beltway crosses the Potomac River.

Each is expected to bring thousands of jobs, during construction and once the casino opens. MGM's is expected to create 4,000 jobs at the casino and to spur other area businesses to hire an added 4,400 people. Penn National projects 2,600 direct and incidental permanent jobs. Greenwood's projection falls in between.

"You want to look at total investment, the revenue picture and the overall impact on development and employment" when determining which proposal would best serve Maryland, said David G. Schwartz, director of the Center for Gaming Research at the University of Nevada, Las Vegas.

The size of the facility and its level of amenities will bear significantly on the casino's economic impact, Schwartz said.

"Hypothetically, you could have a tent with a lot of slot machines" produce as much gambling revenue as a well-appointed resort, but the job creation and economic multiplier effects would be far lower, he said.

The amenities of each proposed casino cannot be compared yet. The applications are not public documents, and the competitors have been reluctant to provide details because of disclosure restrictions put on them by the state. All three bidders declined to provide revenue projections.

Maryland's gambling law also dictates the factors that the commission must consider when evaluating the proposals. The most weight — 70 percent of the decision — is supposed to be given to "business and market factors," including the amount of tax revenue each proposal expects to generate, the number of jobs created and compliance with minority business participation goals.

The expected wages and benefits for the jobs created by the facility and "additional economic development planned" in the area of the proposed facility, according to the state's request for applications, are supposed to be 15 percent of the decision.

The remaining 15 percent is supposed to be attributed to the need for new public infrastructure around the site, the existing transportation infrastructure nearby and the effect the casino would have on nearby residential communities.

The commission still needs to work out how the factors' weight will be put into practice, Fry said. Until now, the distribution of Maryland's casino licenses has not been competitive, he said.

Regardless of what the selection process looks like, the decision will boil down to the commission asking which proposal is "in the best interest of the state," Fry said.

Despite the similarities among the proposals and the lack of details available to the public, the casino operators identified attributes that they said sets their plan apart.

MGM's proposed location is its main strength, said Lorenzo Creighton, president and chief operating officer of MGM National Harbor LLC, the MGM subsidiary that proposed a site beside the Capital Beltway and near the existing National Harbor conference center, retail and shopping destination on the Potomac River.