The combined report discounted concerns that a proposed casino outside Washington would draw too much business away from others at Arundel Mills and in downtown Baltimore. Current casino licensees, now limited to slot machines, could end up ahead in net revenue by adding table games such as roulette and blackjack, the Department of Legislative Services and PricewaterhouseCoopers said.
"It would be hard not to get to $100 million making reasonable allowances," he told the Work Group to Consider Gaming Expansion.
However, Deschenaux conceded that market forecasting is a risky business: "We're uncertain about our uncertainty. We know we're uncertain."
Gov. Martin O'Malley and General Assembly leaders created the 11-member panel to consider issues associated with authorizing a sixth casino in Maryland and allowing table games at all six. The governor has said that if the work group can help forge a consensus that could pass both houses of the legislature, he would call a special session July 9 to consider such a proposal.
Proponents want the legislature to act this summer so a question on gambling expansion can go on this November's ballot instead of waiting until 2014.
The projection of state revenue comes with some significant caveats. It does not reflect the desire of the developers of National Harbor, a sprawling multi-use complex on the Potomac River, for a cut in the slots tax and a low table game rate to help them finance a luxurious "destination" casino. Nor does it reflect some other operators' desire for lower tax rates.
In its bottom-line conclusion that a sixth casino site would not hurt existing licensees, the report appears to be a setback for David Cordish, chief executive of the company that developed the Maryland Live Casino at Arundel Mills. Cordish has opposed any move to add a sixth casino in the state until the market has stabilized.
Backing up Cordish was Anne Arundel County Executive John R. Leopold, who said that opening a site south of Arundel Mills could jeopardize county revenues and put Cordish at a disadvantage. "To change the rules at this time would be [a] breach of faith to a businessman who's played by the rules," Leopold said.
National Harbor's developer, Milton Peterson, also found some things in the report to dislike. He said the DLS-Pricewaterhouse estimate that a Prince George's casino would generate $460 million in annual revenue was far too conservative. He estimated that a casino of the type he envisions would generate at least $740 million and provide far more benefits to the state and county than the report accounted for.
At its first meeting June 1, the work group received projections from a consultant hired by the developers of National Harbor, a site favored for a casino by Senate President Thomas V. Mike Miller and County Executive Rushern L. Baker III. They also heard predictions from Cordish about the negative effect a National Harbor casino would have on business at the Arundel Mills site.
At the time, several lawmakers on the panel said they wanted to hear from the state's own consultants before making up their minds whether to support a Prince George's casino. One leading proposal on the table — a bill passed by the Senate but not the House during this year's regular session — would compensate existing slots license holders for the increased competition by allowing table games and by cutting their slots tax rate to 52 percent.
The analysis prepared by the staff and consultants agreed with Cordish that a National Harbor casino would cut into Maryland Live's slots business, though its estimates weren't as high.
The report estimated Maryland Live's net revenue loss on slots from competition with a "regular" Prince George's casino at nearly $37 million after taxes. But it said that loss would be more than offset by new revenue from table games — giving the Arundel facility $31 million more annual revenue that it could expect under the current market structure.
Other slots operators would gain even more, according to the report. A site in Baltimore, authorized but not yet licensed, would get a 30 percent revenue bump, for example, if a National Harbor casino were opened and table games allowed.
Caesars Entertainment, the sole applicant for the city license, released a statement Tuesday in which it took issue with some of the report's calculations of increased table game revenue. Caesars held to its position that it could support a sixth casino in exchange for table games, but said "an appropriate change in the tax rate is needed."
The numbers-heavy report was clear in its finding that table games would be a plus for state revenue at an assumed tax rate of 20 percent — above the level in the Senate bill but less than in some neighboring states. The study estimated that revenue would grow 23 percent if table games were permitted.
Deschenaux also noted that even with a new 3,000-slot casino in Prince George's, the Central Maryland gambling market would produce far less revenue per capita than other U.S. markets with a heavy presence of gambling halls.