Just four years ago, Maryland voters approved legislation authorizing slot machines (video lottery terminals) at up to five locations in the state. It didn’t take long for Maryland’s political leaders to decide that wasn’t enough – voters in November will again be asked to approve a significant gaming measure. This time around, legislation signed this week authorizes a sixth casino in Prince George’s County, which includes the Washington D.C. area, plus table games at all facilities.


The measure includes other features as well, such as giving veterans’ associations in most counties the rights to install up to five “instant ticket lottery machines” – electronic gaming machines that have a slot-like appeal. That provision becomes law without requiring voter approval.

Existing operators fought the gaming expansion, claiming it changed the game plan they expected when they invested in the properties. And as new casinos authorized under the original legislation open, the impact on existing facilities is dramatic. Hollywood Casino Perryville experienced a one-third reduction in its business when Maryland Live! opened in June south of Baltimore. With the long-awaited Baltimore casino license finally issued, its opening (likely in 2014) will certainly make a significant dent in revenues from both of these properties. The only other current casino, at Ocean Downs, is well insulated from the competition due to its location on the far eastern shore.

A casino in Prince George’s County will certainly impact Baltimore-area casinos, and will also affect Hollywood Casino at Charles Town Races in West Virginia, some 70 miles away from National Harbor, one of the proposed sites for a new Maryland casino. MGM Resorts International has emerged as a major player for the sixth license, much to the chagrin of Rosecroft Raceway owner Penn National Gaming, which clearly hoped for gaming there when it purchased the property early last year.

As a way to minimizing the harm to existing casinos, the final bill does give everyone the right to add table games, and also offers significant tax reductions. Still, assuming voters approve, it will be years before the market stabilizes, and it might look quite different than legislators expect.

The following chart summarizes 2012 gross terminal revenue at Maryland’s casinos:

 

 Hollywood Ocean DownsMaryland Live!State total
     
January-May 2012$54,394,478$19,032,186n/a $73,426,664
% change from 2011+17.7%+14..5% +16.8%
     
June 20127,957,8734,395,650$28,481,47840,835,001
% change from 2011-9.8%+16.0% +223.8%
     
July 20126,891,7415,754,41635,408,79748,054,954
% change from 2011-32.4%+7.6% +209.2%