What do Maryland’s business climate and gaming policy have in common? Both seem arbitrary. So, it has been two years since I wrote about slots in Maryland, and a lot has changed. First, Maryland Live is slated to open on June 6 at 10 p.m.; second, a vendor has been selected to introduce gaming to Rocky Gap resort; and third, there has been speculative talk about a special session to discuss table games and a casino at National Harbor. Both Ocean Downs and Hollywood Casino exceeded expectations by bringing in over $150 million in annual slot revenue, of which nearly $90 million is returned to the state in the form of taxes. These tax revenues are put into numerous accounts ranging from education to horse racing to small business support. While this is all good, and it is expected that Maryland Live will return nearly $400 million to the state in tax revenues, something does not feel right.
Maryland leaders have bemoaned the fact that businesses move to Virginia or don’t even consider Maryland as a possibility in spite of Maryland’s workforce and educational assets. Moreover, these same leaders claim that, compared to Virginia, Pennsylvania, West Virginia, and other surrounding states, Maryland’s total tax bill is not that much higher. Indeed, this is true; the differences are minimal. I believe that the reason why those other states are able to have a better business climate is that Maryland state politicians’ decisions seem rather arbitrary in their approach to fiscal matters. There is no better example of the arbitrary nature of Maryland state politics on display than the proposal to allow gaming at National Harbor. While I don’t begrudge Prince George’s County the pleasure of having a casino at National Harbor, I do take issue with the fact that this was proffered after the Cordish Company had made its investment in Maryland Live with the expectation that Maryland Live would be the only casino operation south of Baltimore City.
I understand that the state and localities provide numerous services, and Maryland has had the number one ranked public school system in the nation for the last four years. As an economist, I can appreciate the value of that latter outcome. Obviously, the provision of these services requires tax revenues. Due to economic forces, these tax revenues have fallen short of the required expenses; as a result, taxes had to be increased. However, it is imperative that we as a state ensure that businesses that do invest in Maryland are able to realize the potential of their investments and are assured that there will be no arbitrary decisions that will adversely affect their ability to do so. I realize there are no guarantees in life, but when the state provides a set of rules, guidelines, and policies, many businesses expect those rules, guidelines, and policies not to change arbitrarily.
While we celebrate the success of Hollywood Casino and Ocean Downs and hope that Maryland Live shares the same success along with the soon-to-be casinos in Baltimore City and Rocky Gap, we must ask ourselves, “Will our legislators’ decision to allow gaming at National Harbor improve our business climate reputation?”