House backs racino bill, but sticking points linger

Tuesday, April 13, 2004

By PAUL CARRIER, Portland Press Herald Writer

AUGUSTA — A bill that would regulate slot machines that Penn National Gaming hopes to install at Bangor Raceway received preliminary approval in the House late Monday. But lawmakers took the vote without considering an industry-backed amendment that would reduce the state's take. The bill now goes to the Senate, which may take it up today.

The legislation, which has already been modified in committee, was proposed by Gov. John Baldacci after Maine voters passed a referendum last November allowing commercial harness-racing tracks to install slot machines if they won local approval in 2003.

On Monday, the House sent it to the Senate without a roll-call vote. But approval followed nearly two hours of debate in which lawmakers overwhelmingly rejected eight amendments that would have changed how racino revenues are distributed, imposed tighter limits on the number of slots at a racino, and sent the proposed law to voters for final action in another referendum.

But the issue that may cause the biggest fight failed to materialize Monday. Penn National and other racino supporters oppose provisions that would impose a 1 percent state tax on gross revenues to raise about $8 million a year once the Bangor racino is fully operational. They also oppose the bill's call for a state-run system to monitor and control slot machines.

The industry favors a one-time licensing fee that would raise $3 million for the state. And it wants a company-run monitoring system for slot machines, which Penn National claims would still give the state full control over the slots.

A fight over those changes may surface in the Senate, though private talks are continuing between the industry and the Baldacci administration to try to work out a compromise. Baldacci opposes the changes, but Penn National lobbyists say the company will not open a racino in Bangor unless the bill is reworked to address those concerns.

Lee Umphrey, Baldacci's spokesman, said Monday that a company-run monitoring system at a Penn National casino in Louisiana "led to graft."

Umphrey was referring to a Jan. 10 Associated Press report that several employees at Casino Rouge in Louisiana were arrested last winter on charges of skimming at least $50,000 during a year-long slot-machine scam. Christopher Howard, a lobbyist for Penn National, confirmed the arrests and said they show the company-run monitoring system worked properly.

Bangor voters authorized slots last June, and Penn National hopes to install up to 1,500 machines there. Scarborough Downs, which wants to open a racino in southern Maine, was unable to win local support from voters in Scarborough, Saco or Westbrook before the Dec. 31, 2003, deadline.

The pending legislation would not give Scarborough Downs more time to find a home for a racino, so the only one that could open anytime soon would be in Bangor. Robert Tardy, a lobbyist for Scarborough Downs, has said his client may ask the Legislature for another shot at a racino in two or three years.

Baldacci, who opposes racinos, has argued that the state needs tougher racino controls than those approved in last year's referendum. The bill passed by the House calls for a state Gambling Control Board to license and regulate slot machines. That is tougher than existing law, which allows a harness-track operator to both install slots and run harness races with one all-purpose license from the Maine Harness Racing Commission.

The bill endorsed Monday by the House would require Penn National to get a separate slots license from a new gambling board, even though the promoter already has a conditional harness license from the racing commission. Under the bill, the Gambling Control Board would have to act on any applications for slot-machine licenses by Sept. 30 of this year.

The bill would require that 89 percent of slot-machine revenues go back to bettors in the form of winnings, or "payback." One percent would go to the state's general fund to cover the administrative costs of the gambling board. That is the 1 percent tax that the industry opposes.

Baldacci had proposed that the remaining 10 percent of gross revenues be split between the racino operator and the state, which would use its share to help fund various programs. Under the governor's bill, the state would have gotten 25 percent of the remaining money.

The House bill would change the split to 39 percent for the state and 61 percent for the operator. The state would use its share to help cover administrative costs, provide counseling for gambling addiction, supplement harness-racing purses and beef up the sire stakes funds.

Other recipients of money from the state's share of any racino revenues would include agricultural fairs, a program that provides prescription drug discounts, and scholarships offered by the University of Maine System and the Maine Community College System.

Commercial harness tracks, the state's five off-track betting parlors and the city of Bangor also would get some of the state's share under the House-backed bill.

Staff Writer Paul Carrier can be contacted at 622-7511 or at: pcarrier@pressherald.com

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