Employment and Barriers to Independence
Poverty and Economic
Well Being
The Regular Person’s Guide to the
Maryland Slot Machine Referendum
Assessment of Proponents’ and Opponents’ Claims
Claim 4: Slot machines are necessary for the survival of Maryland’s horse and racing industries.
ASSESSMENT: TRUE, with qualifications
Slot machine revenue may be the racing industry’s best chance for survival, but even with slot machines the industry’s ability to survive and prosper is not assured.
Some reports suggest that slot machine gambling has increased revenue at horse race tracks in Delaware, Pennsylvania and West Virginia. Others suggest that slots compete with horse racing for gambling dollars.
The horse racing and breeding industry in Maryland accounts for over 9,000 jobs, and has an economic impact of more than $600 million(1). While these are large numbers, they are modest in comparison to the state’s overall economy: 2/10 of 1% of the state’s overall economy(2), and less than 1/2 of 1% of jobs(3).
Slot machines are supposed to help race tracks in two ways.
First, they attract patrons who will play slot machines at the track, bringing in revenue and possibly increasing wagering on horse races. Anecdotal evidence suggests that few slots players cross over to become horse players. In addition, at least two of Maryland’s horse racing tracks will not receive slots because they are outside the boundaries specified for slot machine licenses (Pimlico Race Course in Baltimore and Rosecroft Race Course in Prince George’s County).
Second, the proceeds of slot machines can be used to increase prize money for horse races, attracting more and better horses to Maryland tracks, increasing fan interest and increasing wagering. Seven percent of gross slots revenue ($95 million estimated in 2013) will be slated to go to a purse dedication account to enhance horse racing purses and funds for the horse breeding industry(4). Another 2.5% ($34 million in 2013) is dedicated to facility renewal at the race tracks. Improving facilities should also help attract more visitors.
The Maryland Budget and Tax Policy Institute judges that this additional revenue will not by any means assure the survival of horse racing in Maryland. However, without this type of infusion the industry’s prospects are very poor. In particular, the tracks that do not become slots locations will need very strong marketing strategies.
(1) Maryland Department of Labor, Licensing, and Regulations. A Report to Governor Martin O'Malley, Slot Machines and the Racing Industry: A Review of Existing Data in Maryland and Neighboring States. 2007. 9 July 2008 <http://www.dllr.state.md.us/whatsnews/slotsreport2007.pdf>.
(2) Based on Maryland gross domestic product of $268,685 million in 2007. US Bureau of Economic Analysis
(3) Based on total average non-farm employment of 2.6 million in 2007. US Bureau of Labor statistics.
(4) Maryland Department of Legislative Services. Maryland Education Trust Fund - Video Lottery Terminals: Fiscal and Policy Note. 2007. 30 May 2008 <http://mlis.state.md.us/2007s1/fnotes/bil_0003/sb0003.pdf>.
Back to main assessment page>> Claim 5>>
Back to details of the Maryland Slot Machine Proposal>>