State to net $3.4M more from Hollywood Slots than expected

Posted Nov. 24, 2009, at 9:10 p.m.

AUGUSTA, Maine — Amid all of the talk last week about spending cuts and a revenue shortfall nearing $400 million, there were only a few tidbits of good news concerning state finances.

Among the positive trends were revenues from Hollywood Slots.

The Bangor slots facility is now projected to generate $3.4 million more than originally anticipated for state programs this fiscal year, which ends June 30, according to figures supplied by the Revenue Forecasting Committee. That figure climbs to a little more than $4 million for the fiscal year that begins July 1.

Grant Pennoyer, director of the Maine Office of Fiscal and Program Review, said the upward adjustment is not necessarily due to a surge in business at the racino. Rather, the Revenue Forecasting Committee had made conservative predictions on how much money would flow into state coffers from slots proceeds.

“We were very, very conservative, [predicting] no growth in revenue in fiscal years 2010 or 2011 in the old forecast,” Pennoyer said.

The slot machines at Hollywood Slots’ facility on Main Street in Bangor have averaged more than $58 million in gross revenues monthly since January, with actual income ranging from a low of $46.5 million in January to a high of $70.5 million in July, according to revenue reports filed with the state.

Income from gambling at Hollywood Slots is divvied up according to a complicated formula written into the law authorizing a slots facility in Maine.

Hollywood Slots is required to pay out at least 89 percent of revenue from slot machines in the form of winnings. Out of the remaining “net proceeds,” 39 percent goes to the state, generating more than $17 million for state programs last year.

More than half of the state’s money goes to harness racing purse supplements, the Sire Stakes Fund, agricultural fairs and to promote or stabilize harness racing tracks and off-track betting establishments.

The remaining money — or 18 percent of the net proceeds — goes toward Maine’s General Fund, the Fund for Healthy Maine, scholarships to Maine’s public colleges and universities and to the city of Bangor. A portion of the revenues going into the General Fund go to the Gambling Control Board for enforcement of Maine’s gaming laws.

According to the new projections, an additional $1 million is projected to flow into the General Fund from Hollywood Slots this fiscal year and $1.2 million next year.

The Fund for a Healthy Maine, which was set up to administer Maine’s share of the legal settlements with tobacco companies, is predicted to see a boost of $686,000 this year and $792,000 next year, although there is no guarantee the additional money will stay within the programs due to the budget crisis.

The upward adjustments, while welcome changes, are in stark contrast to a revenue shortfall in the General Fund now estimated at $384 million and expected to climb higher over the next two-year budget that starts July 1.

State lawmakers will go to work in January identifying areas to cut.

Ironically, among the positions potentially on the chopping block is the head of the Gambling Control Board, which is charged with ensuring Hollywood Slots complies with Maine’s gaming regulations.

Robert Welch, the board’s executive director, said Tuesday that his position has been recommended for elimination due to budget cuts. The Legislature has no obligation to earmark the additional revenues from Hollywood Slots to the control board or to any other gambling-related programs in the state.

Welch, who actually recommended the cut, said eliminating the executive director position could help avoid cutting the inspectors, auditor, detective and other personnel who carry out the day-to-day enforcement for the board.

“We’re so small that if you make any other cuts it would affect operations,” Welch said.

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