September 21, 2019
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Maine lets casinos write own gaming laws with voters’ help

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People play slots at Hollywood Casino in Bangor
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AUGUSTA, Maine — When Maine voters gave Shawn Scott the rights to Maine’s first casino nearly 14 years ago, he wrote his own law, hastily sold the rights and made a cool $51 million.

And the Virgin Islands developer may have another chance to do it in 2017.

A referendum effort that would give Scott and his associates the rights to a new casino in York County with as many as 1,500 slot machines qualified for the November ballot Monday. It would be Maine’s third casino, alongside others in Bangor and Oxford.

Both were established through the state’s ballot initiative process, and both were sold by their original developers for massive profits, turning election campaigns into little more than investments. Horseracing Jobs Fairness, the committee formed to support this year’s referendum, has already plowed $4.2 million into the campaign.

It has left Maine’s policymakers on the sidelines without crafting a coherent statewide system amid isolated debates and likely leaving millions on the table for the public. None of that is likely to change soon.

Maine’s lack of casino policy — first exploited by Scott — has led to isolated debates on casinos defined by gaming interests and parochialism.

Maine has never had a competitive process to regulate casinos, and Scott essentially pioneered the current piecemeal approach at the ballot.

Companies linked to him bankrolled a 2003 referendum to allow slot machines at the blighted Bangor Historic Track, which he bought the year before for just over $1 million. It won in the same year that a higher profile bid for an Indian casino in southern Maine lost.

But just after the election, the Maine Harness Racing Commission released a report on Scott, saying he demonstrated “sloppy, if not irresponsible financial management” and flagging 37 lawsuits in four states. He later sold the property to Penn National Gaming for $51 million.

Since then, Maine voters have rejected five of six proposed casinos, with only Oxford Casino approved in 2010. Just over two years later, the original owners sold it to gambling giant Churchill Downs for $160 million.

The 2010 campaign is when things got parochial: Oxford’s chief opponents were Penn National, but in more recent battles in the Legislature, both Hollywood and Oxford have banded together to oppose other gaming expansions alongside local politicians and businesspeople.

That’s what happened in 2015, when a battery of bills to expand gaming went before the Legislature: Oxford Casino warned that expansion “will kill this successful economic engine” for the region and the Bangor Region Chamber of Commerce urged legislators to “not dim one of the bright spots in the Maine economy.”

All of the 2015 gaming proposals failed, including some that would have placed regulations on new casinos. That gave the existing casinos what they wanted. It also provided a wider avenue for a proposal like that of Scott, whose referendum would exempt him from one of Maine’s key casino laws — one saying casinos can’t operate within 100 miles of one another.

Rep. Louis Luchini, D-Ellsworth, the co-chairman of the Legislature’s gambling committee and an opponent of Scott’s referendum, said the two established casinos that came after Scott cracked the door make it hard to pass a comprehensive plan for gaming in Maine.

“I think forming casino policy through referendum has been bad for the state,” he said.

A 2014 study for the Legislature said southern Maine could bear another casino, but Scott’s proposal doesn’t adhere to some of its key recommended standards.

The Legislative got a roadmap for a comprehensive solution in 2014, when the New Jersey consulting firm WhiteSand Gaming submitted a report to the Maine Legislature that picked southern Maine as an optimal location for a third casino.

It came, however, with caveats. WhiteSand called for a competitive process required upfront investment of $250 million, capital reinvestment of between 3 percent and 4 percent annually and a uniform tax structure for all Maine casinos at 35 percent on slot machine income and 16 percent on table game income. That would be a tax cut for existing casinos.

Scott’s question isn’t competitive and would require no upfront investment or reinvestment, though it would exceed WhiteSand’s recommendation by giving the state a 39 percent cut of slot machine income.

The developer’s sister, Lisa Scott, who has funded the entire referendum effort through the last reporting cycle in 2016, released a statement on Monday promising 800 construction jobs and 1,000 permanent jobs because of the casino, but nothing’s promised in the law.

She said one of backers’ key priorities was protecting revenue for Maine’s struggling harness racing industry, which would get 10 percent of slot machine income in the York County proposal. But the Maine Harness Racing Association hasn’t taken a position on the proposal yet, said Linwood Higgins, a lobbyist for the group.

It floated its own casino proposal in 2015 that would have allowed a new York County proposal, but with a competitive process and an upfront investment. It failed after lawmakers proposed different versions of the bill, but Higgins called it a “much fairer way.”

“If there was a competitive bid process, then the state would capture all that and you wouldn’t have to worry about somebody making gobs of money just because they ran a referendum,” he said.

 



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