ANNAPOLIS, Md. -- A state commission rejected two of six bids for slot machine licenses Thursday because the bidders failed to include a total of $33 million in upfront license fees.
The seven-member commission voted unanimously to reject a bid by a subsidiary of Magna Entertainment Corp. for a site at the Laurel Park horse racing track in Anne Arundel County. The commission also shut out a bid from New York-based Empire Resorts, which wanted to put slot machines at Rocky Gap State Park.
Attorneys for Magna have gone to court to prevent the bid from being rejected. A Feb. 26 hearing has been scheduled in Anne Arundel County Circuit Court on the request for an injunction.
The commission made its decision after Robert Howells, the procurement officer for the Maryland Lottery Agency, and Bonnie Kirkland, an assistant attorney general, advised the panel that the law did not appear to allow them to consider bids without licensing fees.
"Therefore, it's our view that this was intended to be mandatory, and the commission does not have the discretion to waive it or modify that very clear mandatory provision in the statute that was passed by the legislature," Kirkland said.
Canada-based Magna was required to submit a $28.5 million licensing fee for its bid for 4,750 machines at Laurel Park, and Empire was supposed to include $4.5 million for 750 machines at Rocky Gap.
Magna subsidiary Laurel Racing Association has concerns about how the company could get its money back if local zoning rules created hurdles for their project. The company contends the requirement for of the licensing fee "without clarity and legal authority to ensure refundability is unlawful and may not be enforced."
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The commission voted at a hearing without acknowledging representatives from the Laurel Racing Association, who attempted to ask for a chance to speak.
A constitutional amendment approved by voters in November paved the way for up to 15,000 slot machines at five locations. But the nation's recession and developer reluctance with the overall plan brought bids for only 6,550 machines by last Monday's deadline. The loss of the bid at Rocky Gap means only 5,800 machines are being requested.
Maryland has only collected about $39.3 million in upfront fees from bidders for slots, instead of the $90 million that fees for 15,000 machines would have brought in to help fight the state's $2 billion budget deficit. The bids also have long-term implications, because state budget analysts had estimated the state could have raised more than $600 million a year after full implementation in several years.
The commission's decision also means Rocky Gap does not have a bidder for the location in Allegany County.
The commission decided to include four of the bidders, including the Baltimore City Entertainment Group, which wants to put 500 slot machines in Baltimore city.
Baltimore-based Cordish Co. also made a bid for the Anne Arundel site, seeking to put 4,750 slot machines at Arundel Mills Mall, and creating the only competitive bidding scenario in the process.
William Rickman, who owns the Ocean Downs racetrack near Ocean City, has bid for 800 machines in Worcester County, with the possibility to expand to 1,500.
Penn Gaming Inc., which is based in Wyomissing, Pa., wants to put 500 machines at a Cecil County site, with the potential to grow to 1,500.