Ocean Downs Starts Slow, Seeks 800 Slots

BERLIN – The idea of slots as the panacea for the state’s growing economic crisis fizzled somewhat this week with a less than stellar bid offerings for the five proposed locations across the state, with bids for just 6,550 of the potential 15,000 allowed, including a mere 800 at Ocean Downs, the only bid received for the Worcester County location.

In November, voters across Maryland approved slots in a referendum authorizing the development of as many as 15,000 slot machines at five locations across the state including Worcester County. On Monday, state lottery officials accepted bids from six potential developers totaling 10,300 slots including two bids for an Anne Arundel County location and one each for the other four designated areas in the state.

However, the relatively gloomy outlook became more dismal when it was learned two of the bidders had not included the requisite $25 million each in license fees, potentially reducing the number of slot machines bid for across the state to 6,550, or well under the 15,000 allowed by referendum vote in November. The parent Magna Entertainment, bidding on behalf of the Laurel Racing Association and the Maryland Jockey Club, submitted a bid for an Anne Arundel location totaling 3,000 slots, but did not include the substantial license fees, nor did New York-based Empire Resorts, which submitted a bid for 750 slots at the Rocky Gap location in Alleghany County.

Closer to home, William Rickman, Jr. and his newly established company Ocean Enterprises 589 LLC did submit a bid for Ocean Downs as expected. However, the bid fell far short of what was anticipated at the historic racetrack in Berlin near Ocean Pines. The Ocean Downs bid included a request for 800 slot machines initially with an option to expand to 1,500 in the future despite the fact as many as 2,500 were authorized for the county.

Rickman’s bid did include the required $25 million up front license fee as well as $4.8 million for the proposed 800 slots. The bill required a payment of $3 million for each 500 machines, bringing Ocean Downs’ payment to $4.8 million.

Little else is known about Rickman’s bid for Ocean Downs as state lottery officials have not made public specific details about each bid submitted. Ocean Downs officials this week confirmed the number of machines requested, but could offer little else in terms of what changes would be made to the facility, what impacts or improvements were anticipated for the neighboring communities, although at just 800, those impacts will likely be considerably less than what was anticipated.

“We’ve been out of the limelight in terms of how much detail about our proposal we are making public at this time,” said William Fasy, chief operating officer for Ocean Downs and Delaware Park. “That’s largely because of a stipulation by the location committee that they would make any announcements to the public and the press about the bids, but the facts are pretty clear.”

Fasy could not speculate about what would happen next, suffice it to say more details would be made available as the review and approval process runs its course. Ocean Downs is expected to make a supplemental bid in April at which time more details could be made available.

“We’re in a holding pattern right now,” he said. “We’ve met the first deadline and got our bid in for 800 machines with the ability to expand to 1,500. I’m excited about the prospect of getting into operation quickly, but there is a long process to get through. We’ll make our supplemental bid by April 15 at which time more information about our proposal will likely be made public.”

Because of the drastically lower number of bids in general, and the lower number of slots in each bid specifically, there have already been grumblings in Annapolis about reworking and re-opening the process. However, finding support for that might be difficult among state lawmakers who went to bat for the legislation as written and could even call into question the validity of the referendum vote. Delegate Jim Mathias (D-38B) said yesterday he would not likely support an effort to reopen the process.

“There have already been some discussions about changing the operators’ share in order to enhance the bidding and perhaps get more bidders and more machines,” he said. “I certainly couldn’t support that. I think that would be disingenuous to the people of Maryland who voted for this with the expectations laid out in the referendum.”

Mathias said he could not support changing the rules in the middle of the game, especially after the long, arduous route slots took to gain approval.

“That train has left the station,” he said. “It’s been discussed, voted on by the legislature and ratified by the people. I think we were all excited about the speculation that there might have been more than one bidder because more bidders would have raised the dividends for Maryland.”

Despite the low number of bids and the even lower number of proposed slot machines, Mathias said he was not critical of the bidders, given the economic uncertainties.

“I really don’t have any problem with them starting off responsibly,” he said. “This is an industry we’ve decided we’re going to embrace in this state and I would like them to be successful. Starting off at the maximum in this economy might set them up for failure.”

Mathias said those who are solvent enough to weather the current economic crisis in terms of the slots bids would likely come out on top at the end. 

“This is a 15-year contract and we need to make sure we have responsible bidders in for the long haul,” he said. “The bidders need to be able to make the investments necessary to meet and even exceed people’s expectations. I think that’s what we saw this week.”

At the end of the day, with all of the concerns about the potential impacts on the community and the heated debate about the local revenue sharing plan, starting smaller might be a better course of action, according to Mathias.

“Maybe this is a good thing for Worcester County, Ocean Pines and Ocean City to see if we can start with this new industry and allow it to integrate at a slower evolution instead of getting 2,500 right off the bat,” he said. “This might give us the opportunity to measure the impacts to the community on a smaller scale and make adjustments as this thing evolves.”

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