BERLIN — A report released this week by the state’s Department of Legislative Services (DLS) revealed the new Casino at Ocean Downs has underperformed thus far and is not expected to live up to revenue projections in the next five years.
The DLS this week released its Spending Affordability Briefing, a blueprint of sorts that examines state revenue sources and anticipated expenditures in advance of the next budget cycle during the General Assembly session early next year. In the section on the state’s Video Lottery Terminal (VLT) program, the DLS revealed the state’s nascent slots program is not achieving the anticipated results in terms of revenue, nor is it expected to in the next five years when the other facilities are up and running.
The Perryville facility in Cecil County opened for business with 1,500 machines last September and has generated over $110 million through the end of this September. The Casino at Ocean Downs, which opened last January with 750 machines and now includes 800 VLTs, has generated roughly $35 million in revenue through the end of last month.
“Fiscal 2011 VLT estimates from the Perryville facility came in roughly on estimate for year one, but revenues from the Ocean Downs facility underperformed the estimate by about half,” the report reads. “It is estimated that the economic recession has reduced overall VLT revenues by approximately 10 percent.”
According to the report, the state’s VLT program has fallen victim to a number of difficulties, including a weak economy, increased competition from neighboring states and the delayed openings of other casinos in Maryland. As a result, the primary beneficiary of the program, the state’s Education Trust Fund, will see an estimated reduction of about $114 million in anticipated revenue from slots in fiscal year 2012 alone, a figure that soars to about $475 million over the first five years of the program.
The presumption all along was that the revenue would steadily increase, but under current estimates, the figures are expected to stabilize. At Ocean Downs, for example, the anticipated revenue is predicted to be practically stable for the next five years, from $46 million in fiscal year 2012 to $46.9 million in 2013 to $47.9 million in 2014 to $48.8 million in 2015 to $49.8 million in 2016.
“Previous estimates assumed a three- or five-year phase-up to stabilized annual revenues at a facility,” the report reads. “However, no phase-up is now assumed. This reduces the estimates … to essentially current levels.”