Maryland Casinos Get Rich While Public Schools Struggle

January 12, 2016 by Mark Scott in Blog, Budget and Tax, Education

December marked one of the most profitable months on record for Maryland casinos— which generated more than $95 million in revenue. Regrettably, soaring profits for casinos have not resulted in more money for education, as they could have without past changes in state law.

Instead, teachers and staff continue to face layoffs and students have fewer resources than they need because of budget cuts.Casino table games

Two main factors prohibited education in Maryland from benefiting from increasing casino profits. One was a change in the rules pertaining to how much money the casinos could keep, and the other was a change in how the government would spend the money.

The original legislation that legalized gambling mandated that the Education Trust Fund receive the lion’s share of gambling revenues from slots at five new casinos. About half of the slots revenue went directly to the fund and an additional 18.5 percent to other state programs. The casino companies generally kept no more than 33 percent.

However, in 2012 new legislation allowed all casinos to add lucrative table games, such as poker, craps and roulette. And it allowed the companies to keep 80 percent of the table game proceeds—while also reducing the share of slots money that goes to the education fund.

Last month, Horseshoe Casino Baltimore reported  earnings of $27.2 million the largest percentage increase—19 percent—over December 2015. That figure nearly matched the casino’s record high of $27.5 million set in August. Maryland’s largest casino, Maryland Live, generated $54.1 million from slot machines and table games in December, a 7.9 percent increase. Overall, Maryland casinos outperformed expectations year-to-year (December 2014 to December 2015), with a revenue growth of 11 percent.

Casinos have contributed hundreds of millions to the Education Trust Fund in recent years, despite the legislative changes. However, instead of increasing overall resources for schools, state leaders have shifted money that used to go to education to other needs.

If contributions to the Education Trust Fund had remained as they were prior to 2012, and gaming revenues had gone solely toward increasing education funding, Maryland schools would have had millions more in support. The governor and lawmakers should reverse this course by mandating a larger contribution from casinos and halting the practice of diverting funds intended for education.