State Officials Cast a Wary Eye on Gambling, Lottery Revenues

Live! Hotel, which is attached to the Maryland Live! casino. Photo from Live! Casino and Hotel via WTOP.

In late February, celebrity chef Gordon Ramsay made a surprise appearance at the Horseshoe Baltimore Casino, to visit his eponymous steakhouse.

In early March, the casino opened an outpost of Ben’s Chili Bowl, the iconic Washington, D.C., greasy spoon.

And on March 16, Horseshoe and Maryland’s five other casinos shuttered for more than three months due to the outbreak of COVID-19.

“It’s been that kind of year,” said Randall Conroy, senior vice president and general manager of Horseshoe.

Now the casinos — and the government entities that rely so heavily on gaming revenues and income from the sales of lottery tickets — are trying to pick up the pieces and figure out how to proceed in a landscape that has changed dramatically.

“The pandemic has just been a huge change in the way we do everything with our lives, much less manage our businesses,” said Gordon Medenica, director of the Maryland State Lottery and Gaming Control Agency.

The impact of the coronavirus on the state lottery and gaming operations was the topic of a virtual hearing Tuesday of the House Ways and Means Committee. Casinos and lottery games are major contributors to state education funding and to local social service programs.

Unsurprisingly, Medenica said, with casinos shuttered from mid-March to mid- or late June, those revenues are way down.

Ordinarily, Medenica said, casinos generate about $60 million a month for the state. But that figure stood below $30 million for March, was zero for April and May, and came in at about $13 million for June. Industry leaders are looking eagerly to Aug. 5, when the revenue figures for July will be released.

Most of Maryland’s casinos are operating at roughly half capacity now, Medenica and managers of the six properties said in their testimony — though traffic and revenues appear to be coming in at roughly 70%. Even so, Medenica told lawmakers, “I think we have to expect a long-term lowering of our expected casino operation revenues.”

The news from the lottery has been surprisingly less grim.

Though lottery sales plummeted during the early part of the pandemic, with a 30% drop in late March compared to the previous year, they have steadily inched their way up, and since June there has been about a 20% increase in weekly sales compared to a year ago.

In all, the profit on lottery sales for fiscal year 2020, which ended on June 30, are expected to come in at about $583 million — just $10 million less from the record-setting previous fiscal year.

At the outset of the pandemic, Medenica said, sales of lottery tickets were down because so few people were venturing out of their homes, and also because bars and restaurants, where about 15% of all tickets are sold, were closed.

But the surge in sales in recent weeks has been taking place all over North America, he said. It isn’t attributable to the COVID-19 relief checks that Americans have been receiving, Medenica said, but rather to this simple dynamic: “There really is no place else to spend discretionary entertainment dollars.”

That’s beginning to change — and casinos represent a competing outlet for the lotteries for entertainment spending.

“I would expect those 20% increases [in lottery sale figures over the previous year’s] not to last,” Medenica said.

All six casino executives spoke at length about the employee furloughs they were forced to make during the shutdowns — though most provided benefits to their workers while the casinos closed. They’ve all physically changed their facilities’ floor plans, to ensure social distancing, and have scaled back hours and adopted stringent cleaning protocols.

Although all the executives expressed relief that they’ve been able to reopen, they are apprehensive about what’s next.

“The future is really challenging,” said Matt Heiskell, general manager at Hollywood Casino in Perryville.

Joe Weinberg, a partner in the Cordish Cos., which operates the Maryland Live! casino, said the venue recently opened a 4,000-seat concert hall that is unlikely to see any business for the foreseeable future.

“We don’t see live entertainment resuming in the country or in Maryland at all until there’s a cure or a vaccine,” he said.

Five of the state’s six casinos — Ocean Downs being the exception — have seen a small number of COVID-19 cases among their workforce, the executives conceded after being questioned by Del. Nick J. Mosby (D-Baltimore City).

But the state could be in line for more gaming revenue soon.

Maryland voters will be asked on the November general election ballot whether to approve sports gambling for the state. If the measure passes, the General Assembly and Hogan administration will begin crafting regulations for the industry. Casinos may become venues for sports betting.

Medenica suggested that Internet lottery games could also be coming to Maryland — Virginia and Pennsylvania have already allowed residents to buy lottery tickets online.

“It’s one of those things that’s seen as inevitable,” he said.

[email protected]

Josh Kurtz
Co-founder and Editor Josh Kurtz is the leading chronicler of Maryland politics and government. He began covering the State House in 1995 for The Gazette newspapers, and has been writing about state and local politics ever since. He later became an editor at Roll Call, the Capitol Hill newspaper, and spent eight years at E&E News, an online subscription-only publisher of news websites covering energy and environmental issues. For seven of those years, he led a staff of 20 reporters at E&E Daily, which covers energy and environmental policy on Capitol Hill and in national politics. For 6 1/2 years he wrote a weekly column on state politics for Center Maryland and has written for several other Maryland publications as well. Kurtz has given speeches and appeared on TV and radio shows about Maryland politics through the years.