AG's Office Advises Assembly It Can Expand Gambling

Legal

The General Assembly has an unfettered right to expand gambling in Maryland over the objections of existing license holders, according to the Attorney General's Office.

Dan Friedman, counsel to the General Assembly, told a Prince George's County lawmaker that the 2007 law in which the legislature permitted the issuance of five licenses to operate slot machine halls did not create any property right that would let one of those license holders successfully sue the state if the Assembly were to authorize yet another site.

The letter to Del. Justin Ross, a Democrat, appears to give lawmakers the green light to consider a proposal to permit a sixth casino site at National Harbor and to allow that location and existing slots venues to offer table games. Such a move would be a setback for Cordish Cos., which opposes any move to add a site that could compete with the Maryland Live! slots casino that is expected to open at Arundel Mills next week.

Ross had asked whether an existing operator had an "actionable claim" against the state if it were to make changes to the law that could affect its market share.

Friedman said the answer was a "definitive no." He cited language in the 2007 law that precludes "the creation of a property right in any license" required in the legislation.

"Given that language, it is quite clear that no license holder under the VLT law has a property interest of any sort in that license," the lawyer wrote.

The Sun obtained the letter as a work group named by Gov. Martin O'Malley to study a possible expansion of gambling was planning to hold its first meeting Friday morning. The group, made up largely of lawmakers and administration officials, has been given the task of attempting to find a consensus on whether and how the state should permit more games and more sites. If the group can reach an accord that could win approval from both the Senate and House, O'Malley has said he would call a special session for July 9.

In his letter Friedman said no licensee could be surprised that the Assembly would consider an expansion of gambling because the constitutional amendment that allowed slot machines envisioned possible growth. He pointed to language allowing the legislature to expand gambling as long as the measure could win voters' approval in a referendum.

If a lawsuit were brought alleging that a new law expanding gambling violated an existing licensee's rights, the state's defense would be "remarkably strong," Friedman wrote. He added that a licensee that did sue the state to challenge its power to expand gambling could face sanctions under a 2011 law prohibiting an operator from interfering with the establishment of a slots facility by another licensee.

A company contemplating such a suit "would be well-advised to tread cautiously," Friedman wrote.

Joe Weinberg, a spokesman for Cordish Cos., said that even if an expansion were legal, it wouldn't be fair.

"I'm not a lawyer, but I do know the universal doctrine of fairness.  We made a massive investment in the state based on a set of ground rules established by the state which the state is contemplating changing before we even open.  If Maryland is perceived as an unreliable partner, businesses will stop investing in the state," Weinberg said in an email.

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