By JOAN JACOBSON
What’s next for Baltimore, collecting a licensing fee from prostitutes and drug dealers? A bill to be introduced Monday by Councilman Robert Curran aims to generate $5 million annually from the operators of those slot-less slot machines you see in bars and convenience stores. Is Baltimore this desperate for cash?

On Monday, City Councilman Robert Curran is planning to introduce a bill that would raise $5 million a year in revenue for the city’s desperate coffers. He wants to do this by charging a $3,000-a-year registration fee for each of the city’s more than 2,000 licensed video gambling machines. In a draft of his bill, he renames the machines “simulated slot machines,” but there’s not much simulation going on here. They are the real thing – slot machines without slots – and even Councilman Curran admits they are used illegally.

Only in Baltimore

In my view, there are many things wrong with his bill. First and foremost, I believe the city council should not be in the business of collecting fees from illegal enterprises. Any bar owner, vice cop or FBI gambling expert will tell you that these machines are not only illegal because bartenders and store clerks illicitly pay out winnings to players, they are illegal by design; the Maryland Court of Appeals said so.
It’s a weird situation because, in spite of what the Court and law enforcement experts say, the city licenses the machines anyway.
Instead of outlawing these devices, which cost the city, state and IRS tens of millions annually in lost taxes, Curran wants to set up a system that would bring in just $5 million and further institutionalize this shady Baltimore tradition.

If Curran wants to squeeze some municipal dollars from illegal activity, why stop with video gambling machines? Imagine the prostitutes and drug dealers lining up to pay their annual fee at the Abel Wolman building, when they come in to make good on their parking tickets and water bills.

Where I’m coming from
Before I go any further, I must disclose that I am the author of an Abell Foundation study critical of these machines. My 2006 report revealed that machine owners – some of whom are convicted felons – are cheating the state and IRS out of tens of millions in tax revenue each year by understating their income. (Unlike legal slot machines in states like Delaware, no government official here can monitor video gambling earnings). I also told the councilman I would be writing a letter to the City Council opposing his bill and that I would be writing about this on my Baltimore Brew blog. One more admission: my husband twice ran against Councilman Curran for his 3^{rd district seat.}

In any case, I had a polite, spirited debate with Curran on the phone this week about his wrong-headed bill. His incentive, he said, was purely to “revive a revenue stream” for the city.

In addition to charging $3,000 per machine (which, by the way, is what one machine earns in three weeks) he also wants to exempt the owners from paying the admission and amusement tax, which is based on 10 percent of gross receipts. The city would lose the $1 million it gets from that tax. Curran understands that the video gambling guys are paying just a fraction of what they really owe on this tax because they’re lying about their gross receipts. But now he wants to let them off the hook by forgoing the tax altogether. I don’t follow his logic.

Wait, it gets worse

There is still another part of the bill I find really reprehensible: it would allow a major increase in the number of machines allowed in bars and other business. Right now, they’re allowed 5 “amusement devices” that would include video gambling and other real games. His bill would double the number, allowing five of those ten machines to be ‘simulated slot machines.’

This is what he’s proposing on the same week when City Council President Stephanie Rawlings Blake is urging the city to move forward to get a legal slots parlor built downtown. Wouldn’t the increased number of video gambling devices in city neighborhoods compete with a slots parlor? No, says Curran because legal slot machines pay out a higher percentage per dollar spent by gamblers. Still, illegal winnings are tax-free and gamblers can just walk around the corner from their homes to play at the neighborhood bar.

Oddly, Curran’s bill comes during a crackdown on video gambling in the metropolitan area by the IRS and the U.S. Attorney’s office, which just filed a claim to confiscate millions in cash and real estate owned by video gambling king John Zorzit and his Nick’s Amusements business, which earned $18 million over a four-year period from just 109 machines in Baltimore County.

Cash-cows for the bars

Curran was the councilman who spearheaded the ban on smoking in bars, whose owners thought they could not survive without smokers. But the councilman knew the bars would survive – and they have. This time, though, the councilman admits the bars in Baltimore “cannot live without these” machines. He is right about that. The Abell study showed that some bars can’t sell enough beer to stay in business. The illegal slots truly keep them afloat. And there is nothing simulated about that.