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Ocean Downs Casino in Financial Trouble

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Hilda Blood of Fenwick Island plays a slot machine Monday at The Casino at Ocean Downs. Blood said she and her husband, Art, visit the casino about once a month. Though The Casino at Ocean Downs generated nearly $45 million in its first year, the facility still finished 2011 in the red, according to its owner.

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Owner William Rickman said the casino’s 33 percent share of revenue, which came to about $14.8 million, was not enough to cover the building’s operating expenses.

“Unfortunately, we did not do the business we thought we would do, nor what the state projected, nor what we projected, which led to fairly substantial losses for the company for the year,” he said in an interview.

“I realize it seems like a lot of money, but we as the operators have to cover all those expenses,” he said. “We’re looking forward to maybe getting some help from the state, because the losses were large enough that they just can’t go on indefinitely. Some people feel that it’s automatic that you make money in these things, but that’s not the case.”

Rickman also said he hopes to work with state officials to lower the casino’s tax rate, which by law claims two-thirds of its revenue. He said the level of taxation for what’s essentially a seasonal operation “just doesn’t work.”

When asked if he could provide exact figures to show by just how much money the casino was in the red, Rickman said he has yet to receive the final audit that would show those losses.

“I’m satisfied with the facility, don’t get me wrong, it turned out great — I’d even like someday for it to grow. But you have to be in the black before you can do that,” Rickman said.

According to figures released by the Maryland Lottery, the total revenue generated by Ocean Downs came to $44,927,696.06. That makes the casino, only a year old, a major cog in the county’s economy. Its revenues match an amount that’s half the county’s entire annual operating budget.

Slots revenue swelled in the summer months, dipped in the shoulder season and stayed down in the winter. Revenue peaked in July at $5.3 million — a figure 14.3 percent higher than September, the second-busiest month.

The casino took in $3 million in December, the casino’s least-busy month since its January 2011 opening.

Where the taxes went

Ocean Downs provided local governments with $2.47 million in impact grants for 2011, according to the Maryland Lottery. That total amount comes from a 5.5 percent tax of total Ocean Downs revenue. All casino taxes combined take 66 percent of its revenues.

From that kitty, Worcester County gets 60 percent, Ocean City gets 20 percent, and Berlin and Ocean Pines each get 10 percent. That means Worcester received $1.5 million, Ocean City received $494,237 and Berlin and Ocean Pines each received $247,118.

Worcester County spokeswoman Kim Moses said the county used its money for a one-time purchase of public safety vehicles and to fund the bond payment for Worcester Technical High School. Ocean City spokeswoman Donna Abbott said the resort has put its money toward street paving. Ocean Pines also plans to use its money toward road improvements.

Berlin mayor Gee Williams said the Town Council decided months in advance to put its money toward buying land for the future site of a new police department and new community center.

“We budgeted $200,000 a year,” Williams said. “It looks like in this first year, we’re going to do a little better than that. I feel confident that even if the revenues remain flat, that we’ve made our budget. This is something that’s been on Berlin’s wish list for at least 20 years.”

Williams also said when Berlin sought a precise budget estimate on what its share of the slots would be, he contacted Rickman directly.

“I figured if anybody would know, he would, because he’s certainly the expert in the field. He’s the one that said, ‘if you budget $200,000 a year, you’ll be fine.’ I’m very grateful for that advice,” Williams said.

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