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A 2012 law created to restrict Maryland casinos from contributing to political campaigns has turned out to be a $1.1 million dollar failure.
Despite the law’s intent to clamp down on political contributions tied to casinos, a Baltimore Post investigation has found $1,098,000 of casino money flooding into the campaign coffers of numerous Maryland legislators over the last five years.
Of the six casinos in the state, The Post was able to link at least four directly to what appears to be an attempt to funnel scores of political contributions through a variety of front companies. The most far-reaching program was run by Caves Valley Partners, a Towson development company which is a principal in Baltimore’s Horseshoe Casino. Caves Valley Partners spent almost $450,000 that it moved through 45 entities to 91 political campaigns, statewide.
To the casual observer, donations from the developer were coming from such anodyne sounding names as Stadium Square Holdings or SBF Capital, when in fact state corporation records show those companies operate out of the same address and have at least one of the same officers as Caves Valley Partners.
While Caves Valley was the most prolific donor, casino money is so pervasive that The Baltimore Post counted 148 different political campaigns receiving donations from people and companies linked to Maryland Live, The Horseshoe Casino, Rocky Gap Casino and Ocean Downs.
People connected to Rocky Gap, for example, shelled out $112,000 to 14 politicians (42 contributions) since the passage of the law. Maryland Live Casino principals did the same, giving $79,000 to 28 hopeful elected officials (46 contributions). And those with ties to Ocean Downs put their bets on 64 candidates (177 contributions), to the tune of $370,000.
Even two of the most powerful politicians in the state – Senate President Thomas V. Mike Miller and House Speaker Michael E. Busch – collected between them, a total of $41,500 in casino money. Both men declined to comment.
Busch and Miller were not alone. The Baltimore Post found 47 Maryland legislators who voted for the casino prohibition and then turned around and accepted money from casino interests. In total, they collected $266,090.
By law, the State Board of Elections (SBE) is supposed to monitor campaign finances and report any questionable donations to the State Prosecuting Attorney.
However, SBE officials were unclear on how they enforced the law.
Linda H. Lamone, state administrator for the SBE, declined an in person interview. “I don’t know the details of the finance law. So, I don’t know how helpful I will be,” she said. “I don’t know the complexity of the finance law.”
Lamone has headed the agency for 20 years.
She, in turn, referred all questions to Jared DeMarinis, head of the Candidacy and Campaign Finance Division of the SBE. On the one hand, DeMarinis said SBE’s Audit and Enforcement Department was charged with auditing the campaign contributions for the agency. (The Department employs two auditors for the job.) On the other hand, he said that the agency relies on citizens to catch possible violations of this nature. And enforcement of the law falls at the feet the State Prosecutor’s Office to investigate and prosecute.
However, DeMarinis said he could not recall finding a single suspicious transaction involving the ban on donations by the casino industry.
The law itself makes it very difficult to make anyone accountable.
The state law unambiguously says “an applicant for a video lottery operation license or a holder of a video lottery operation license” cannot make a campaign contribution to a state or local candidate.
But it then carves out two exceptions.
If a person owns less than a 5 percent stake in a casino, they can make a donation. Since it is highly unlikely that an average citizen knows what stake someone else owns in a casino, the SBE is equally unlikely to get a complaint.
But the law then goes on to, in effect, promote the use of front companies which allows for intended or unintended obfuscation of the actual amount of donations, split among multiple Limited Liability Companies. If a person who has an interest in a casino also owns a legal entity – such as SBF Capital – that “is organized for legitimate business purposes unrelated to gaming and does not have a direct interest or ownership in (a casino)” then the legal entity can donate to candidates.
Ironically, it was a spokesman for Caves Valley Partners who demonstrated how these loopholes worked.
Arthur Adler, partner at Caves Valley Partners, cited the 5% rule, explaining that neither he, nor the other Caves Valley partners, individually owned more than the state maximum.
He also said that the $450,000 that The Post had found was inaccurate. The partner, however, failed to explain why.
What The Post found is that the various companies the developer used to give the donations came from the same addresses as the corporate office for Caves Valley Partners. In addition, the corporate officers pop up in the records of the companies used to funnel the money to political campaigns.
Adler also claimed that none of the partners for Caves Valley had ever applied for, nor held, a video lottery operations license. The Post emailed Adler a copy of the license with the names of four Caves Valley partners on it. Adler argued that the license is held by a company, but did not dispute that he and his partners were listed as principals and officers on the license.
Whether or not Caves Valley Partners and the other casinos have effectively exploited these loopholes will ultimately be decided by the State. DeMarinis said that the agency is currently reviewing a computer analysis by The Baltimore Post.
But retired Anne Arundel County Assistant States Attorney David Plymyer argues that the state must go beyond enforcing the current law. “If there are any loopholes that render the law less effective, they need to be fixed,” Plymyer said. “Anyone who doesn’t believe that Maryland could return to the time before the abolition of slot machines in the 1960’s when gambling interests owned politicians lock, stock and barrel, needs to wake up – and wake up quickly.”
Elliot Jaspin contributed to the computer analysis for this story.
Story Updated 9/20/2017: In an earlier version of this story, the number of politicians who had received contributions had been counted in error as their individual contributions. The story has been updated to reflect the number of actual politicians and their corresponding contributions (which are unchanged).
Rocky Gap: 14 politicians (42 contributions)
Maryland Live Casino: 28 politicians (46 contributions)
Ocean Downs : 64 politicians (177 contributions)
