As Ocean Downs eye future expansion some in Ocean City object. Why?

Matthew Prensky

| Salisbury Daily Times

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Ocean City officials confident about fall tourism despite losing millions during summer

Ocean City officials remain confident about the fall tourism season despite the town losing millions this summer due to the ongoing COVID-19 pandemic.

BERLIN, Md. — Ocean Downs Casino has been a part of Worcester County for 10 years, but the casino is facing growing competition from the possible expansion of casinos in Norfolk. In order to keep up, Ocean Downs is considering plans to expand.

To grow its footprint, the casino needed its zoning to be changed. The Worcester County Commissioners granted that adjustment Oct. 20, despite the disapproval of Ocean City and its business community.

Ocean Downs Casino, located in Berlin just outside of Ocean City, is considering plans for an expansion in order to match growing competition after voters in Virginia voted to allow gambling in Norfolk. To stay competitive, casino officials are looking to add amenities, possibly including a hotel. Ocean City officials and businesses object to the expansion, and wholly oppose the idea of a hotel, fearing it will create an unfair advantage and hurt resort businesses.

Ocean Downs asked the commissioners to create a special overlay zone for the casino property, said Joe Moore, an Ocean City attorney who represents the Ocean Downs Casino.

“The text change simply allowed the casino to request additional uses, and those uses are, for instance: off-street parking garages, restaurants, nightclubs, banquet halls, hotels and motels, retail service establishments, arenas for outdoor entertainment, theaters, health clubs and cultural, social and recreational areas,” Moore said.

The overlay zone still prevents Ocean Downs from building a hotel because of a state law that bans casino owners from building a hotel within 10 miles of a casino, Moore said. But Ocean Downs owners can sell off a portion of its property to a separate developer who in turn can build a hotel, Moore said.

Developers, who are independent of the casino, could also buy one of the commercially zoned pieces of land on Route 589 across from Ocean Downs and build a hotel there.

The casino is trying to align its zoning with the business that takes place on the property, said general manager Bobbi Sample.

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“We always look at new ways to expand our revenue, but obviously, one of the things that we’re going to have is there’s going to be more competition,” Sample said. “Virginia has in Norfolk and Portsmouth on November’s ballot a referendum to allow commercial casino facilities.”

The referendum was held on Election Day this year and voters supported the idea of allowing gambling in the Norfolk and Portsmouth area, according to The Virginian Pilot.

The casino hasn’t committed to building a hotel, Sample said. If one were built in the future, it would be oriented to gamblers, not families.

Ocean Downs wants to attract gamblers with the financial means to spend multiple days at casinos, Sample said. The casino‘s intended customer could still benefit the beach town through increased visitation.

Ocean City officials and businesses oppose the overlay zone and the concept of a hotel because they say it violates an agreement the casino and town had from when casinos were first legalized in Maryland.

Businesses and officials also believe the possible hotel could create an unfair advantage for Ocean Downs if it starts giving away rooms to “high rollers.”

When the idea of a casino was first proposed, the beach resort worried the casino would “squash mom-and-pop hotels” and dilute the labor market, said Susan Jones, executive director of the Ocean City Hotel-Motel Restaurant Association.

“How do you compete as a hotel with somebody who’s giving away free rooms?” Jones said.

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Ocean City officials and business owners lobbied against casinos before they were legalized in 2008, said Ocean City Mayor Rick Meehan. While the town ultimately lost the fight, it did secure a number of restrictions, including the hotel rule.

Meehan told the Worcester County Commissioners that Ocean City had formed a partnership with Ocean Downs and the casino had agreed not build a hotel on the property. That agreement was struck between Ocean City hotel owners and Ocean Downs’ former owner Bill Rickman.

“That partnership has worked, and Mr. Rickman said it’s about a partnership,” Meehan said. “Well that original partnership was that there would not be the expansion of hotels and these other amenities on that property or in that area. That was very clear. Now time has passed and they, some have forgotten, but I have not forgotten.”

Rickman told the Worcester County Commissioners that Ocean City misinterpreted the agreement. Rickman didn’t want to build a hotel personally, but the option was always there for a hotel to be built at Ocean Downs.

“I’ve been approached by hotel owners in Ocean City that wanted to partner or have a hotel at Ocean Downs, but it was something I didn’t want to do,” Rickman said. “It’s not reasonable to restrict these people from having a small hotel.”

A question over fairness

Commissioner President Joe Mitrecic appreciates the contributions Ocean Downs makes to Worcester County, but couldn’t support the overlay zone legislation.

Mitrecic represents Ocean City on the Worcester County Commissioners.

Creating the overlay zone will pave the way for a hotel, Mitrecic said. Even if Ocean Downs doesn’t own the hotel, it will create an unfair advantage for the casino.

The hotel at Ocean Downs will also take away business from West Ocean City, Ocean City and Ocean Pines, where guests used to stay to visit the casino, Mitrecic said.

“They want to be able to comp rooms,” Mitrecic said. “As a matter of fact that I said to Mr. Moore, ‘You would be alright with having the restriction that the casino can’t comp rooms,’ and he said no absolutely not. That’s the reasoning behind wanting to build their own hotel.”

If Ocean Downs can give free rooms away to its guests, hotels in Ocean City or elsewhere can’t match that, Mitrecic said.

“My constituency didn’t support it, I didn’t support it and it’s there now, Mitrecic said. “We’ll see how it works out,” Mitrecic said.

If more Ocean City businesses were brought into the conversation by the casino, Jones said, it could relax some fears. The casino is looking to attract a different kind of customer than Ocean City, and if businesses see that, he feels opinions could change.

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Not everyone agrees that the casino expansion and possible hotel will take any guests away from Ocean City.

People who go to Ocean City want to enjoy the beach and Boardwalk, according to Commissioner Chip Bertino. Those who go to Ocean Downs or would stay in its hotel want to gamble.

“I did hear some comments that the casino would have an unfair advantage by having a hotel there. Well, I don’t necessarily agree with that,” Bertino said. “How do you define an unfair advantage? If my business is near the ocean is that not an asset that you’re able to capitalize on, or if I’m in a historic district that attracts people, is that an unfair advantage?”

Ocean Downs has contributed about $2.9 million to Worcester County in 2019, which is roughly 2 cents on the tax dollar in the county, Bertino said. Worcester County might have to consider raising taxes without Ocean Downs’ contributions.

“The money that goes to local (jurisdictions) has really made a significant impact, I believe, on the quality of life for residents here in Worcester County,” Bertino said.

Contributions to the community

All Maryland casino contribute part of their gross revenue to the state. The funding goes toward Maryland’s Education Trust Fund.

Ocean Downs contributes approximately 47% of its gross revenue to Maryland, of which 32% goes to the education fund and 5.5% goes to local impact grants, according to Sample.

Worcester County receives 60% of those local impact grants, according to Sample.

Each jurisdictions receives the following:

  • Ocean City, 20%
  • Ocean Pines, 10%
  • Berlin, 10%

Ocean Downs needs to continue to offer new amenities to stay competitive, especially if it begins to see more competition, Sample said.

The overlay zone was the first step in expanding, but the casino doesn’t have any immediately plans to grow, Sample said. The plan will likely be executed over several years.

“The hotel would probably be the biggest positive, as far as competing with other with other venues,” Sample said. “We would look at any of the potential uses that are now proved in the zoning as potential items to add over time.”

Obtaining the overlay zone was a critical step for Ocean Downs. The property was considered an agricultural zone because of its horse-racing track, Moore said.

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Any future hotel has no intentions of taking any business from Ocean City, Moore said. The casino simply wants to offer its customers a place to stay overnight.

In a show of good faith, Ocean Downs has committed to limiting any hotel on the property to 150 rooms, Moore said.

The casino won’t compete with Ocean City in any significant way with fewer hotel rooms and the intentions of attracting a different demographic from the beach resort, Moore said.

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