You could run out of fingers and toes counting up the reasons to visit West Virginia. There's the scenery, the air, the quiet. But hundreds of Marylanders motor to the land of the wild and wonderful to do something else entirely. They sit in smoke-filled rooms in Charles Town Races and Slots, staring at screens they activate with cash and operate with the push of a button.

Rightly, state government types in Maryland have seen this as a problem. People are, after all, leaving the state—and not just to go to West Virginia, but to Delaware, New Jersey, and Pennsylvania too—to spend up to a billion of their hard-earned dollars each year, if you want to believe pro-gambling types, at slot machine parlors and gaming tables.

With hopes of keeping that money at home and winning some tax relief, Maryland voters passed a referendum in 2008 legalizing slot machines. The state went on to form a "slots commission" to license five parlors that would bleed $1 billion from (mostly in-state) slots players annually. In return, the state would win as much as $90 million in up-front licensing fees and two-thirds of the annual cut—$660 million—to spend on education and help for the horse racing industry.

That was the idea, anyway.

Fourteen months later, slots remain a mirage. Licensees have been found for parlors near Ocean City and in Perryville in Cecil County. Gamblers will be able to file into spiffed-up slots palaces there, most likely late this year. But the mega-operations planned for Anne Arundel County and Baltimore City, and a smaller outpost in Rocky Gap State Park in Allegany County, were up in the air at press time.

What's the hang-up? Development has been slowed by the recession and, critics say, by the state's large take of the cut, which has discouraged would-be casino owners from gambling on Maryland. In Anne Arundel County, local residents are collecting signatures in an effort to overturn the Cordish Co.'s zoning approval for a gambling parlor adjacent to the Arundel Mills mall. In Baltimore, a group that planned to open a casino downtown failed to come up with the $22.5 million in licensing fees, leading the slots commission to reject its bid in December.

But industry experts say there's something deeper at play: After dithering and debating the slots question for a decade, Maryland got in the game too late, and it might be crowded out from the table.

Casinos in Las Vegas and along Mississippi's Gulf Coast are experiencing serious, ongoing declines. Harrah's Entertainment—the largest casino company in the world—lost an unprecedented $1 billion in the third quarter of 2009. "When casinos in Atlantic City can't figure out a way to make their industry profitable, it's clear [the business] isn't what it used to be," says Daniel Campo, an assistant professor at Morgan State University who keeps an academic eye on gambling.

Industry spokespeople point out that gambling revenues in states such as Michigan, Missouri, and Indiana are down, but not way down. "A lot of destination casino areas haven't done well, but the effect isn't monolithic," says Frank Fahrenkopf Jr., president of the American Gaming Association in Washington, D.C., which lobbies for commercial casino owners and makers of gaming machines. Racinos—hybrids of horse racing tracks and slots parlors—are doing well.

But now that every state government in the country except for Montana and North Dakota is swimming in red ink, it's likely we'll see more of them float slots schemes to balance the books. And this raises the bigger question of market oversaturation: By getting into slots, Maryland is playing its part in a multi-state shell game in which money hopscotches from one area to another.

Here's how the game has played out so far: Pennsylvania slots took money away from Atlantic City's boardwalk casinos. Delaware snatched horse-racing revenue away from Maryland tracks by using slots as a draw. And when Maryland passed its own pro-slots law, a county in West Virginia—worried that new competition might cut into the 96 percent of Charles Town gambling revenues that come from outside the state—voted in blackjack and poker. Delaware upped the ante further by trying to corner the East Coast market on professional sports betting, a matter that is winding its way through the courts. And now Pennsylvania is expanding table games beyond slots.

State officials might deem this gambling arms race an ideal way to save residents from a tax hike. In Maryland, those who pushed for slots remain unbowed. "The bigger risk is not getting involved in slots at all," says Shaun Adamec, press secretary for Gov. Martin O'Malley. "Our border states are using slots to take Marylanders' money. We're glad that we got involved when we did."

In Baltimore, Deputy Mayor Andrew Frank says he's cautiously optimistic about gambling's future near the stadium complex, which will ostensibly be aided by hundreds of millions of dollars in investment by developers. Slots revenues, he says, could help the city knock back its region-leading property tax rate "by six to eight cents over the next five to seven years."

"We don't believe the ship has sailed on slots," agrees Joseph Weinberg, a partner at the Cordish Co., whose plans for Anne Arundel County include a palace for 4,750 slot machines, five restaurants, and three spots for entertainment. Total cost: $320 million. "There's a substantial market within a half-hour from Arundel Mills; there's about five million people we can tap," says Weinberg. "Given the opportunity, people will travel to a closer facility."

Still, the promises of the pro-slots campaign in 2008 have faded a bit, like the felt on a decrepit blackjack table. And, some argue, that may be just as well.

John Kindt, a professor of business and legal policy at the University of Illinois at Urbana-Champaign, says gambling sucks money away from the consumer economy and small businesses. Kindt and others estimate that as a slot machine takes in $100,000 per year for casino owners, it eliminates one job elsewhere in the economy, eventually leading to three times that amount in lost consumer spending and taxes paid. Meanwhile, slots force states to absorb more in "social costs," such as an uptick in gambling addiction. "The taxes charged by Maryland on this amount [of slots income] are miniscule in comparison with what the state will lose," he says.

Marylanders might just be better off if slots don't catch on. Introducing gambling, Kindt says, "is like throwing gasoline on the fires of the recession."

—Michael Anft