The remaining 40 percent automatically goes to the Washington County Fire and Rescue Association for distribution to local fire and rescue companies.
If the theater receives gaming funds, the money would go toward paying off a $130,000 loan from Bulldog Federal Credit Union, Maryland Theatre Board President Patricia Wolford said.
Bulldog loaned the money in March so the theater could meet a balloon mortgage payment due at the end of this month to a group of local banks.
It was the final payment on a $250,000 mortgage taken out in 1994 when the theater was in the midst of a financial crisis.
Theater board member W. Kennedy Boone III said at the time that Bulldog's six-month loan at 9 percent interest was "a good deal" and that credit union and theater officials planned to negotiate a new long-term loan, over 10 or 15 years, to pay off the $130,000 loan.
Wolford said Thursday that if the Gaming Commission money comes through, the theater could do more shows.
"We will be able to provide a minimum of two more performances a year for the general public," she said.
The theater's application states that if its debt burden were reduced or eliminated "the theater will be able to use the funds now required to pay debt service to support additional performances for the cultural enrichment of the county citizens."
Gaming Commission Chairwoman Sue Tuckwell said she had not seen the Maryland Theatre's application and wouldn't review it until after the May 31 application deadline.
"It'll be considered along with everyone else's," she said.
"I believe that, as chairman, it is inappropriate for organizations to lobby for gaming funds by issuing their applications to the newspaper," she said. "I think it's in poor taste."
A grant of $130,000 to one organization would represent a large chunk of the money available, and "I'm not sure we're ready to take a giant leap that big," said Tuckwell, who was president of the theater's board in 1994 when the mortgage was taken out.
The Gaming Commission tries to give some money to everyone who qualifies and has a "predilection" to help organizations that provide basic human services like food and shelter, she said.
If the total amount of money requested by an organization is not available, then the commission may award a grant for some lesser amount, she said.
The theater paid out $173,073 in donated and earned funds since 1994 to reduce the principal of the mortgage to $130,000, according to the application.
Last fall the theater requested $234,388 in gaming funds for interior restoration work but was turned down.
At that time, Gaming Commission guidelines set a cap of $15,000 on the amount of money an organization could receive from the gaming fund in a calendar year.
The theater was one of 63 charitable and nonprofit organizations requesting a total of $839,742.
The Gaming Commission had only $693,480 to distribute in January, 60 percent of which was divided among 52 charities and nonprofits, Sterling said.
The $15,000 cap on grants was lifted by the Washington County Commissioners on March 18, she said.
Applications for the next round of Gaming Commission grants are being accepted during May and funds will be distributed in August, Sterling said.
The Maryland Theatre's application was the second application the Gaming Commission received on Thursday, the first day of the new application period, she said.
The Salvation Army filed an application requesting $15,000 to renovate a property at 514-516 W. Franklin St.