A plan floated earlier this year by Delaware Governor Jack Markell to allow the current racino licensees to open separate slot parlors around the state was ultimately rejected by the casinos, according to a report in Delaware’s News Journal.
Last spring, Tom Cook, Markell’s finance secretary and head of a panel seeking ways to help Delaware’s three racinos recover from losses to competition and high taxes, approached executives of Dover Downs, Delaware Park and Harrington Raceway separately to offer the plan. Delaware racinos are permitted up to 4,000 slots each under the law, but less than half are currently active at the racinos. Under the proposal, each property would have been able to open satellite slot parlors at locations around the state using their remaining allowable machines.
The operators rejected the plan, predicting it would lead to more losses. “If we can’t make money with what we’ve built here, why are we going to go build places to lose more money?” said Dover Downs CEO Denis McGlynn in an interview with the News Journal. Dover Downs currently has 2,400 slots, which would leave 1,600 machines to place in a separate parlor.
The state panel headed by Cook is still studying ways to help turn the fortunes around for the casinos, which have been losing money because of competition from Maryland and Pennsylvania, and because of a gaming revenue tax that was raised at the height of the recession to become one of the highest in the industry.
The operators have repeatedly asked for breaks in taxes and fees from the state, but lawmakers have refused. The state panel has recommended replacing the slot revenue tax from its current high fixed rate—an effective 60 percent, including all fees—with a tiered revenue tax that would be lower when revenues are lower. On table games, the casino operators simply want the rate reduced from its current effective 40 percent—the highest table tax in the country—to around 15 percent, which would be more competitive with other states.
McGlynn told the newspaper that the administration’s slot parlor proposal betrayed a “lack of understanding” on the part of officials as to the root of their problems. “OK casinos, you can invest more money somewhere else to build more facilities that lose money,” he said of the plan.
In a separate interview with the newspaper, Bill Rickman, owner of Delaware Park, concurred with McGlynn’s opinion. “They’re not Starbucks; they shouldn’t be on every corner, he said of the state’s racinos. “I believe they should be destination locations.”
As the panel continues to search for ways to help the land-based casino industry, the state’s online gaming program is generating its lowest revenues since the program was launched more than a year ago. For October, Delaware’s online casinos generated just $130,469 in revenue, compared to its record of $240,763 posted last April.
