Slot tax would be unchanged under recommendations
A panel of lawmakers and government officials formed to study ways to help Delaware’s struggling casino industry has returned its recommendations to the state legislature. If adopted, the recommendations would save the casinos more than $30 million in fees and taxes over the next two years.
The Delaware Lottery and Gaming Study Commission, a nine member panel chaired by state Finance Secretary Tom Cook and including a bipartisan group of lawmakers, a representative from the State Chamber of Commerce and Alan Levin, director of the Delaware Economic Development Office, was formed to provide relief to an industry that has been reeling from new competition in Maryland and Pennsylvania. It has worked on the project for eight months.
Owners of Delaware’s three racinos—Delaware Park, Dover Downs and Harrington Raceway—had urged panel members to recommend a reduction in gaming taxes and fees which, combined, amounted to an effective 60 percent, and the elimination of recurring fees. The panel, which was more than a month late returning its recommendations to lawmakers, returned a mixed bag of proposals that wouldn’t give operators everything they want, but would provide substantial relief to losses that have occurred as the facilities have lost business to both the recession and to neighboring states.
Under the commission’s recommendations, the state would take over 75 percent of vendor fees associated with acquiring and servicing slot machines during the coming fiscal year, which would save the casinos $9.9 million.
In fiscal 2016, the annual $3 million table game license fee would be eliminated, saving the casinos an additional $10.2 million, and the table game revenue tax would drop from its current 29.4 percent to 15 percent, saving the operators another $7.2 million.
What the recommendations do not include is any reduction in the slot revenue tax, which was raised from 36 percent to 43.5 percent in 2009 to balance the budget. Operators were hoping the state would roll that tax back to its pre-2009 level.
Still, operators are not complaining. “It’s an outcome that I think was the best we could hope for under the current circumstances,” Dover Downs Chairman Denis McGlynn told radio station WBOC. “We have a fiscal situation in the state. The industry is not unaware of that. I think we have a political year where it’s an election year and people have to be careful how they view our industry. We understand that.”
The proposal, which the commission approved by a 7-2 vote, was delivered to the legislature by state Senator Brian Bushweller, one of the commission members.
“I think of the goal of what I’m about to propose is that the state of Delaware is a partner in a venture, and we need to be a good partner in that venture,” Bushweller said. Bushweller, whose district includes Dover Downs, also proposed that the commission reconvene in summer of 2015 to revisit the issues,
Other panel members expressed concern that the industry’s savings represent a drop in state revenue. “I think it went a little too far, and that’s what concerns me,” said state Economic Development Secretary Alan Levin. “Frankly, somebody has to make up that $20 million. There’s going to be a gap in the budget. It’s going to come out of the taxpayers’ pocket.”
The full General Assembly will now debate the recommendations. Governor Jack Markell has said he supports the panel’s proposal.
