The Delaware Lottery and Gaming Study Commission, which missed its January 15 deadline for recommending measures to aid the state’s three struggling casinos to the state General Assembly, returned its recommendation only a week late, in a plan that would transfer back to casinos some million annually that is currently being taken by the state from casino revenues.
The recommendation, proposed by Democratic state Senator Brian Bushweller—whose district includes the Dover Downs racino—was passed on a narrow 5-4 vote of the panel, which is made up of state officials and lawmakers. The package—quickly dubbed a “bailout” and a “ cut to the state budget” in the mainstream media—would consist of rule changes and tax and fee breaks.
It is the second group of recommendations from the panel, which was formed in 2013 to find ways to help the state’s three racinos—Delaware Park, Dover Downs and Harrington Raceway—deal with continuing losses arising from increased regional competition, particularly in Maryland.
Last year’s recommendations for a mixed bag of tax breaks and fee eliminations did not make it through the General Assembly, which instead moved $10 million from other state programs to throw a life preserver to the industry.
This year’s proposal calls for a cut of the table game revenue tax from 29.4 percent to 15 percent, saving the casinos an estimated $6 million annually; for the state to pay 43.5 percent of casino vendor costs, a $3.3 million annual savings; a 5 percent annual credit on marketing and capital expenditures, which are $30 million annually; and a transfer of 1 percent of the state’s gaming revenue to the states’ standardbred and thoroughbred racing industry.
“We’re simply taking too much money,” Bushweller said of the state’s cut of casino revenues, in an Associated Press interview. “The simple solution to a simple problem is let’s take less money from the casino industry.” Dover Downs CEO Denis McGlynn added, “If you want this industry to fight the competition, you have to give us the resources to do it.”
The proposal drew immediate support from the American Gaming Association, which released a statement from President and CEO Geoff Freeman urging lawmakers to adopt the plan.
The AGA’s press release also cited a fall study by Oxford Economics showing that the three racinos contribute $726 million to Delaware’s economy, support more than 4,200 jobs generating nearly $188 million in income, and generate $316 million annually in tax revenue to local, state and federal governments.
“Delaware casinos face an ultra-competitive mid-Atlantic landscape,” Freeman said. “To thrive, lawmakers should embrace progressive, pro-business policies that empower Delaware’s casino industry to innovate and reinvest. Forward-thinking gaming regulations and tax policies will protect jobs, attract customers and strengthen Delaware’s economy.”
Others on the panel, and in the legislature, do not agree. State Finance Secretary Tom Cook, chairman of the panel, was among the four that voted against the recommendation. Hose Majority Leader Valerie Longhurst told the AP the plan has little chance of making it to the desk of Governor Jack Markell, whose administration is on record opposing the breaks.
“I honestly don’t think (the proposal) will have the support in the General Assembly to pass,” Longhurst said.
Cook told the AP the 1 percent for horsemen alone goes against the proposal passing. “I do have a concern about giving money back to the horsemen,” he said. “It’s going to make this very tough to swallow by the General Assembly.”
In addition to the table tax and vendor costs, operators have been clamoring for a drop in the slot revenue tax, which was raised from 36 percent to 43.5 percent in 2009 in what was presented as a temporary change to balance the budget. It was never reduced, leaving the effective slot tax at over 60 percent.
