Dover Downs chief blames tax rate
Dover Downs, Delaware’s only racino with an attached hotel, announced it is eliminating 24 positions, and will scale back table-game operations. Table games will not be offered early weekday mornings starting in mid-May.
The move is the latest effort by Dover Downs to cut costs amid continuing losses that casino officials blame on increased Maryland competition and a slot revenue tax around 60 percent. While all three racinos in the state are suffering flat revenues, Dover Downs, as the state’s only publicly traded gaming company, reported a loss of $706,000 last year, the first annual net loss since adding slot machines in 1996.
The company lost another $352,000 in the first quarter of 2015, prompting the latest move. The 24 positions—20 dealers and four security guards—add to the 31 positions already eliminated over the past 15 months. Denis McGlynn, president and CEO of Dover Downs Gaming and Entertainment, said in an interview with Delaware’s News Journal that the company was able to eliminate all but two of the first group of jobs by attrition, but that’s not the case this time.
“This further cutback is not a pleasant one to make, but unfortunately, in light of our position we must make it,” McGlynn said. “We’ve cut everywhere else we possibly can, and the only remaining areas where we can affect change is payroll and marketing. Well, we’ve been very conservative with our marketing, and you can see the results this quarter.”
McGlynn added that the property would be able to make a profit but for the onerous tax rate. “It’s not like we can’t generate a profit,” he told the News Journal. “Last year, we generated an $80 million operating profit but had to pay out $80.7 million to the state and the horsemen, so we were left with a net loss.”
The state Lottery and Gaming Study Commission has twice recommended that the state lift some of the tax and fee burden—which was raised in 2009 but never lowered—only to have the state’s lawmakers approve temporary measures providing funding from state agencies designed to aid distressed businesses. McGlynn says the fundamental problem is the size of the state’s slice of gaming revenues.
“Way back in 2008, we let everyone know this day would come, and now it’s here,” McGlynn said of the layoffs. “I’m not blaming anyone, because I understand the state has its own financial situation to deal with, but if we don’t get relief for the gaming industry here in Delaware, it’s safe to say we will see more of this in the future.”
The announcement by Dover Downs came as a state panel exploring how to make Delaware’s revenue portfolio less unpredictable and more reflective of economic conditions was preparing its final report to Delaware Governor Jack Markell.
The Structural Revenue Review Committee was formed amid concerns that more than half of Delaware’s revenues come from “inelastic” sources, including lottery and gambling.
