The Lottery and Gaming Study Commission in Delaware, made up of government officials and lawmakers, has twice recommended tax breaks for the state’s three current racinos, which have struggled against new competition in Maryland and a high tax rate that has squeezed profits. However, at each of the panel’s meetings, Delaware attorney Darrell Baker delivered testimony criticizing the casinos for seeking a state “bailout.”
Baker is now reportedly working with state lawmakers on a plan that would address the sagging state revenue from casinos by… adding even more casinos. Baker’s plan would create three new casino licenses for the state, up for public bid at a price of $10 million per license.
Baker has criticized the current setup as a monopoly for the three current state casinos—Delaware Park, Dover Downs and Harrington Raceway—and has urged open bids for new properties, letting the open market decide which succeeds and which fails. He has said mismanagement is more responsible for the decline of gaming revenues in Delaware as regional market saturation.
“They have sucked the money out of those properties for so long, and they overleveraged them, and now they have the unmitigated gall to come and ask for a bailout,” Baker told Delaware State News. “Why doesn’t every other business in the state do that? They want a monopoly and a tax break.”
The casinos actually are asking for a return to their former revenue tax rate, which was raised from 51 percent to an effective 60 percent in 2009 in what was to be a temporary increase due to the recession. It was never lowered, and casinos have struggled to turn a profit. While Delaware Park and Harrington are private companies that do not reveal earnings, the public Dover Downs lost $706,000 last year.
“I don’t believe that adding more casinos to this state will help us in any regard,” Denis McGlynn, president and chief executive officer of Dover Downs, said earlier this year, according to the newspaper. “I think that will only further cannibalize the mid-Atlantic market.”
State Senator Brian Bushweller, a traditional staunch casino advocate, spoke out against Baker’s plan. “There’s only so much gambling money to go around,” he told Delaware State News. “The fact is if we don’t do something about how much money we take from the casinos, the very real possibility is that we will kill that industry off, and that we will lose $180 million a year; we’ll lose 4,500 jobs.”
The specifics of the bill have not yet materialized, and Baker has not revealed the lawmakers who would sponsor a bill based on his expansion plan.
