Gambling on Delaware’s casinos

There was one part of the recently completed legislative agenda in Delaware that caught Rob Tornoe’s attention.  The $8 million given as aid to Delaware’s 3 casinos.

 

Here is Rob’s commentary.

A number of years ago, I drew a cartoon that really angered the folks over at Dover Downs. It featured a suit with a bag of money as a head, pushing a shopping cart filled with Delaware politicians. My contention was the casinos were using their influence to get their way in Dover, and despite their rebuke, I don’t think I was wrong at the time. Fast-forward to today. Delaware taxpayers are officially bailing out our three casinos to the tune of $8 million due to increased competition from new casinos in Maryland and Pennsylvania. A case of the casinos buying influence again, right? No so fast… Markell is in a tough spot when it comes to the casinos. As of last year, gaming revenue accounted for more than 7 percent of Delaware’s general fund budget, making it the state’s fourth largest revenue stream (ahead of the corporate income tax and gross receipts tax). The casinos really wanted the taxes they pay on slot machines reduced down to 37 percent (from 43.5 percent) but Markell wasn’t willing to budge on that, so it’s “too big to fail time” for Delaware’s three gambling halls. A quick peek at the numbers Dover Downs is seeing illuminates the issue. According to the News Journal, slots revenue was up over $3.2 million over the previous year during the first five months of 2012. But since Maryland Live opened in June, Dover Downs saw their slow revenue decline almost $13 million over the final seven months of the year. 2013 hasn’t been any better for the hard-hit casino, as they struggle with a $22 million drop in slot revenue and a reported new loss of $283,000. And Maryland Live doesn’t even have table games yet! Delaware enjoyed a free ride with limited competition for years. But with new casinos popping up everywhere (including possibly soon in downtown Philadelphia) the panacea of increase revenues without tax increases is fading away, and tough choices will face all three casino operators in the state in the coming months and years. I’m not a gambler, but the major issue I see is that none of Delaware’s three casinos are destinations in and of themselves. When’s the last time you went to see a show or did some shopping at any of the casinos? I think for Delaware’s casino industry to succeed and thrive, they need to make the transition from convenient gambling spots to true destinations that can draw in people interested in things other than gambling. Secondly (and this might seem counter-intuitive) I believe there is some merit in considering a new casino at either the beach or along the I-95 corridor, possibility near Christina Mall. New Jersey’s fatal mistake in their plan to rescue Atlantic City was centralizing all the gambling into one corner of the state people have to travel to, giving up all the potential customers in and around Philadelphia and New York that would visit a casino or two if they were closer and more convenient. Both the beach and the Christiana Mall areas have become destination spots for people out of state to visit, so if you want to reclaim the gambling dollars lost to out-of-state competition, erecting a casino where tourists are already visiting seems like a logical choice. None of these are good options. A new casino at either the beach or off I-95 could spell doom for Delaware Park or Harrington, but it might also be the best long-term option for jobs, state revenues and Delaware’s casino industry as a whole. —– Rob Tornoe is a political cartoonist and WHYY contributor. Check out more of Rob’s cartoons at RobTornoe.com, and follow him on Twitter @RobTornoe.  Watch him on First this week.  Here is his segment.