The gamble that is Delaware’s gaming industry

    The issue of what to do for Delaware casinos caught John Watson’s attention, as this legislative year came to a close.

    Here’s John Watson’s commentary:

    It looks like our casino business will stay in business, not fading away, but having a real chance to compete with the competition from neighboring states Pennsylvania, New Jersey and Maryland.

    On Thursday, state lawmakers gave final approval to a $477 million capital budget, including an $8 million bailout for Delaware’s casinos. It’s a short term fix by lawmakers who have promised to consider a long term solution, that could include more state aid.

    The $8 million falls short of lowering the state tax burden carried by the casinos, but will go directly to cover higher expected costs from vendors who supply slot machines to Dover Downs, Delaware Park and the Harrington Raceway and Casino.

    A News Journal report says, according to language in the bond bill, the state finance department will make the payments.

    The next step is a commission to study the theats to Delaware’s casino industry. An industry, by the way, which adds a lot to the state financial bottom line. Every year, lottery revenues provide over $200 million to the state budget through taxes on slots and table games. It occurs to me that if Delaware’s casinos had introduced live table games before it happened in our neighboring states, they might not be in these dismal financial swamps.

    Denis McGlynn, chief executive of Dover Downs Gaming and Entertainment, which operates the casino and hotel, is quoted as being “thankful that [the state] recognized that the industry has a severe issue that needs to be dealt with.”

    He went on to say “we’re grateful for whatever they can and have done. And, we are hopeful that what they do over the summer will open a lot more eyes to the plight of this industry here in Delaware.”

    On the flipside, the Capital Budget Bill, one of three pieces of budget legislation passed by lawmakers each year, appropriates millions of dollars for road, and school construction projects. This year there is $187 million in new bonding authority and about $61 million in cash.

    Rep. Tim Dukes, a Laurel Republican, called the deal “bad government,” but there was no further debate after that.

    Speaker of the House Pete Schwartzkopf signaled earlier in the session that there was no support for reducing the state taxes casinos pay. He said the state should help pay the cost of vendor contracts, which are negotiated by the state, but fully paid for by the casinos.

    “We have made a decision that we are going to do this, to try to maintain one of our biggest employers in Kent County,” Schwartzkopf said. All of this is presented knowing that Dover Downs is facing a $60 million debt as well as out-of-state competition.

    Finally, The News Journal says, for every dollar played in a slot machine in Dover, the state levies a 43.5 percent tax. Another 10.75 percent goes for harness races and vendors also get their share.

    Casinos are left with about 38 cents on every dollar to pay their expenses. McGlynn says the current system is “not only unfair, but it’s not durable.”

    The horsemen’s share of the gambling revenue, which was carved out as part of the mid-1990’s deal that  created Delaware’s three casinos, has been targeted  by casino executives inside Legislative Hall. I think only time will tell if that makes a difference.

    McGlynn proposes reducing the share of revenue going to fund purses for harness horse racing in Dover and Harrington from 10.75 percent to 9 percent.

    But as expected, the Delaware Standardbred Owners Association, which represents the horsemen, is pushing back at that proposal.

    Salvatore DiMario, Executive Director of the Association, said the horsemen cannot provide the “low-hanging fruit” to help ailing casinos. “We need to hold the line as best we can to keep the industry viable,” DiMario said.

    So where does that leave us? Right where we have always been it seems to me. You have to abide by what the horsemen say about all of this and they seem to have some loyal supporters in the General Assembly. What do you think?

    Here’s a final thought. If Gov. Ruth Ann Minner had not opposed the idea of table games during her time in office and instead left it to Gov. Jack Markell to finally implement after he took office, perhaps the Delaware Casino Industry would be in better shape.

    There would have been all those years of table game customer loyalty in place. All those years to get used to the idea and all those years of tax free shopping here in the First State.

    John Watson is a long time Wilmington radio talk show host. You can reach him at johnwatson1506@comcast.net

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