Delaware state senators have introduced a bipartisan bill in what is the third attempt in three years to secure state help in the form of tax and fee breaks for the state’s three struggling racinos.
Delaware’s three racinos—Delaware Park, Dover Downs and Harrington Raceway—have seen profits dip as new competition multiplied in neighboring states, particularly Maryland. The gaming operators, led by Dover Downs Casino President and CEO Ed Sutor, have pleaded for breaks in gaming revenue taxes and fees that have led to consecutive profit losses.
Senate Bill 144 would change the tax structure, slash the table game tax rate in half and eliminate the annual table game license fee. Currently, 43.5 percent of all casino revenue (not counting money returned to players and paid to vendors) goes to the state. The lead sponsor is Senator Brian Bushweller, a Dover Democrat, and the bill lists 13 Democratic sponsors and seven Republican backers, split between the state’s three counties roughly evenly.
The bill would create a bracket structure resembling what was set up when lawmakers first approved slots gambling in 1994: Daily revenue of no more than $75,000 would be taxed at 32 percent, revenue greater than $75,000 and less than $150,001 would be taxed at 35 percent, revenue between $150,000 and $225,001 would be taxed at 37.5 percent and revenue of more than $225,000 would be taxed at 43.5 percent.
In addition, the table game tax rate of 29.4 percent would be cut to 15 percent and the $13.25 million table game license shared between the state’s three casinos would be disposed of.
Bushweller told the Delaware State News the measure carries an estimated cost of $21 million to the state government, but would even the playing field for racino operators. “The casino industry pays all the same taxes as any other business in Delaware,” Bushweller said. “You pick a tax and they’re paying it … but in addition to it, through the first three quarters of 2017, Dover Downs paid $56 million between the horse racing industry and the state.”
He added that the casinos have suffered as profits sunk and taxes rose. “Since the slots were instituted in the 1990s in Delaware, the state has persistently and routinely increased its take from the overall … slot machine revenue to a point where they’re no longer able to function like a normal business,” Bushweller said.
Bushweller said that while the past two attempts to help casinos lost to critics in the legislature calling it a “bailout” for the industry, a stronger state financial picture this year increases the chance the bill will pass.
“I will say that it’s been clear to me over the past two or three years, an increasing number of members of the General Assembly have come to understand the issue and I think want to try to do something about it,” Bushweller told the newspaper. “Whether we can do something depends on a lot of other factors.”
Denis McGlynn, president and CEO of Dover Downs Gaming & Entertainment, the parent company of the racino and Delaware’s only publicly traded casino, told the State News the facility lost $289,000 through the first nine months of 2017, and blamed the state’s 47 percent cut of profits. “This isn’t what free enterprise is supposed to be about,” he said.
The bill has been placed in the Senate Banking, Business & Insurance Committee.
