Dover Downs reports $1 million net loss for 2017

 

DOVER — With their fourth quarter of 2017 results in, Dover Downs Hotel & Casino reported a $1,068,000 loss for the year — down from a profit of $786,000 reported for 2016. With a reported net loss of $779,000, the last quarter of the year appeared to be the worst.

The fourth quarter report indicated that gaming revenues were up 1.2 percent from the same time period in 2016, but hotel occupancy rates sagged about 1 percent. General and administrative expenses were shaved down about $256,000 compared to the fourth quarter of 2016 because of lower employee related costs.

The results also noted changes connected to President Donald Trump’s recently passed tax reforms, saying:

“On Dec. 22, the Tax Cuts and Jobs Act was signed into law. The fourth quarter of 2017 and full-year 2017 results reflected the impact of the new tax law, which resulted in an income tax expense of $662,000, primarily from revaluing the company’s net deferred tax assets to reflect the recently enacted 21 percent federal corporate tax rate.”

Total revenues for 2017 were said to be almost $177 million compared to $182 million in 2016.

Company President and CEO Denis McGlynn faulted Delaware’s regulatory environment for this year’s net loss.

Denis McGlynn

Denis McGlynn

“Once again the company demonstrated substantial gaming operational profitability which once again was totally wiped out by an unfair and outdated gaming revenue sharing formula,” he said. “Legislation has been introduced to implement a more fair and realistic formula and we hope the Delaware Legislature and Administration will act favorably on it.”

The legislation in question was a bipartisan bill introduced last week taking aim at providing “relief” to Delaware’s three casinos that supporters say is sorely needed.

The bill’s main sponsor, Sen. Brian Bushweller, D-Dover, spoke out earlier this week in support of the legislation.

“The casino industry pays all the same taxes as any other business in Delaware,” Sen. Brian Bushweller, D-Dover, 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.”

The third attempt at providing aid to the casinos over the past three years, 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 bill would create a bracket structure resembling what was set up when lawmakers first approved slots gambling in 1994.

Under the bill 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 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.

According to Sen. Bushweller, the measure carries an estimated cost of $21 million to the state government. It’s a cost he believes Delaware cannot afford not to pay.

Casino executives have been pushing for years for relief, but nothing has been done since 2014, when legislators agreed to shift $9.9 million in slot vendor costs to the state.

Opponents paint casino relief as a “bailout,” arguing the state should not provide aid to private businesses. But, Mr. McGlynn suggests that Dover Downs ability to function and grow was being constrained by the state.

“This isn’t what free enterprise is supposed to be about,” he said of the casinos keeping less than half of their revenue.

The bill would go a long way toward stabilizing Dover Downs in the near future, Mr. McGlynn predicted.

Should the current trend — a result of casinos opening in other states and increased tax rates — continue with no financial relief, the casinos may no longer be able to keep their doors open, supporters have said.

Senate Bill 144 lists 13 Democratic sponsors and seven Republican backers, and the number of sponsors from New Castle County and from the lower two counties is close to even.

The bill’s co-sponsors include Senate Democratic leadership, an indication the measure is likely to receive strong support in at least one chamber.

The proposal has been placed in the Senate Banking, Business & Insurance Committee.

Matt Bittle contributed to this report.

Reach staff writer Ian Gronau at igronau@newszap.com

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