Casino bill passes House, goes back to Senate Saturday

Gov. John Carney holds up the budget bill after he signed it in his office Thursday. (Special to the Delaware State News/Gary Emeigh)

DOVER — Financial relief is in the cards after all.

On the second-to-last regularly scheduled day of the legislative session, the House approved a modified version of a bill that would give Delaware’s three casinos tax breaks. By a 35-4 vote, with one member absent and one not voting, the chamber sent the measure back to the Senate, which is expected to pass it when the General Assembly convenes Saturday.

“I cannot stress the importance of this bill enough to the city of Dover and the residents of central Delaware,” Rep. Sean Lynn, D-Dover, said.

After negotiations, supporters and opponents reached an agreement on a change to Senate Substitute 1 for Senate Bill 144, which had been awaiting a vote in the House for two months. The amended version reduces the slot tax rates by less but retains the decrease in the table game tax rate, the elimination of the table game license fee and the creation of capital and marketing credits.

The change leaves an additional $3.6 million for the state in the first year and $3.2 million more thereafter. That extra money could be used Saturday when the Joint Finance Committee meets to finalize the grant-in-aid bill, which provides funding to nonprofits.

Supporters have called for gaming relief for years, arguing the tax rates on the casinos are too high and could drive them out of business. While Dover Downs, the only public company of the three and the leader of the charge for assistance, has shied away from discussing bankruptcy, it lost nearly $1.1 million in 2017, the second time in four years it has ended the year in the red.

“It doesn’t take a rocket scientist to figure out that the situation needs to be changed,” Dover Downs President and CEO Denis McGlynn said last week, noting the casino eliminated 96 positions in 2015.

House Speaker Pete Schwartzkopf, D-Rehoboth Beach, was the main opponent of the original bill passed by the Senate, which would have cost the state $15 million in year one and $20 million in subsequent years. An amendment he filed two weeks ago would have kept the provisions dealing with table games — lowering the rate from 29.4 to 15.5 percent and doing away with the $3 million license fee — but eliminated the 2 percent reduction in slot rates.

Under the amended version approved Thursday, Dover Downs and Delaware Park would see their slot tax rate decrease from 43.5 to 42.5 percent, while Harrington Raceway & Casino would turn 41.5 instead of 42.5 percent of proceeds over to the state. Should the casinos invest a certain amount of money in their facilities after July 1, 2019, the rates would drop another 2 percent.

The horsemen would receive an additional .3 percent in revenue the first year and .3 percent the next year. As a result, the standardbred racing industry’s take would top out at 11.35 percent, while those in thoroughbred racing, which takes place only at Delaware Park, would receive 9.6 percent.

When slots were added in 1994, the revenue-sharing formula was based on how much money the casinos brought in, taxing higher amounts at higher rates, much like income taxes. Over the years, that has changed, much to the casinos’ chagrin.

The original bill would have instituted the tiered structure once more, although that was taken out of the substitute, which was crafted after discussions earlier this year between the executive branch and the casinos. Gov. John Carney has avoided commenting directly on the legislation, but the fact the Department of Finance was involved in negotiations would indicate he has given the effort his blessing.

There was a sense of success in the House chamber after the bill passed a few minutes before 8:30 p.m. Several Dover-area representatives applauded the effort, which they said would ensure jobs are not lost, and a number of lawmakers shook hands with Sen. Brian Bushweller, D-Dover, who has been a strong advocate for the casinos.

“We got it done. It was great,” Rep. William Carson, D-Smyrna, said.

“It wasn’t easy,” Sen. Bushweller, who is not seeking re-election and was seeking to pass legislation before he leaves, replied.

Dover Down had 1,401 employees, including 889 full-time workers, as of the end of 2016, according to the Securities and Exchange Commission. Because the other two establishments are not required to file financial reports, their exact numbers are not known, but Sen. Bushweller said in the Senate debate two months ago the three businesses combined employ about 4,500 people, while the horseracing industry supports another 2,200 jobs.

Throughout the day Thursday, there were rumors the House would vote on the bill. Asked at 5 what his expectations were, Sen. Bushweller simply crossed his fingers.

In the end, the House reached a deal all parties could agree on, even as Rep. Schwartzkopf conceded the state was giving up more than he would have liked.

The casinos did not support Rep. Schwartzkopf’s first amendment, and whether it would have garnered the votes to pass will never be known.

“Everybody’s happy,” the speaker said after the vote.

A spokeswoman for Gov. Carney last week said the governor “views the State, equine industry, casinos and other lottery agents as partners in building and sustaining the State’s gaming industry.”

Mr. McGlynn has said Senate Substitute 1 for Senate Bill 144 would not solve all his company’s woes but would offer some stability.

He was not present for the vote Thursday, but according to Rep. Schwartzkopf and Sen. Bushweller, the amended measure is one Dover Downs can support.

Rep. Schwartzkopf deflected a question about what he would do if the casinos request further relief in a year or two, saying the General Assembly would have to “wait and see,” especially given the recent legalization of full-scale sports betting.

Regardless of what happens in the future, Thursday was a clear victory for many.

“This bill is critical to keeping important jobs in Kent County,” Rep. Trey Paradee, D-Cheswold, said.

Casino vote

The House approved legislation Thursday that would give Delaware’s three casinos financial relief. Trumpeted by supporters as a much-needed measure, the bill now goes to the Senate, which is expected to pass it.

Yes (35): Baumbach, D; Bennett, D; Bolden, D; Brady, D; Briggs King, R; Carson, D; Collins, R; Dukes, R; George Smith, D; Gray, R; Hensley, R; Hudson, R; J. Johnson, D; Q. Johnson, D; Kenton, R; Kowalko, D; Lynn, D; Matthews, D; Miro, R; Mitchell, D; Mulrooney, D; Osienski, D; Outten, R; Paradee, D; Postles, R; Ramone, R; Schwartzkopf, D; B. Short, D; D. Short, R; Smyk, R; Spiegelman, R; Viola, D; Williams, D; Wilson, R; Yearick, R

No (4): Bentz, D; Heffernan, D; Longhurst, D; Potter, D;

Not voting (1): Jaques, D

Absent (1): Keeley, D

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