No luck for Delaware casinos

The Delaware Legislature will end its session Thursday with no help for Delaware’s three casinos who say competition and excessive tax rates are making it difficult to stay profitable. (Delaware State News file photo)

The Delaware Legislature will end its session Thursday with no help for Delaware’s three casinos who say competition and excessive tax rates are making it difficult to stay profitable. (Delaware State News file photo)

DOVER — For the second year in a row, relief has not been in the cards for Delaware’s three casinos.

Although this legislative session does not end until Thursday, there will be no measures from the General Assembly to provide financial assistance to the casinos.

“We’re disappointed. Our problems are not going away,” said Dover Downs Hotel & Casino President and CEO Ed Sutor. “It’s only going to get tougher when MGM opens their facility (in National Harbor, Maryland) later this year.

Ed Sutor

Ed Sutor

“We have no choice but to continue to hold down expenses as much as we can and hopefully the new administration and the new legislature will take on our situation earlier rather than at the end of the session like they’ve done for the past several years.”

This issue stems from competition in neighboring states and tax rates industry executives say are too high.

With the casinos struggling, the Lottery and Gaming Study Commission approved legislation in 2015 that would have made major changes to the revenue-sharing model. The proposal carried an annual cost to the state of $45.8 million, however, and so it failed to find footing.

This year, supporters brought back a modified version, but that too went nowhere.

Sen. Brian Bushweller, D-Dover, has been the strongest advocate for legislative relief, and he retained hope up until Monday, when the Delaware Economic and Financial Advisory Council lowered the state’s revenue forecast by $21.6 million for the current fiscal year.

Brian Bushweller

Brian
Bushweller

“We had hoped that the DEFAC report would produce some reasonable amount of revenue increase to the state so that we’d have a reasonably good shot at making meaningful progress, and that’s the phrase I always use … meaningful progress on the casino issue. One of the things I’ve never been interested in was another Band-Aid,” he said, referencing legislation passed two years that shifted some slot costs to the state.

The downturn, however, made getting any substantial proposal through the legislature “politically unfeasible,” Sen. Bushweller said.

He had an unfiled amendment that would have been introduced if the state’s revenue projection saw an uptick, but in the absence of positive news, it has been shelved. That proposal would have brought in smaller-scale change, altering the table game tax. Under the purview of the amendment, the state would lose about $5 million in revenue annually, well below previously proposed amounts.

Although the issue is not divided strictly on partisan grounds, the majority of supporters in the legislature are Republicans. Most of them also hail from Kent and Sussex counties as well.

Delaware Park plays a smaller role in New Castle County’s economy than Dover Downs and Harrington Raceway and Casino do in Kent, given the latter has a smaller population and fewer big companies.

As an argument in favor of casino relief, Sen. Bushweller has repeatedly cited legislation passed earlier this year, with very little objection, aimed at helping the state land the spinoff companies resulting from the merger of chemical giants DuPont and Dow.

“Casino jobs are just as good as Port (of Wilmington) jobs. But look what else we did,” he said Thursday. “We did the Chemours bill. We did the other Dow/DuPont companies. We gave tons of money to JPMorgan Chase. All to protect jobs. That’s what it was all about up there.

“Well, we have job needs here in Kent County too. And they’re already there.”

He pointed to Dover Downs’ $239,000 loss in the first quarter of 2016 as evidence lawmakers need to step in or face the possibility the casinos will go out of business.

For his part, Mr. Sutor declined to assess the possibility of bankruptcy, although he said it is more likely the bank to which the company owes millions will bring in representatives of its own to “slash and burn.”

Dover Downs was $31 million in debt as of March 31, with that sum due to be paid back by Sept. 30. The deadline has already been extended several years, and Mr. Sutor said the casino is looking to push it back again.

Among the gubernatorial candidates, both Republicans have supported helping the casinos. Sen. Colin Bonini, of Dover, is a co-sponsor of one relief bill, and Lacey Lafferty said she believes the tax rates need to be lowered to allow the casinos to compete.

Cerron Cade, the campaign manager for U.S. Rep. John Carney, a Democrat, said in an email Rep. Carney is weighing the issue.

“Our gaming industry is something that sets our state apart and the congressman has long understood the importance of it,” he wrote. “Finding ways to help our casinos compete in an increasingly competitive environment, given our state’s budget difficulties, is one of the bigger challenges our next governor will face. Congressman Carney is studying these issues in depth in order to find a solution, and looks forward to talking more about them as we move closer to the election.”

Unrelated to Sen. Bushweller’s efforts, a bill from Rep. John Viola, D-Newark, would require charitable gaming organizations to pay 35 percent, rather than 40 percent, to the state. It would also strike from the Delaware Code language mandating 40 percent of the proceeds be contributed to a charity.

Staff writer Matt Bittle can be reached at 741-8250 or mbittle@newszap.com. Follow @MatthewCBittle on Twitter.

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