Casino relief bill introduced

Brian Bushweller

DOVER — Legislators last week introduced a bipartisan bill to provide relief to Delaware’s three casinos that supporters say is sorely needed.

“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 main sponsor of the legislation, 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.

Dover Downs, the only public casino in the state, had 1,401 employees, including 889 full-time workers, as of the end of 2016, according to the Securities and Exchange Commission. Harrington Raceway & Casino, meanwhile, employs “several hundred” more people, Sen. Bushweller said.

“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,” Sen. Bushweller said.

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.

Bills to provide assistance to the casinos in 2015 and 2016 both went nowhere.

This year, however, the state’s financial picture is much stronger, greatly increasing the chance of passage.

“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,” Sen. Bushweller said. “Whether we can do something depends on a lot of other factors.”

Opponents paint casino relief as a “bailout,” arguing the state should not provide aid to private businesses.

Dover Downs’ top executive’s response?

Denis McGlynn

Denis McGlynn

“This isn’t what free enterprise is supposed to be about,” President and CEO Denis McGlynn said of the casinos keeping less than half of their revenue. Through the first nine months of 2017, Dover Downs had lost $289,000, he noted.

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.

A spokesman for Gov. John Carney did not comment directly on the legislation but shared more general thoughts on the casino industry.

“Gov. Carney views the state, equine industry, casinos and other lottery agents as partners in building and sustaining the state’s gaming industry,” Jonathan Starkey wrote in an email. “Delaware’s three racinos are major employers — and help generate significant revenues for the state.

“Delaware also continues to face long-term budget and revenue challenges. The governor will keep all these factors in mind when considering policies affecting our state’s casinos.”

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.

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