Q2 revenue up slightly for Dover Downs, but not enough to save positions

DOVER — Dover Downs has cut 72 positions so far this year, the result of continuing disappointing revenues, the company announced Thursday.

In its quarterly release, the casino revealed while it made slightly more money this quarter than in the January-to-March period, it still eliminated positions through a mix of layoffs and cutting vacant spots. Dover Downs announced in April it would cut 24 positions in May and cease offering table games from 2 to 8 a.m. Mondays through Thursdays.

The positions are in various areas of operations, including gaming, food service and other fields.
Dover Downs also is negotiating an extension for its debt, which must be repaid by Sept. 30 if no agreement is reached.

Statewide, slot revenue has declined for 34 consecutive quarters, officials said Tuesday at a meeting of top industry executives.

While Dover Downs is the only public company of Delaware’s three gaming establishments, and thus the only one that releases earnings statements, Delaware Park and Harrington have hinted they are struggling as well. Because of the revenue-sharing system in the state, casinos keep only about 40 percent of revenue, with the rest going to the government, the horsemen and slot vendors.

At Dover, total revenue for the second quarter was up about $1 million, while expenses decreased by about $400,000. As a result, the casino reported net earnings of $631,000. In the first three months of 2015, it lost $352,000.

While events like Firefly Music Festival and Big Barrel Country Music Festival in June hurt slot play, they did bring in additional hotel guests, meaning the dual impacts largely balanced themselves out.

The festivals fall under Dover Motorsports, a separate entity from Dover Downs Hotel & Casino.

Denis McGlynn

Denis McGlynn

Dover Downs has made $279,000 this year. At the midpoint of 2015, the company had lost $889,000, en route to a loss of $706,000 for the year.

“Historically, the spring and summer months are stronger months for the company, and that held true during our second quarter,” Dover Downs Gaming and Entertainment President and CEO Denis McGlynn said in a statement. “We benefited from growth in hotel rooms revenue and a decision to take on-site retail operations in-house. Unfortunately, we also had to engage in another round of expense reductions, which included the elimination of 72 jobs so far this year.”

A rise in competition with the legalization of casinos in Pennsylvania and Maryland in the past decade has resulted in falling revenues for the state’s three casinos.

A bill filed in January and backed mostly by downstate lawmakers would have implemented capital and marketing credits, halved the table game tax rate, eliminated the table game license fee and shifted more of the slot vendor costs to the state. The proposal was first put forth by casino executives and formally was recommended by the Legislature’s Lottery and Gaming Study Commission, but the bill faced fierce opposition from lawmakers and stalled early on.

The company has chipped away at its debt, but the multimillion dollar figure remains imposing, and the Sept. 30 deadline looms. However, Mr. McGlynn said in an interview the company has been working with its creditors and expects a one-year extension to be agreed upon by the two sides.

The debt was decreased from $38 million to $34.9 million in the second quarter.

Much of the debt was incurred when Dover Downs invested in capital improvements between 2000 to 2005 to better compete against newer casinos in neighboring states. The calculation to invest was based on what then had been a stable revenue-sharing plan in place which had Dover Downs retaining 46 percent.

However, the state steadily increased its take of revenue until by 2013 the casino was left with less than 38 cents on the dollar from which to pay expenses while also trying to reduce its debt.

Going forward, Mr. McGlynn said he believes rather than eliminating more positions, Dover Downs will cut back on events and operations.

“There’s not much left,” he said in regard to positions that can be done away with.

Community events like the chocolate festival will cease, and the company will spend less on advertising, Mr. McGlynn said. Dover Downs also may remove some slot machines from the floor and scale back its involvement in boxing, in an effort to save money.

Mr. McGlynn said he is disappointed with the continued cutbacks but he remains hopeful the General Assembly will take up legislation to aid the casinos.

“I think it’s fair to say there’s a good number of legislators who now understand something needs to be done here, but I think they were somewhat handcuffed by the fiscal position the state was in,” he said.

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