Casino Reinvestment Act will help Delaware better compete

Delaware’s casino industry is encouraging the General Assembly to act now on the Casino Reinvestment Act, Senate Bill 30.

There was a time when our casinos (Dover Downs, Harrington Raceway and Delaware Park) were the region’s only gaming establishments outside of Atlantic City and Charles Town, W.Va, attracting customers from as far away as Harrisburg, Philadelphia, Baltimore and even Virginia. Our visitors enjoyed their experience, and Delaware’s coffers received billions of dollars from taxes on gaming revenues — money that went into public education, Medicaid and scores of other operating-budget items that enriched the lives of all Delawareans.

Delaware’s success with gaming didn’t go unnoticed. Neighboring states soon legalized gaming. Today, our casinos are surrounded by more than two dozen competitors located within a fairly short driving distance, with more on the horizon.

Bill Fasy

Bill Fasy

This intense new competition has radically changed the regional casino market. New Jersey learned that the hard way. Despite its relatively low gaming tax rate of 9 percent, Atlantic City recently closed four casinos and is struggling to keep its remaining eight casinos operational. While Delaware casinos should be able to hold their own, state gaming tax policy and the annual license fee levied during the “Great Recession” on the casinos is making it nearly impossible to maintain operations in this new, hyper-competitive market.

It’s important to note that in the last 20 years, state taxes on Delaware’s casinos have been raised seven times — including a 2009 tax hike that was imposed to help bail the state out of a temporary budget crisis, but has never been rescinded. Today, for every dollar of revenue from a slot machine, the state levies a 43.5-percent tax. Another 10.75 percent goes for harness races or 9 percent in thoroughbred races, and slot machine vendors also get their share of approximately 9 percent. After machine cost-sharing with the state, casinos are left with 38 to 41 cents on every dollar to pay their expenses.

As a result of falling revenue and high state gaming taxes and license fees (and just when Delaware casinos should be increasing marketing to retain the loyalty of slot and table games customers), casinos instead must use those dollars to make payroll and pay other operating costs. Capital budgets for site improvements have been slashed, and new projects that would increase the desirability of Delaware casinos have been shelved because they are not financeable.

For years, Delaware casinos have been asking the state to address these long-standing issues. The Lottery and Gaming Study Commission, which was formed to develop long-term solutions to protect Delaware’s regional gaming market, has made recommendations that are embodied in the Casino Reinvestment Act, Senate Bill 30.

If enacted, SB 30 will provide our casinos with gaming tax credits for the increased marketing and capital investments they need to compete in today’s hyper-competitive market. If the current fiscal condition of the state will not allow this, amend the bill and take the credits out of the 2015 bill. But keep the much-needed tax and fee adjustment for our fledgling table game operations.

Our table game tax rate is the highest in the country at 29.5 percent, and SB 30 calls for a more competitive 15-percent rate. The $3 million annual table games license fee should also be eliminated for fiscal year 2016 and beyond.

By reinvesting in the casino industry, Delaware will protect critical tax revenues that benefit all residents. In addition to providing more than 4,000 jobs, Delaware’s three casinos generate more in taxes and fees than the combined gross receipts taxes of every other business in Delaware combined.

Despite the importance SB 30 is to the state’s future, it is currently stalled in the state legislature for reasons that don’t make sense for the state or Delawareans. Amending the bill as suggested by the casino industry easily resolves most of the arguments against SB 30.

SB 30 — as its stands or with the amendment we are suggesting — gives the casino industry a fighting chance and provides the long-term solutions that the General Assembly has sought for years. Despite the importance of this bill to one of the state’s largest tax-producing industries, it is currently stalled in the General Assembly for reasons that don’t make sense for the state’s long-term financial health.

Delawareans are paying the price for each day of delay. Casino customers are slipping away, perhaps never to bring their tax dollars back to Delaware.

Now is the time to act for our future and protect our tax revenues. Under the state’s current fiscal circumstances, the casino reinvestment act, SB 30, with the amendment we support, is a logical compromise solution for Delaware’s overall financial benefit.

Editor’s note: Bill Fasy is president of Delaware Park in Stanton.

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