COMMENTARY: Saving jobs in Delaware’s southern counties

The “casino issue.”

Why are we, and several other legislators, especially from Kent and Sussex counties, so concerned?

Here are some facts:

• The three Delaware casinos employ more than 4,000 people. More than 2,000 of those are in our state’s two southern counties.

• Since their inception in the mid-1990s, the casinos have generated more than $3.7 billion (that’s a “B”) for Delaware’s General Fund.

• At the beginning, the state’s annual share of gross gaming (slot machine) revenue was about 22 percent, depending on total revenue for the year. Note that this 22 percent was not taken from casino profits — their “bottom line” — but from the casinos’ gross gaming revenue — their “top line.”

Sen. Brian Bushweller

Sen. Brian Bushweller

• Based on this arrangement, the casinos moved forward and invested hundreds of millions of dollars – $285 million in the case of Dover Downs alone — to create what you see today at the three casino sites.

• Over the years, however, the state has routinely changed the rules, raising its share six times until, finally, in 2009, the state raised its share a seventh time to stake claim to 43.5 percent of gaming revenues.

• Meanwhile, the state established new licensing fees and assessed other new costs to the casinos. All these increases have made it virtually impossible for the casinos to market their product effectively and to make continuing improvements to their facilities. All this, just as new casino competition was emerging in the states surrounding Delaware.

• In 2010, in an attempt to ease the financial strictures these arrangements put on the gaming industry, the state authorized the introduction of table games at the casinos. Ironically, however, the state decided to take a 29.4-percent share of the table game revenue. That has resulted in the casinos actually losing money on table games because those games are far more labor intensive than slot machines. In the meantime, though, the state has already reaped $136 million from those table games.

• On top of all that (the state’s 43.5-percent slot share and it’s 29.4-percent table game share), the casinos must provide substantial shares of gaming revenue — up to 10.75 percent for slots and 4.5 percent for table games — to both the thoroughbred and standardbred horse owners, and pay significant, additional expenses of the horse racing industry.

When you add in the cost of the slot machines themselves, which the state negotiates with the slot machine vendors, the casinos end up paying more than 60 percent of slot revenues and nearly 34 percent of table game revenues to other parties. That’s before they begin to pay their own employees, their utility bills, all their regular local, state and federal taxes, and all the other costs of running their operations.

No business can survive under these circumstances.

Delaware has rightly taken steps over the years — including significant steps in the past several months — to protect the jobs at many companies and entities in northern New Castle County that thousands of local citizens depend on to pay their mortgages and raise their children. We, and other Kent and Sussex legislators, have supported those efforts, including, in 2016 alone, relief for Chemours, the new DuPont-Dow Companies, the Port of Wilmington and the Riverfront Development Corporation.

Now, the state of Delaware’s demands on the casino industry threaten thousands of jobs here in Kent and Sussex

Rep. William Carson

Rep. Bill Carson

counties, and those employees deserve to have the state fighting for them, just as we did for those working in northern New Castle County.

We hasten to add that the demands of the state threaten future state revenues as much as they threaten jobs. This year, the casino industry will pump more than $160 million into state coffers. Inaction on this issue will steadily whittle away at that revenue source.

Faced with new, intense competition from surrounding states, our casino industry has done an amazing job retaining customers. However, the state’s demands on the casinos are exacerbating the challenges of out-of-state competition. Those demands are now the immediate threat to jobs, especially in Kent and Sussex, and to revenue to the General Fund.

There are precious few days left in this legislative session. The General Assembly and governor should reduce the state’s share of gaming revenue this year.

EDITOR’S NOTE: Brian Bushweller is the Democratic state senator representing Dover’s 17th District and Bill Carson is the state representative representing the Smyrna and Central Kent County’s 28th District. Both are members of the General Assembly’s Joint Finance Committee.

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