For nearly two decades, Delaware has maintained a strict policy on its casinos that restricted them to maintaining slots within their respective establishments. There are currently three casinos operating in the state, but the revenue results haven’t been too inspiring lately. Gov. Markell’s administration came up with a plan to bail out casinos by allowing them to open stand-alone slot machine parlors throughout the state, but all three companies rejected the idea.
Secretary of the state’s Department of Finance, Tom Cook approached the executives of all three casinos earlier this year with an offer. Each location, Delaware Park, Dover Downs and Harrington Raceway, holds a license that allows them to install up to 4,000 slot machines, but none have come anywhere close to reaching that limit. The plan would allow them to open additional slot machine parlors in Delaware, where they could install more slots, adding to their current total to reach the optimal number of 4,000.
At Dover Downs, for example, there are presently just 2,400 slot machines installed. Cook’s offer would have given the casino the ability to introduce up to 1,600 more slot machines at various new locations. Dover Downs Chief Executive Officer, Denis McGlynn, said that he entertained the idea, but upon deeper exploration, decided that additional slot machine locations would only serve to produce additional fiscal losses.
“If we can’t make money with what we’ve built here,” McGlynn explicated Dover Downs’ decision, “why are we going to go build places to lose more money?”
Similar sentiments were submitted by the executives of the state’s other two casino locations. Had they accepted the offer, however, it would have marked the first time in Delaware’s legal, land-based gambling history that slot machines were allowed to be played outside of traditional casinos.
Due to the resounding rejection of the slot machine expansion plan, government officials are once more looking for a solution to the exponential reduction in gambling related revenue. According to the state’s published DEFAC General Fund Worksheets, lottery and casino gambling revenue generated $235.5 million in taxes in 2013, down from $269mm in 2012 and $287mm in 2011. In March, the administration projected another decline to $224.8mm in 2014.
Delaware’s officials saw only two ways to save its casinos; cut taxes and licensing fees to reduce their expenses, or open new slot machine parlors to increase revenue. Since a state panel rejected the first plan, and the casinos rejected the second, officials are now looking for more ideas.
“I think we need to put every idea on the table,” said McGlynn. “Some of them may be popular, some of them may not be.” The casino’s CEO said administrators aren’t seeing the reality of the situation. McGlynn called it a “lack of understand”, wherein the state is saying, “OK casinos, you can invest more money somewhere else to build more facilities that lose money.”
According to casino officials, the only way to resolve the issue is to lower the tax rate on Delaware’s gambling facilities. McGlynn pointed out that they are responsible for the region’s heaviest tax burden, resulting in a contribution of $74.2 million to the 2013 state budget.