Delaware Casino Bailout Plan Is Analyzed by Lottery & Gaming Commission

Last updated on November 2nd, 2018

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The Lottery and Gaming Commission of Delaware created an estimate of the planned $20 million bailout of the states casinos. A panel of lawmakers have suggested the state give back some twenty million dollars in fees to the land-based casino industry, to help their gaming venues compete against tough competition in nearby states.

The final vote will happen later this year, with most expecting some form of relief for the gaming interests in the state. The other major alternative plan is a $14 million bailout plan by another panel member.

Sharing Vendor Costs

Effective July 1st, the state would share vendor costs with the casinos at Dover Downs, Delaware Park, and Harrington Raceway & Casino. The taxpayers would pay 75%, while the gaming venues would pay 25%. Though this would not hit the state fully in the 2014 fiscal year, it should cost the state about $9.9 per year.

Reduce Tax on Table Games

The table game revenue would be reduced from the current 29.4% down to 15%. These fees are collected only on winnings. The reduced table game revenue include the traditional table games like blackjack, craps, and roulette. It also includes poker, which in online gaming is often considered a different form of gambling.

If this reduction went into effect, it would save the casinos $7.2 million per year, or cost the state the same amount, depending on perspective. It should be noted that 4.5% of this revenue is used to fund purses at the Delaware horse races.

Eliminate Annual Table Game Tax

Since 2010, the casinos have had to pay an annual table game license fee of $1 million apiece. The panel suggests these annual fees be waived, starting July 2015. If this were applied, it would cost the state $3 million.

Total Cost to Taxpayers

Add these three changes to the way revenues are collected and it will cost the state $20.1 million. Once again, the full amount of the discount for the three land-based gaming venues in Delaware will not be felt until 2015. For the 2014 fiscal year, Delaware will lose $9.9 million in revenues.

If the current proposals were enacted, then provisions call for these issues to be addressed again for the 2015-2016 fiscal year. Given recent history, it appears these discussions may take place every or so. Last year, deliberations were held to bailout the casinos in a similar way, though the amount offered was only 40% of what’s being proposed this year.

2013 Bailout Price Examined

In 2013, state lawmakers offered an $8 million rebate to the gaming interests in the state. At the time, officials from the various racecourses claimed they were having difficulty competing with gaming facilities in other nearby states. Management at these establishments said they might have to make significant layoffs to remain a viable business.

This is not to imply the casinos are making up their financial difficulties. Taxes on the casinos generated for the year ending in June 2014 equal $180 million. That figure is down $58 million from the amount collected just four years ($238 million), showing that the three venues are facing major troubles from the increased competition of casinos in Pennsylvania and New Jersey.

State Lottery Sales also Decline

The state lottery also has shown a marked decline in the past 10 years. The state lottery generated $235 million in revenue in the last fiscal year. When you account for inflation, the amount collected is down 20% over a 10 year period.

That represents a major decline, due to alternative options like the multistate lotteries (Powerball, Mega Millions). Gamblers want ever-larger jackpots, which is something the Delaware state lottery simply cannot deliver.

What makes these figures more disturbing is the fact the lotto has added keno gaming and online play in those same ten years. Despite finding various other ways to collect money, citizens seem to be turning away from the traditional lottery games.

Why Taxpayers Should Pay More

Faced with the need to give back more to the gaming businesses, some taxpayers ask why the state should pay more. Severals reasons exist. One, the three gaming locations employ thousands of residents, so the bailout helps to keep thousands of people employed.

Two, the state funds education and Medicaid with the casino money it collects. If these businesses failed, then the taxpayers would lose a whole lot more money than they are being asked to give back now.