Delaware Panel to Consider New Bailout Plan for State’s Gaming Industry

Last updated on November 2nd, 2018

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A state panel in Delaware soon will convene to determine what the state legislature can do to help the struggling gambling industry. Earlier this year, Delaware’s lawmakers approved a $10 million bailout for the state’s three casinos and racetracks.

Political leaders at the time hoped the package would be enough to keep the gaming industry afloat, but indications are a bigger bailout plan is needed. Since lawmakers are not likely to take the racetracks’ business leaders word at face value, the legislature has called on a well-known panel to study the problem and come up with new recommendations. The last time this issue was discussed, the legislature listed to the panel, but did not enact the full plan it recommended.

State Gambling Study Commission

Legislators appointed a state gambling study commission last year, which is the body that recommended the bailout. At the time, the panel recommended a $20 million bailout plan, but legislators changed the numbers in the eleventh hour to a $10 million package.

Now, the same panel is being charged with studying the competitive marketplace which faces the struggling gaming industry of Delaware. The panel will be expected to recommend options, though the options could be limited in a saturated regional marketplace.

New Bailout Plans to be Considered

The bailout discussions over the past year have revolved around plans to lower taxes and fees on the state’s three racetracks, which also have casino-style gaming at their complexes. One plan is to eliminate the annual $3 million table games fee paid by casinos. This would reduce Delaware’s share of the table game revenue, but offer an immediate break for the three venues which need the most help.

The $9 million this saved the state was the biggest part of the $10 million dropped at the last minute from the last bailout package. Lawmakers believed that the gaming industry executives might have overstated their needs to help increase profits. Since the $20 million bailout package was amended, other signs have emerged that the regional gaming market is dangerously saturated.

New Jersey’s Similar Plight

In nearby New Jersey, Atlantic City has had 3 casinos close their doors since the bailout plan was enacted: Trump Plaza, The Showboat, and Revel Casino. Court documents released last week showed that a fourth casino, Trump Taj Mahal, would close in November. If the Trump Taj Mahal ends up closing, it will be the fifth (of twelve) casinos which have closed in Atlantic City this year.

Since those closings were announced, lawmakers in New Jersey have scrambled to come up with plans to save the struggling industry in Atlantic City. These plans have included allowing PokerStars and Full Tilt to enter the online gaming market of New Jersey, a bill to approve a casino in North Jersey near New York City, and a plan to challenge the federal PASPA law which allows Delaware and three other states to accept sports bets–while barring New Jersey. If such a challenge were successful, it might hurt Delaware’s casino industry, since Delaware is the only state east of the Mississippi River to accept legal sports bets.

Delaware’s Limited Options

In many ways, Delaware has fewer options than New Jersey. Delaware also has a legal online casinos and poker rooms, but the online portals for Delaware Park, Dover Downs, and Harrington Raceway produce small revenues, because they can only accept players living in Delaware (and now, Nevada).

New Jersey’s bid to legalize sportsbooks underscores the limited options for Delaware’s gaming industry. Delaware already accepts sports wagers at its struggling venues, so this is not an option. In many ways, the picture on that front could only get bleaker.

Tax Breaks the Likely Option

With new sources of revenue unlikely to appear, that leaves few options but tax breaks to save Delaware’s racetrack/casinos. This might have been the likely outcome accepted by the legislators when they enacted the $10 million bailout plan. Since the recommendation was for a bailout twice the size, leaders may have decided to offer a smaller package and reassess in a few months time. If so, then the reassessment is beginning, with a new bailout plan the likely result.