Carney signals imminent negotiations on casino tax relief bill

Sen. Brian Bushweller

DOVER — Stakeholders who’ve been advocating for casino reform in the state were pleased to see Gov. John Carney signal that discussions would “immediately” take place.

The governor sent Secretary of Finance Richard Geisenberger to speak on his behalf at the Senate Finance Committee meeting on Wednesday.

“These discussions have been going on since the governor took office, but I think now is the time to sit and begin these discussions immediately to figure this out,” he said.

The specific reform bill being considered, Senate Bill 144, was tabled at the committee meeting. But it is expected to be picked back up and possibly released to the Senate floor pending further negotiations.

The bipartisan bill was reintroduced earlier this year. It would provide tax relief to Delaware’s three casinos that supporters say is sorely needed.

The third attempt at providing aid to the casinos over the past three years, SB 144 would change the tax structure, slash the table game tax rate in half and eliminate the annual table game license fee.

Currently, 43.5 percent of all casino revenue goes to the state.

The bill’s primary sponsor, Sen. Brian Bushweller, D-Dover, says the current arrangement “cannot continue.”

“This is a result of the culmination of a number of factors over the past 20 years or so that have created a situation that places our casinos and the associated industries, especially the ones in Kent County, in serious jeopardy,” he said Wednesday.

Sen. Bushweller believes if the casinos aren’t given relief, more than 1,500 jobs and hundreds more in associated industries are at risk.

“The simple fact is, we, the state of Delaware, take too much money away from the casinos,” the Democrat said. “Since the 90s, the state’s take from what casinos make has doubled.”

Dismissing the criticism that the casinos’ ills have more to do with management than taxes, Sen. Bushweller said Dover Downs casino specifically was pushed into a loss last year by their tax obligations.

“They made a $74 million operating profit in 2017, that’s a lot of money,” he said. “The problem is, with the way the laws read right now, we required them to give $60 million to the state — and this is after they’ve paid all the other taxes that any other business pays. Then they had to give the horse racing industry 15 million. If you add those together, they were required by law to pay out $75 million even though they only made $74 million.
Obviously, they finished the year with a loss. That cannot continue.”

At the meeting, Secretary Geisenberger noted Gov. Carney’s history with casino legislation and his commitment to working on a solution.

“Gov. Carney worked with Sen. Bushweller during the Carper administration and was very active in developing legislation that authorized the partnership of casinos in the state and the horse racing industry. He’s a strong supporter of those industries,” he said.

“Obviously, last year was a big challenge with the budget situation, but this year we think there is an opportunity to make something happen. Gov. Carney is very committed to working with all of the parties to develop a package that addresses the issues laid out in SB 144.”

Opponents of the bill have painted casino relief as a “bailout,” arguing the state should not provide aid to private businesses. But, advocates retort that onerous taxes have hampered casinos’ ability to function and have stifled growth.

Senate Bill 144 lists 13 Democratic sponsors and seven Republican backers. The number of sponsors from New Castle County and from the lower two counties is close to even.

Dover Downs’ President and CEO Denis McGlynn, who attended the committee meeting, thinks Secretary Geisenberger seemed to be a “positive move forward.”

“I think it puts some definition on time frame and it’s encouraging to see the governor’s office involved,” he said.

If the casino was to get the relief they’re seeking, Mr. McGlynn said their first priority would be to address overdue issues and try to grow in step with competition.

“We have debt to pay, deferred maintenance, employees haven’t gotten raises in a long time and there is marketing that needs to be addressed,” he said. “This bill was put together not because it’s something we’d just like to have, it’s something we actually need to continue doing what we’ve been doing in the past, especially in light of the competitive influences that are still yet to come.”

Mr. McGlynn said that with the current tax burden the casino will have a hard time growing, which as the field fills up is about to get even more difficult.

“MGM is opening a new 50,000-square-foot expansion in the coming months and we have Maryland Live! opening a $300 million hotel in a few months,” he said.

“Virginia is on the verge of passing a bill that would allow gambling at the horse track down there, so they’re a few years away too. We’re way behind on what we need to do to catch up.

“We need this bill.”

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