DOVER, Delaware — An industry group representing Delaware's three casinos is newly calling on state lawmakers to revise revenue-sharing models so that the casinos can remain profitable amid increasing competition from casinos in other states.
Members of the Video Lottery Advisory Council agreed Tuesday that their priority is reinstating a tiered rate structure for slot machine revenue, with the state's share fluctuating based on the amount of revenue taken in. When business is down, the casinos would pay a lower rate. When business is up, the rate would increase.
The panel also said the state and the horse racing industry need to share in the total cost of slot machine vendor fees. It also said the state tax rate on table game revenue should be reduced to 15 percent, significantly less than what the industry describes as a current effective rate of almost 40 percent.
Other proposals include subtracting labor costs for table games before splitting the revenue, and giving casinos tax credits of 5 percent each for capital expenditures and marketing initiatives.
The panel's recommendations are the same it proposed last year, then met mostly with a deaf ear in the General Assembly in what was described as a tight budget year. Next year poses even greater fiscal challenges, given current revenue projections. Nonetheless, Dover Downs CEO Ed Sutor, chairman of the gambling advisory council, said the panel must not abandon efforts to get the tax breaks the casinos need to remain viable.
"We can't stop in trying to get the relief we need," said Sutor, whose company has seen slots revenue decrease year-over-year for 34 consecutive quarters.
Sutor said Delaware casinos have been negatively affected by the opening of the Horseshoe Casino in Baltimore last year. More financial pain is expected when a sixth Maryland casino, MGM Resorts International, opens next year.
"The additional competition is coming," Sutor said, suggesting that Dover Downs' hospitality business also will take a hit from new hotels being built at the MGM and Maryland Live! casino in Anne Arundel County.
"Both of those are going to have an impact on the upper end of our market," he said.