Delaware faces a dilemma when it comes to the racino industry.
The stage was set when Delaware faced a budget crunch during the recession of 2008 and 2009. Taxes were increased on casinos, with the hope that longer hours of operation and other changes would make a difference.
Given the state of the economy at the time, it seemed like the prudent course of action. The wild card turned out to be Maryland. While it was clear at the time that Pennsylvania would have an effect on local casinos, few would have predicted that our neighbor would go all in.
After a lengthy battle over slot machines, the state approved a massive casino in the form of Maryland Live after giving Cecil County the first casino in the sate at Perryville.
The Maryland Live casino is near the Baltimore International Airport. It quickly emerged as the
a favorite destination in the region as one of the so called “ Walmart” casinos with lots of slots and without the overhead of hotels and other amenities.
Maryland takes a big chunk of revenues, but at this point, few at Maryland Live is complaining.
The Markell administration found $8 million to help casinos in the state, while a commission looks for ways to reduce the tax burden.
Whatever emerges will result in painful choices in a state where revenue growth remains sluggish.
Outside of Kent County it may be hard to conjure up a lot of sympathy for the industry among voters, even if layoffs result. Sadly, we have become somewhat numb to downsizings.
Racinos continue to support horse racing in the state and led to Delaware approving However, lower gaming revenues and a changing demographics have led to less interest in the sport.
Any major tax break is likely to be seen as catering to powerful business interests that did not prepare for the day when competition would become cut-throat.
Dover Downs deserves credit for investing in its hotel and conference center in an effort to become a destination resort. On the minus side, the company ended up with a debt load. The delicate dance will have to take place in Delaware or we will see damage to the economy in the form of a downsized gaming industry and a downward spiral of gambling tax revenues.
During the downturn, it might have been better to have made deeper cuts in the budget, imposed a smaller gaming tax increase and perhaps used a portion of the state’s “Rainy Day” Fund.
That did not happen and the General Assembly seems likely to face some unpleasant election year choices.
