House speaker proposes cutting casino relief by half

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Schwartzkopf
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Delaware House Speaker Pete Schwartzkopfintroduced an amendment Thursday that would cut the financial impact of Senate Substitute 1 for Senate Bill 144 in half.

In April, the Senate passed a bill to offer relief to Delaware’s three casinos, providing them $20 million in tax and fee breaks. The state has among the nation ’s highest rates of “revenue sharing” with casinos. The Senate passed the measure 17-3.

Schwartzkopf, a Democrat from Rehoboth Beach, has raised concerns about taking $20 million in state revenue annually out of the budget when the financial problem the casinos face have not been clearly defined.

The bill has remained in limbo since its passage in the Senate, thanks in large part to Schwartzkopf ’s opposition and a lack of enthusiasm among the delegations in New Castle and Sussex counties.

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Support for the legislation has been the strongest in Kent County, which has two of the three casinos. The speaker’s home county of Sussex has no casinos.

“I have yet to hear that Delaware’s casinos will go under without a $20 million bailout. Surrendering that much money to three private institutions means there would be less money for various programs benefiting seniors, students and people with disabilities, as well as adequately supporting correctional officers, probation and parole officers and other state workers,” said Schwartzkopf.

“But despite my reservations, I have to balance those concerns against the simple fact that the state of Delaware is a business partner with these three casinos. They employ thousands of workers, which means thousands of families would be impacted if they are forced to close or lay off people,” Schwartzkopf added.

Contrary to Schwartzkopf’s statements, publicly traded Dover Downs Gaming has posted losses, despite cost-cutting efforts. Delaware Parking and Harrington Raceway are privately held and do not post results. There are concerns that without a cut in the state’s revenue-sharing percentage, casinos will move intoa downward spiral that will lead to closings.

Schwartzkopf’s amendment would eliminate the proposed reduction in the state’s share of gross slot machine revenues. It would retain the cut in the state’s share of gross table game revenues from 29.4 percent to 15.5 percent and still eliminate of the table game licensing fee. This would provide an estimated $10 million in relief to the three casinos combined.

“This amendment would cut casino relief in half, but still make a long-term, structural change to our agreement with them, which will allow them to be profitable and make investments in their operations. With this structural change and the addition of sports betting, which should attract more patrons and provide even more revenue for the casinos, there would be no reason for them to seek additional relief for years to come,” the speaker stated.

Industry sources have said that contrary to popular belief, sports betting will have only a minor impact on casinos’ bottom lines. Schwartzkopf had previously held out hope that sports book revenues would allow the state to avoid a cut in revenue sharing.

Casino revenues have dropped over the years as Pennsylvania and Maryland added casino after casino, including sites that do not come with the burden of supporting horse racing.

Delaware’s casinos all have harness or thoroughbred tracks.

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