Good afternoon all,
There is a hint of irony in rumors that are floating around the Dover Downs community after Rhode Island-based Twin River acquired the one-casino company.
A Delaware State News story earlier this week mentioned possible layoffs and pay cuts as top executives of the company retired after long careers.
The irony comes from the fact that Dover Downs became more attractive to a suitor like Twin River when the General Assembly provided a modest amount of relief from its oppressive “revenue sharing” formula. Dover Downs eked out a profit last year after the relief bill took effect.
Relief from ‘revenue sharing’
Legislators had little choice, but to aid an industry that has been beset by declining revenues in both racing and gaming.
Not everyone was glad to help. Some New Castle County legislators had little sympathy for the casinos’ plight as they watched neighboring states cash in from big upfront payments for gaming licenses.
Also, the horse-racing focused owners of Delaware Park balked at spending the tens of millions of dollars it would make the area a “destination casino” rather than a “locals” establishment.
Instead, they dabbled in investments like s a shuttered hotel off I-95 that was later sold and snapping up a county engineering building.
Staying in Tom Gordon’s good graces
The hotel was later sold to a well-heeled operator Cynics suggested the company was working to stay in the good graces of then County Executive Tom Gordon. Gordon kept the hotel closed after it was found that owners built a structure that was larger than proposed. He was also on a controlled growth campaign during that time. Gordon later changed his stance as the economy softened.
Delaware Park was also able to fight off proposals for a casino in Wilmington. That proved to a good thing as Pennsylvania quickly added casinos and it became clear that the riverfront did not need any boost from a casino.
Instead, the family acquired a horse track and casino near Ocean City, MD that was at least a marginal competitor to Delaware venues. The site was later sold to Kentucky Derby owner Churchill Downs
Meanwhile, Dover Downs’ founding Rollins family had every opportunity to jump into the Pennsylvania and Delaware gaming markets but did not do so.
Dover Downs stayed put as gaming expanded in PA and Maryland
Layoffs in areas, such as finance are commonplace when companies combine. Much larger Twin Rivers should be able to eliminate duplicate functions and services. Dover Downs Gaming and Dover Motorsports (not part of the acquisition) share finance and other functions. That could cushion the blow a bit.
The other factor that is likely to limit layoffs is the labor-intensive nature of the casino business. The 24/7 schedule of a larger hotel-casino means some methods of cutting jobs through methods, such as contracting out functions, doesn’t work well in some instances.
For example, a casino can’t afford to wait for a tech to show up when the heating or air-conditioning crashes. A broken slot machine also requires prompt attention. Employees also have to be carefully screened.
The good news is that Twin Rivers continues to indicate that it plans to spend money on the casino, which scaled back or eliminated past projects as revenues declined and a potential bonanza in sports betting failed to materialize.
Planned investments are good news
Some also suspect that the company miscalculated on an expansion of the casino’s hotel that led to a heavier debt load at a time when casino revenues were plunging.
Twin Rivers’ deeper pockets will also help since it can afford to tap into state incentives that reward casinos that spend money on marketing efforts that draw more customers.
Rumors of pay cuts may be idle speculation. The job market has tightened in Dover and throughout the state. On the other hand, the possibility of more paltry benefits may be legitimate. Dover Downs reportedly had a decent package that is typical in the gaming industry.
It is worth noting that the casino industry has an outsized impact on the Central Delaware economy than has been less vibrant than its neighbors to the north. In addition to Dover Downs, Harrington Raceway operates a day-tripper casino to the south.
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