Delaware casinos are struggling and state lawmakers are debating a bill that would slash taxes in an effort to safeguard their futures.
Senator Brian Bushweller (D-Dover) is the primary sponsor of SB 114, which proposes a tiered tax on slots revenues, instead of the blanket 43.5 percent casinos currently pay to the taxman.
It would also halve the 30 percent tax on table games to 15 percent and suspend the annual license fee.
Delaware Casinos Tax Grab
“Since the slots were instituted in the 1990s in Delaware, the state has persistently and routinely increased its take from the overall slot machine revenue to a point where they’re no longer able to function like a normal business,” Bushweller told Delaware State News.
There does have to be substantial progress made in reducing the damage the state has done to the casino industry,” he added.
Under the proposed tiered system, daily revenue of $75,000 and below would be taxed at 32 percent, with revenues between $75,000 and $150,001 taxed at 35 percent. Revenue between $150,000 and $225,001 would be taxed at 37.5 percent, while anything above $225,000 would be taxed at 43.5 percent.
It’s the third attempt to provide tax relief to Delaware casinos in as many years. But with state coffers in now a healthier position, thanks to the $170 million that’s expected to carry over from the current fiscal year into the next, the proposal has a greater chance of becoming a reality.
$20 Million Hit
Nevertheless, Bushweller expects lawmakers to baulk at the $20 million he estimates the new tax regime will cost the state per year. But unless they swallow that $20 million now, there will be no casino industry left to tap in the future.
“The casino industry pays all the same taxes as any other business in Delaware,” said Bushweller.
“You pick a tax and they’re paying it … but in addition to it, through the first three-quarters of 2017, Dover Downs paid $56 million between the horse racing industry and the state,” he said of Delaware’s biggest casino.
Denis McGlynn, president and CEO of Dover Downs Gaming & Entertainment, said due to the hefty sum his company paid last year, it wound up losing $1 million.
“We make money, everybody else gets it but us, and we end up with a million-dollar loss,” he said. “This is just not sustainable.”