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Would building new casinos feed the state’s coffers, or is it too risky a gambit?
(page 2 of 5)
Two Points of View
Casino operators who see the state’s take of revenues as a tax would seem to have a point when it comes to financing their growth in order to stay competitive.
“We’ve gone from almost $20 million in revenue down to $7 million since the most recent tax hikes,” says Fasy. “You just can’t show a return on investment to secure the lending necessary for development with drops like this.”
Delaware Park has put a planned hotel on hold due to revenue declines as a result of state action, as well as the continuing bleak economic outlook.
Sutor says Dover Downs has had to shelve $90 million in development projects due to cash flow issues tied to tax rates. “We’ve had three tax hikes in three years,” he says. “It’s an unstable tax environment. We’re taxed higher than any other state except for Rhode Island.”
Shaun Fink, executive director for the Dover-based Caesar Rodney Institute, a free-market think tank, cites the Delaware Economic and Financial Advisory Council’s estimates that Delaware will take a 60 percent hit on gaming revenues when four new casinos in Maryland come on line.
Yet others point to a national picture that indicates racinos—horse-racing facilities that offer gaming—posted a gain in revenues, even as Delaware-based operations were posting losses.
“Racing casinos gained 5.5 percent in revenues during recession-plagued 2009,” says House Majority Leader Pete Schwartzkopf. “Meanwhile our three racinos all lost revenue.” (Figures are derived from a report by the American Gaming Association.)
Schwartzkopf says the national picture looks rosy because of the gain in revenues that resulted from creating more venues. It would appear that Schwartzkopf might have a vested interest in that Gaming Association report—he is a staunch supporter for a proposed (and permit-approved) Del Pointe racino in Millsboro—but he would dispute such a conclusion.
“My efforts are not based on what I personally feel for or against expanding the casino industry,” Schwartzkopf says. “I’m doing this for the thousands of jobs that would be created and the significant revenues that would accrue to the state.”
Which would move the debate from that balance sheet and taxes versus commissions over to the classroom—specifically the Milton Friedman school of free and open market competition.
Page 3: So What's the Payoff?
