Delaware Lawmakers Approve 3 New Land-Based Casinos for the State
The Delaware state legislature is planning to generate more revenues by building three new casinos. The proposals are seen as an alternative bailout plan for the three casinos operating in the state at present, which have faced a long decline. The bill being developed is championed before the Lottery and Gaming Study Commission by by Darrell Baker, a prominent Wilmington lawyer.
The three casinos new locations have yet to be determined. One would be in Sussex County, one would be in New Castle County, and one has no fixed location at present. When completed the six casinos would be treated as one gaming entity for tax purposes.
Racinos Are Struggling
At present, Delaware has casino-style gaming in three venues: Dover Downs, Harrington Racecourse, and Delaware Park. The three gaming complexes are on the site of horse racing tracks. These hybrid gaming venues had slot machines and later gaming tables added, making them racetrack/casinos or racinos.
The new gaming complexes would be dedicated casinos without the pretense of racing. The idea is to create gaming destinations which would draw gamblers from nearby states. In recent years, competition has become fiercer, so the top facilities need to be ready to comepte in the new environment.
Gaming Executives Need Bailouts
Gaming executives in Delaware have called for bailouts each of the past two years, saying the current business model simply does not work. They asked the state legislature for a $20 million bailout last year, but were rewarded with a $10 million bailout, instead. Lawmakers said they might provide more of a tax bailout later, if events proved they were needed.
Taxes Lowered on Casinos
The Lottery and Gaming Study Commission was to be the official panel which would make that evaluation for the state. In January 2015, the panel called for a new round of bailouts. Legislators may be tiring of the constant call for lower taxes, which is one reason the new plan is being pushed. As it is, the state’s take of revenues has been lowered from 51% in 1996 down to 40% in 2015. This is still a much higher rate than most comparable gaming locations in nearby states.
Casino executives say that growing competition from nearby states (often called “market saturation”) is the cause of the 3 facilities’ struggles. The growth of Pennsylvania’s gaming sector is a particular cause of strain. Pennsylvania did not have land-based gaming until 2004. As the 6th-most populous state, it has a huge population of potential gamblers. Those gamblers once traveled to Atlantic City or the Connecticut tribal casinos, Foxwoods Casino and Mohegan Sun, for their gaming fun. A significant number in the southern part of the state traveled to the Delaware racinos, too.
Pennsylvania State Revenues
As the Pennsylvania gaming industry became a success, casinos in nearby states began to have serious struggled from the decline in visits from their larger neighbor. Given a choice between driving an hour or two to a racino (of full casino) in Pennsylvania or driving out of state to a racino in Delaware, the choice was obvious.
Starting in 2007 and 2008, the decline in Delaware became marked. In 2007, Delaware’s slots revenue was at $632.2 million. In 2014, those numbers had fallen to a mere $355.4 million.
Gaming Market Collapse
The global recession and damage to the US economy also had a major impact. Casino gambling is seen as discretionary spending of a person’s disposable income. In other words, gambling is a luxury enjoyed by people with a little extra cash to spend on entertainment. When the economy turned soft, many gamblers simply stopped making visits to the racinos.
For the new casinos to work in Delaware, they are going to need to be destination resorts. That is, they will need to be state-of-the-art complexes which include integrated events like shows, concerts, and shopping. Restaurants and nightclubs are going to need to be included in the package, so gamblers and their non-gaming family members will want to visit these locations.
Online Gambling a Disaster
Online gambling has produced dismal results for Delaware. The state simply does not have the population base to support a massive online gaming industry. To help the Internet sector, Governor Jack Markell signed an interstate poker compact with Nevada Governor Brian Sandoval in 2014. That compact just went into effect in March 2015 and early statistics (from Nevada) show that the compact might be working to boost revenues.
Delaware has yet to release data to show their side of the online poker room business, but the increase in player traffic is expected to be sizable. Nevada poker sites have perhaps 150 players online at a time, while Delaware rooms might have 10 to 20 gamblers at the most.
