- Associated Press - Tuesday, January 21, 2014

DOVER, Del. (AP) - With only 10 days left to submit their report, members of a state panel examining how to keep Delaware’s gambling industry competitive have yet to agree on recommendations for state lawmakers to consider.

The lottery and gambling study commission faces a Jan. 31 deadline to submit its report and met Tuesday to review several options, but members could not agree on any of them, the same outcome as their previous meeting.

“I think we’re going to have to meet again,” said state Finance Secretary Tom Cook, the commission chairman.

A key issue for some panel members, including Cook and lawmakers, is how much of a hit the state should take to its general fund in order to give a financial break to Delaware’s three casinos.

“I don’t believe in just giving away everything,” said House Majority Leader Valerie Longhurst, D-Bear. “… I think we need to find a happy medium.”

Cook on Tuesday proposed paying half of the costs for slot machine vendors from net gambling proceeds before distributing the remaining slots profits among the state, the casinos and horse racing purses. Currently, the state takes its 43.5 percent share off the top, before vendor fees are paid.

Officials say the proposed change could cost the state $2.7 million for Dover Downs alone. The cost could rise to $6.6 million if the Delaware Park and Harrington casinos are added. The privately run companies that would have to open their books to state officials in order take advantage of the change.

Cook also proposed a $33-per-room state credit for Dover Down hotel rooms that are complimentary to gambling customers, at an estimated cost to the state of $3.3 million.

The potential cost to the state under Cook’s proposal is $9.9 million, but Sen. Brian Bushweller, D-Dover, said that might not be enough to make much of a difference for the casinos.

“Frankly, I don’t think it is,” he said.

Bushweller and other panel members said franchise fees paid by the casinos and the revenue-sharing model need to be addressed sooner, rather than later.

“I think the big elephant in the room is still the tax rate at 43.5 percent,” said Rep. Tim Dukes, R-Laurel. “… We have to address the tax rate to some extent to give the casinos viability.”

But Cook wants any discussion of changing the revenue-sharing model to come later.

“I think this has to be a multiyear approach,” he said after Tuesday’s meeting.

Delaware officials have seen the state’s three casinos steadily lose business in recent years to neighboring states despite the addition of table games, sports betting and online gambling. The commission was formed to study how Delaware casinos can respond to significant competition from new casinos in Maryland and Pennsylvania.

“We are looking for long-term help here over the next several years,” said Denis McGlynn, president and CEO of Dover Downs Gaming & Entertainment Inc., noting that three more casinos, two in Maryland one in Philadelphia, will soon be coming online.

One suggestion for helping Delaware casinos is to restore the revenue-sharing model for slot machines to the percentages that were in place before lawmakers increased the state’s share in 2009 to help balance the budget. Under that scenario, the state stands to lose $25 million a year if its share is reduced to 36 percent.

Another proposal calls for reducing the state’s share of table game revenue from 29.4 percent to 15 percent, an estimated $7.2 million change in favor of the casinos.

Panel members also are looking at the possibility of eliminating the $3 million annual table games license fee for the casinos, and reducing the state share of online gambling revenue to a flat 25 percent. Currently, the state takes 43.5 percent of online slots revenue, and 29.4 percent of online table games revenue.

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