Delaware examines lower casino taxes, hike in VLT purse share

By: Tom LaMarra

Posted: April 10, 2018

Legislation that would lower casino tax rates at the state’s three racetracks and restore the percentage of video lottery terminal revenue that originally went to purse accounts when the Horse Racing Redevelopment Act passed in 1994 is sitting in the Senate Finance Committee and could be acted upon during the current legislative session.

The racetrack casinos for years have pushed for tax relief given intense gaming competition in the Mid-Atlantic region, and according to published reports, Gov. John Carney said negotiations shouldn’t be delayed any longer. A major issue is balancing tax reductions with less revenue for the state.

Delaware Park, Dover Downs and Harrington Raceway currently pay 43.5% of gross VLT revenue to the State Lottery Fund. The bill introduced by Sen. Brian Bushweller calls for a scale of rates based on daily win, with the lowest rate at 32% and the highest at 43.5%.

An amendment filed by Bushweller in March would add one percentage point to the amount of gross VLT revenue that goes to Thoroughbred purses at Delaware Park. It was lowered to 9% years ago but would return to 10%. For the two Standardbred tracks, the purse share would increase from 10.25% to 11.25%, according to the amendment.

“This amendment is consistent with the (primary casino tax) bill in that it reinstates the structure for horse racing purses established in the original 1994 legislation,” a synopsis reads.

According to the Delaware Thoroughbred Racing Commission annual report, purses at Delaware Park in 2007 totaled $38.1 million for 135 racing programs. For the past five years, the track has held 81-day meets, and total purses have ranged from $14.7 million to $19 million.

In 2017, Delaware Park paid $17.2 million in purses, down slightly from $17.8 million in 2016.

The Senate bill also would reduce gross revenue from table games to 15% from 29.4% and eliminate the annual $13.25 million license fee for table games. That’s a collective figure based on the percentage of each track’s gross table game revenue.

Purses at Delaware tracks earn 4.5% of gross table games revenue. The accounts also get about 9.7% of parlay-card sports betting revenue during the National Football League season.

The bill synopsis notes that certain recommendations in the legislation came from the Lottery and Gaming Study Commission in 2015 and the Video Lottery Advisory Council in 2017, “in recognition of significant changes in the regional gaming marketplace and the state’s desire to remain competitive in the face of a proliferation of gaming venues in neighboring states.”

It goes on to say the “revenue-sharing model is being adjusted in a way that ensures that the state can continue to benefit from video lottery proceeds, ensures continued employment and horse racing at the state’s three video lottery facilities, and ensure that the video lottery agents will be able to reinvest capital in their facilities, effectively market their facilities, maintain their high standards of customer service and earn a fair return on their investments, all so that they can remain vibrant tourism enterprises for the state.”

(Delaware Park photo by Tom LaMarra)