Del. Senate approves $10M financial bailout for gambling casinos struggling with competition

Senate lawmakers on Wednesday approved a $10 million financial bailout for Delaware's three gambling casinos.

The Senate voted 14-5 to pass legislation to help the casinos, which say they are struggling with increased competition from neighboring states and have to share too much of their gambling revenue with the state.

The bill, which has the support of Democratic Gov. Jack Markell and now goes to the House, calls for the state to help pay vendor costs for slot machines, which currently come out of the casinos' share of gambling revenue.

The change would take effect in July 2015, at an estimated cost to the state of about $10 million annually.

To help the casinos until then, lawmakers cobbled together a similar amount of taxpayer money, mostly from unspent funds that are supposed to be used for economic development projects. A third of the money would come from jobs infrastructure funds earmarked for a Kent County sports complex that has been delayed. Another $1 million would come from unallocated jobs infrastructure money, and $5.6 million that was left unspent from a casino bailout package last year.

"I support this legislation because I think it's going to save jobs," said Sen. Colin Bonini, R-Dover. "The bottom line is that these are three of our largest private-sector employers."

But supporters of the bailout acknowledge that it might not prevent layoffs in the gambling industry.

"We minimize the layoffs," said chief sponsor Sen. Brian Bushweller, D-Dover, who has acknowledged that his bill is a "Band-Aid" measure.

Sen. Harris McDowell III, a Wilmington Democrat, voted against the bill, saying it was going to bail out "failing companies."

Sen. Karen Peterson, D-Wilmington, said the casinos don't deserve the money, noting that the owner of Delaware Park built a casino just across the border on Maryland's Eastern Shore.

"There's a lot of hungry kids in Delaware that could have used that money," she said. "There are a lot of elderly people in Delaware who can't make ends meet."

Bushweller noted that the state has increased its share of gambling revenue seven times since first approving gambling in the mid-1990s, cutting into the casinos' profitability at a time when new casinos in Maryland and Pennsylvania are drawing customers who once trekked to Delaware to gamble. He also noted that gambling contributes some $180 million to the state's general fund annually.

While offering temporary relief to the casinos, lawmakers have yet to agree with the Markell administration on a comprehensive plan to ensure the viability of Delaware's casinos.

"We have to address the underlying issues very soon," said Sen. Bryan Townsend, D-Newark.

A study commission led by Markell's finance secretary, Tom Cook, recommended earlier this year that the state split 75 percent of slot-machine vendor costs with the casinos, rather than having the casinos continue to pay the full amount from their share of gambling revenue. The change would cost the state's general fund about $10 million a year. The commission also proposed eliminating the annual $3 million table games fee paid by the casinos and reducing the state's share of table game revenue from 29.4 percent to 15 percent, at an estimated annual cost to taxpayers of $7.2 million.

The commission's recommendations formed the basis of the bailout legislation, which has since been pared back because lawmakers couldn't find the needed money or support.

The revised bill calls for the state to help pay vendor costs for slot machines, but proposals to eliminate the table games fee and reduce the state's share of table game revenue have been dropped.