Proponents of expanded gambling casino sites in Delaware are not taking no for an answer.
Sent home empty handed after last year’s legislative session, competing interests are lining up to be heard again as the General Assembly prepares to debate legislation that would authorize one new casino in Sussex County and at least one in New Castle County.
The year’s bill, though modified to resolve objections from the governor’s office, faces further controversies over the timing and extent of any gambling expansion during a slow economy and the ultimate benefits vs. risks of building new Delaware casinos. Public opinion may influence the debate as well.
“We’re hoping that [legislators] listen to what the citizens of the state are saying,” says Dover Downs President Ed Sutor, citing polls that he says indicate public opposition to casino expansion.
Faced with growing competition from casinos in Pennsylvania and Maryland, owners of Delaware’s racetrack casinos at Delaware Park, Dover Downs, and Harrington Raceway maintain that allowing new casinos in Delaware would further dilute the gambling market.
Sussex County developer Preston Schell says thousands of construction jobs could be created almost immediately if the proposed Del Pointe casino in Millsboro is authorized. A casino is just part of the proposed downstate project, which would also include an indoor water park, indoor sports facilities, a movie theater, a shopping center, and more. All of that development awaits the resolution of the casino issue.
“The casino is the economic engine for everything else,” said Schell. It’s “the economic catalyst for the other good things they can do for the surrounding community.” The developer’s market studies indicate that over the life of the project, about 6,000 construction jobs could be created, mostly temporary, and about 2,000 permanent jobs.
- Developer Preston Schell
Developer Preston Schell says the Del Pointe project in Millsboro is about much more than a casino:
The new casinos would need the approval of a five-member committee that would be established under legislation to be introduced by House Majority Leader Pete Schwartzkopf (D-Rehoboth) as early as next month. Rep. Schwartzkopf says he is working with Governor Jack Markell’s legal team to create the legislation and the committee. Members would include Alan Levin, director of the Delaware Economic Development Office, Secretary of Finance Thomas Cook, and representatives with experience in law enforcement, the judiciary, and banking.
Will Wilmington get a casino?
At issue is the number and location of any new casinos. Last year’s measure would have authorized a specific gaming facility in Sussex County (the Del Pointe proposal in Millsboro) and a casino in Wilmington. Markell spokesman Brian Selander says the governor did not want a bill that authorized one specific casino project.
“The bill this year will have a more open, thorough, and competitive process,” Selander said.
“This bill makes it an open process for anyone who wants to put in a proposal” to build a casino, Schwartzkopf said. At least seven proposals are in the works so far, three in Sussex County and four in Wilmington. Under the radar, sites in New Castle County outside of the City of Wilmington are being looked at for possible casino development.
Wilmington officials are unhappy with the revised legislation because it doesn’t guarantee a city venue for the New Castle County casino.
“The mayor says Wilmington needs revenue and if a casino is built in New Castle County, it should be in Wilmington,” said John Rago, director of communications and policy development for Wilmington Mayor James Baker. Rago says Baker is concerned that “this legislation will open the door for Wilmington to be ignored again on the casino issue.”
The proposed Riverwalk Casino in Wilmington is ready to move forward, according to Hunter Lott of Riverwalk Partners, which already owns tracts of land along A Street at the Christina riverfront.
“Obviously, we believe that our site will do the most good for the city,” Lott says. He estimates that the Riverwalk Casino would put 800 people to work and draw 3,000 to 5,000 visitors a day.
Skirting the Sussex moratorium
Del Pointe, the chosen project in last year’s bill, may face competing proposals under the new legislation. Should the situation become competitive in Sussex County, says Schell, Del Pointe would put its application before the committee and hope it is deemed to be the best. “But if it happens not to be, we’re still supporters of the legislation, and we’d be supporters of whatever venue ends up being selected.”
Any new proposed sites would have to be located within incorporated areas of Sussex County because the Sussex County Council, which has authority over unincorporated areas, has established a moratorium on new construction of casinos. Del Pointe’s developers are working with the town of Millsboro.
“We can’t veto anything the towns do,” notes Council member George Cole (R-Ocean View). He says developers have pressed other local governments to support casino expansion.
Cole has doubts about the viability of a downstate casino and believes that visitors to the beach resorts are unlikely to come inland to towns such as Millsboro to gamble.
Delaware’s racinos raise alarms
As he tries to round up votes, Schwartzkopf says he needs people “to jump on board and start to look out for the citizens of the state, instead of three existing casinos.”
- House Majority leader Peter Schwartzkopf
House Majority leader Peter Schwartzkopf believes the jobs created by the Del Pointe proposal is reason enough to support casino expansion in Sussex County:
However, the Big Three racetrack casinos, or “racinos,” are raising a loud voice in the debate.
Delaware authorized slot-machine gambling in the mid-1990s as a way to support the existing horse race tracks at Delaware Park, Dover Downs, and Harrington. The facilities added table games last year, and patrons now are able to place wagers on National Football League games.
But like racehorses coming from behind, nearby states are opening casinos and threatening to cut into Delaware’s gambling lead.
At present, Dover Downs and the Harrington Raceway and Casino draw heavy numbers of visitors from the eastern shore of Maryland.
“The market on the East Coast, especially in the Mid-Atlantic area, is saturated,” says Dover Downs President Sutor. He says all three Delaware casinos have reduced the number of slot machines in operation, and each is well under the 4,000 machines it is authorized to operate.
“Any additional casinos in Delaware are just going to cannibalize existing business and put the existing three tracks in financial jeopardy,” Sutor says.
- Dover Downs president and CEO Ed Sutor
Dover Downs president and CEO Ed Sutor explains the issues he sees facing Delaware’s current casinos:
Patricia Key, president and CEO of Harrington Raceway and Casino, sounds the same alarm. “Another casino, even one, is going to cannibalize what we have,” she said.
Key says Harrington draws about 40 percent of its visitors from Maryland, where residents now have the option of gambling at two locations in their state: Ocean Downs near Ocean City, or Hollywood Casino in Perryville. At least one other project is in the planning stages in the Annapolis area.
Delaware Park’s casino, horse racetrack, and golf course in Stanton draws most of its visitors from within a 60-mile radius, according to Andrew Gentile, the park’s chief operating officer. He says fewer visitors are coming from Pennsylvania since the opening of a gaming facility at the Penn National horserace track in Grantville, Pa.
Gentile says anyone in Delaware has the ability to get to a slot facility within a 60-minute drive. “Putting another facility closer to them in Delaware is not going to dramatically grow the Delaware base of gamblers,” he says. (Delaware Park owner Bill Rickman also owns the recently opened Ocean Downs in Maryland.)
- Delaware Park Chief Operating Officer Andrew Gentile
Delaware Park Chief Operating Officer Andrew Gentile does not see casino expansion creating additional gambling business in Delaware:
Instead of coming to Delaware, Pennsylvanians now have the option of visiting Harrah’s on the Chester waterfront or Philadelphia’s Sugar House Casino. However, Sugar House’s revenues in its first few months of operation were significantly behind projections, and developers of a planned Foxwoods casino in Philadelphia have had trouble lining up investors.
Foxwoods in Connecticut, where it once held a monopoly on casino gambling, has filed for bankruptcy as competition moved into nearby areas of New York State and Rhode Island.
Richard McGowan, a professor of economics at Boston College, says that when a new casino opens the market for gambling expands somewhat, but any region has a finite number of gamblers.
“I think what’s really going to happen is, the states are going to start competing about who’s got the best prizes, what are the payouts, and things like that,” McGowan said. “I doubt that gamblers will be spending any more, so clearly if they can go closer to home, why not save the gas and go closer to home?”
- Boston College Economics Professor Richard McGowan
Boston College Economics professor Richard McGowan discusses the current gaming landscape:
Boston College Economics Professor Richard McGowan says market saturation is a real issue:
Harrington’s Patricia Key said that with the recent expansion in nearby states, “we started to compete more heavily with each other.”
Although they oppose licensing of new casinos, the leaders of the existing casino industry in Delaware have their own plans for expansion. They complain, however, that their plans have been hampered by the state’s heavy tax on casino winnings. Gentile says Delaware Park added more than 700 employees in the past year with the addition of table games, but the games operate at such a narrow margin because of payroll, state taxes, and licensing expenses that one big winner could have a financial impact.
Schell, meanwhile, is still a believer that a new casino would do well. “Try us,” he says about Del Pointe. “The worst that can happen is it creates a ton of construction jobs for a period of time, and maybe the casino doesn’t work out.”
