From Delmar to Middletown, Bombay Hook to the Brandywine, Dover to Wilmington this is the Caesar Rodney Institute Policy Podcast. Today CRI communications director, Sam Friedman, talks with Ed Sutor, President and CEO of Dover Downs about the future of Casinos in Delaware. Here’s Sam.
(Sam) Mr. Sutor, talk about the end of the session when you were looking for some relief for Delaware’s casinos, and you didn’t get any. What did you think when the budget came through, and there was nothing done for the casinos? (Ed) Well obviously we were very disappointed. The industry’s issues and even suggestions from legislative committee were never addressed, and that’s put us in a very very difficult position.
We’re going to try to do everything we can to survive, but it’s not going to be pretty. In the first half of the year we are already down about 72 positions. These were difficult decisions to make, but we have to look at the lowest performing pieces of our operation. We also cut back on restaurants, closed our deli recently.
We have to look everywhere we possibly can to save money. (Sam) What is it in the legislature, in your opinion, that is keeping them from basically doing what you believe is needed to be done to help the casinos but especially Dover Downs? (Ed) Personally I believe that they only react to what’s directly in front of their face, and they were challenged by a deficit for most of the legislative period. They didn’t look over the longer term.
They’re considering… DEFAC, which projects how much money they have to spend, includes $160 million next year coming from the three Casinos. I can tell you that number is too high based upon us not getting any relief. We have to cut back on our payroll, and we have to cut back on our marketing; if I do either of those, it will cut back revenue.
For instance, cutting back the graveyard shift, there’s 24 positions, that’s over a million dollars a year less in revenue we’re going to receive from that area, and the state gets almost 450 thousand just from that. So this is… we’re in a downward spiral. (Sam) I got a card in a mail from a group which is one of these groups that opposes casino bailouts, you know, where’s my relief?
And it shows these faces. What is it about this issue that, in your opinion, maybe people don’t understand that they think that any relief for you is a bailout and it makes them so strongly opposed to it? (Ed) Well some of the people who are opposed to gaming in particular or have another agenda they want another casino up in Wilmington or Sussex County label this as a bailout, and that has bad connotations. It’s not a bailout it’s the state, the general partner in this deal, has raised the amount that they take out of the pot seven times. We’re now at some of the highest tax rates in the entire country.
How many businesses out there could survive if 62% of their revenue was taken away and they had to operate their business on 38%? It’s a shame, but our people who don’t like us use that term “bailout” often, and it’s incorrect. (Sam) Going forward with the challenges, what specifically will affect Dover Downs even more maybe than the other two casinos? (Ed) Dover Downs has the worst location, the other two locations are better you’re coming from New York or Philly, you go past Delaware Park to get to Washington, Baltimore, you go past Harrington. So we have the worst location of the three, however what’s really bothering us is that we have some other expenses coming down the road next year that we cant do anything about. Obamacare and our health costs are going through the ceiling.
The city of Dover has already announced the electric rate increase will cost us about 75 thousand a year plus the real estate tax increase will cost 65 thousand dollars a year. The state has passed contracts with the slot vendors that’s going to cost us another million dollars a year. We can’t control that, the only things we can control are payroll and our marketing, and when we start cutting too deep into those then the revenues fall, and all three parties lose: The state, the casinos and the horsemen.
(Sam)Thank you so much for joining us, Mr. Sutor it’s a tough issue, but I appreciate you taking the time to speak with me. (Ed) Hopefully the next call it will be better news, but right now we’re hunkering down. (Sam) Ed Sutor, the President and CEO of Dover Downs. You’ve been listening to the Caesar Rodney Institute Impact Delaware Policy Podcast.