I’m Betting This Won’t Help

Delaware Governor, Jack Markell’s administration has proposed “giving” eight million dollars to the struggling Delaware casinos.

And with that sentence we have now entered the insane world of big government.

Insane you say? Why? Well because for the state to give money to the casinos to help them through their current short fall, between revenue and cost, the state first had to take the money from the casinos, at a rate of around 45% of the profits that the casinos manage to take in. When you add in the licensing fees that the state requires the casinos to pay, just to operate, the percentage is much higher.

So the state is not giving the money to the casinos, the state is giving the money, “BACK”, to the casinos. Now if you don’t think that is insane, consider the fact that after giving the eight million dollars back to the casinos, the state will in turn take their 45% cut of future profits again.

The word you are seeking to describe this, is incestuous.

One way to look at this, is that the state of Delaware will give back $8,000,000.  to the casinos, of which, they will then tax at a rate of 45%, for a total of $3,600,000., leaving the casinos with a bailout of actually only $4,400,000., but maybe that is all they need to get back on their feet.

This Markell idea, harkens back to all of the “Too Big To Fail” bailout schemes we have seen from big government in the past. Instead of actually lowering the rate of taxation, which is in large part what is causing the casinos to struggle, the government retains control of the enterprise through manipulation.

Now to further deepen the sense of insanity, let us also consider that we have been told by the Markell administration, and its supporters, that we should build three new casinos in the state of Delaware to offset the loss of revenue to surrounding states.

Excuse my acronym, but WTF?

So, the casinos are struggling because of increased competition from outside the state, not the high rate of taxation by the state, (YEAH RIGHT!), to the point of needing a bailout from the very thug government that steals their revenue every year, and the thug government’s answer is not to lower that high rate of theft, but to build more casinos, i.e. competition, within the state. Shut the front door!

If it is not insanity to, on the one hand, say that the casinos are struggling because of competition, and on the other, to say the way to offset that competition, is to create more competition, then what is insanity?

The very fact that the creation of casinos in bordering states has lowered the revenue from the Delaware casinos demonstrates what I, and others have said all along, there are just so many gambling dollars out there to be spent, and building new locations will not increase that number.

To build more locations will only increase the cost to the owners and to the state who regulates them. Neither will building more locations increase the tax revenue the state receives, again because the limited number of gambling dollars will simply be spread out over more locations, and with the increased cost of regulating more locations, the state will actually see less of a revenue stream.

The answer is not to increase the number of locations, the answer is not to bail out the casinos with money that was taken from them in the first place. The answer is for the state to get out of this un-holy partnership with what should be a wholly private enterprise.

The state should instead of this 45% racketeering rate of taxation, should tax the casinos at the same rate as any other business, and its only involvement in that business should be to regulate it, the same as bars and liquor stores are regulated.

Finally, imagine how many new small businesses could be helped to start-up with low-interest loans from this $8,000,000. ? Of course, imagine how many small businesses could have been helped with low-interest loans from the $20,000,000. wasted on the Fisker fiasco that the Markell administration perpetrated early on in its first term.  A fiasco that DEDO Director Alan Levin once said that they would do again, even after it had become apparent that Fisker would never produce a single car in the state of Delaware.

The Markell administration and the Democrats that have supported it, have shown no skill or ability to create an environment in which new businesses or jobs can be created, they have however shown the ability to waste tax payer dollars, and this latest “IDEA” to bail out the casinos is but another in that long line of bad choices.



22 Comments on "I’m Betting This Won’t Help"

  1. Frank Knotts says:


  2. anon says:

    The state created the casinos as a tool to create revenue, and in exchange, they gave the casinos a license to print money. The state should be able to do whatever they want with them. If they’re going to tax and regulate them as regular businesses, then anyone should be allowed to open a casino anywhere they want in Delaware at any time. If the casinos can’t live with 9-figure annual revenue, then God help ’em.

    You are correct at the end to question the state making a casino bailout a priority, though.

  3. Frank Knotts says:

    anon, I would contend with the advent of sports betting and keno, that anyone can open a petting parlor.
    Just another reason the casinos are struggling, because again the state has created more competition for the limited gambling dollars out there.
    I am not in favor of expanding gambling in any form, but if it were allowed to be run as a truly private enterprise, and allowed to suffer the free market influences, then I think we would have fewer outlets that were more profitable and thus we would see more tax revenue, with less overhead for the state’s part in it.

  4. Tuxamus Maximus says:

    Tuxamus Maximus thinks if you can’t make money with a casino you aren’t in the right business. Go belly up and see if a Trump or Wynn will buy it. WTF its a license to steal in the first place. Have no issue with the existence of them but if you can’t make money doing that you simply are in the wrong business. Let them FAIL.

  5. Laffter says:

    I believe that if you are in a business and can’t make money

    Get out of that business, and do something else…..

    Seems pretty simple….

  6. waterpirate says:

    The problem is why they were created in the first place, to support another failing busines, horse racing. So the reality is that another failing business was created to support a failing business, I think that is called a ponzi scheme, with the tax payers being the ultimate suckers.

  7. Frank Knotts says:

    WP, thanks for that reminder, many people have forgotten that, including myself.
    The mob would be jealous of the way the state of Delaware operates this protection scheme.

  8. Laffter says:

    Ok. Now it’s scary, I am agreeing with water pirate AND Frank
    Either hell is freezing over OR there is hope

  9. Tuxamus Maximus says:

    Tuxamus Maximus agrees (as usual) with Laffter only it’s better than agreeing with the alternatives here.

  10. Mike Protack says:

    Folks, this is Delaware the crookedness is baked into every aspect of our lives, public policy and party politics.

  11. tony stark says:

    anon June 18, 2013

    “The state created the casinos as a tool to create revenue, and in exchange, they gave the casinos a license to print money”

    The State authorized slot machines at 3 existing race tracks to assist an ailing industry, horse racing.

    The industry employed many Delawareans but, more importantly, some of the tracks occupied prime real estate coveted by developers. Chief among those were Delaware Park in Staunton which was a privately held family business. Brandywine Raceway had already gone under.

    Legislators were under pressure to do what was necessary to put a stop on runaway development.

    The profits from the slots were put into a fund that allowed the racetracks to increase purses for Delaware breeders and trainers. The hope was that this would keep the Delaware racing industry afloat, increase the quality of the horses, and thereby, increase interest in horse racing. The slots were supposed to be a sideline.

    For all of the talk of unholy alliance etc., the initial foray into slots simply meant that an industry could be saved without direct subsidies from the state.

    No one expected the slots to take off and many thought that this was simply the last gasp of the horse racing industry.

    They were wrong.

    Slots became the main reason to go to DP, DD, and HR. The rest is history.

    The story of gambling Delaware is more a story of unintended consequences than one of corruption, selling out etc..

  12. Frank Knotts says:

    Tony, all good points. Is the horse industry any stronger today however? Could it now survive on its own? If not we have to ask, why is it being propped up? The real problem is that our legislators have become addicted to the revenue stream, and simply want to assure that it continues. But now think about the point you have made. Gambling grew out of the attempt to prop up a failing industry, and now the government want to prop up the failing industry that is propping up the other failing industry! Should we institute prostitution to prop up gambling, to prop up horse racing? Then we could institute selling heroin to prop up prostitution, to prop up gambling , to prop up horse racing.
    Where does this idea that it is government’s role to save failing industries end?

  13. anon says:

    “The State authorized slot machines at 3 existing race tracks to assist an ailing industry, horse racing.”

    The stated reason under which slots were legalized was not the true motive for doing so. It did help horse racing, but they knew exactly what they were doing. No one involved in the process was surprised by the outcome. I stand by my comment.

  14. Tony Stark says:

    Frank I never stated that I supported the governor’s proposal. I simply was giving history. I don’t think we have enough facts to determine if the governor is making a good move here.

    Anyone who wants to question Markell’s judgment in the area of economic development will get no argument from me. He has proven to be incompetent in this are

    Frank to answer your questions in order.
    1. Yes, Horse racing is in better shape than it was in the 80’s. Had the legislation been in place sooner, Brandywine Raceway would have been still in existence as opposed to being a shopping center.

    2. As I stated earlier, a major rationale for helping the horse racing business was the preservation of open lands as opposed to developments. This goal was largely met.

    3. The casinos did not begin gambling in Delaware. Horse Racing is and always has been gambling.

    While I think some legislators want to stay addicted to revenue/tax streams, most recognize that the gambling business in Delaware is now a mature business with little room for growth. This Markell proposal will rise or fall on the jobs impact and subsequent tax impact.

    Frank, you have focused on the taxes to the casinos. Markell is far more interested in collecting the income taxes from the employees of the casinos. These employees are some of the highest paid restaurant/customer service workers in Delaware. Some have gone on to work in Vegas, AC, etc.

    That is where the money is for the tax collector.

  15. tony stark says:

    Anon is making up facts as he goes along.
    No one anticipated the increase in cash that came with the introduction of slots.
    In fact anon’s attempt to rewrite history ignores the fact that the main argument against this legislation, that was expressed in House and Senate debates, was that the slots would not generate enough revenue to save the horse racing industry. The argument was that there was no point to doing this. It was a waste of time. The horse racing business was dead in Delaware regardless.

    Even supporters of the legislation such as Bobby Outten, R Harrington, Bob Gilligan D Staunton offered no guarantees that the funding would be enough to save the industry.

    Now anon is using the Don Ayotte method of trying to refute an argument by saying a friend of a friend of a friend told me this.

    So anon please tell me who these people were who knew exactly what was going to happen? What did they say in the 1980’s ? It would have been helpful if they spoke up as the legislation faced obstacles.

    Provide some names and links anon.

  16. Tuxamus Maximus says:

    Tuxamus Maximus knows there are a LOT of JOBS that come with those horses and slots and food and booze and whatever else goes on in, and around, those facilities and that includes the home stables and training facilities as well. Lots o $$$ with those critters.

    Tuxamus Maximus likes Tony Stark’s way of thinking both here and on film! Go Horses GO !! Pull those handles people… especially those OUT OF STATE PEOPLE !! PA, MD, VA, NY and NJ $$$ in Delaware is a GOOD thing!!!

    Tuxamus Maximus thinks anon got bad brain repair long time ago and can’t see BIG PICTURE. Something not working well up there. Bounce head off softest part of brick wall may help. Maybe go see a good Iron Man movie would help? Sit really close to the speakers anon.

  17. anon says:

    I can’t say any more without revealing my identity, but suffice it to say that I was there in ’94 for 628, and I remember the arguments that were offered and I also remember that it was all negotiation leverage over the split.

    Anyone who’s spent any time in politics knows that the publicly-offered arguments aren’t REALLY the arguments.

    That’s all I’m going to say, other than it’s very rich to ask for names when you don’t give your own. (Not that I give a hoot who you are, just noticing the inherent hypocrisy in the request.)

  18. tony stark says:

    Anon, I never asked for you to give personal information. I asked for you to give me the names of individuals who predicted that slots would be a cash cow for the state and casinos.

    I gave you the names of supporters of the legislation who made no such predictions of success. I asked you to give me the names of those who KNEW that this legislation would be a cash cow.

    Anon, I gave you the names of 2 sponsors who could not even guarantee that the legislation would generate enough cash to save the horse racing business. I asked you to give the name of the genius who knew this was going to be the ultimate success.

    Now I don’t care who you are. But, anyone with the moniker of Anon who criticizes someone for anonymity is the ultimate hypocrite.

  19. Frank Knotts says:

    Tony, you say that horse racing is in better shape now then in the 80’s, but my question was could it now survive on its own? If not why is it so important to keep dumping more tax money into, not just one failing industry, but two?
    The idea that by taxing the casinos and the employees of the casinos, and then “giving” back eight million of it, will somehow benefit the state by generating revenue, or even benefit the casinos in the long run, only proves that the Markell administration is simply moving the deck chairs around on the Titanic.

  20. Tuxamus Maximus says:

    Tuxamus Maximus wants to remind Frank of the BIG picture. If the Gov puts in $2 and it generates $5 in return than all it takes is $2 of that $5 being out of state money than Delaware WINS! That money stays in the state for a while paying rent, groceries, fuel, property taxes or whatever before it goes away.

  21. Frank Knotts says:

    Frank would remind Taxi-Maxi, that if the state gives 8 million to the casinos, it first had to take it from the casinos and other tax payers, who if allowed to keep it would have been paying rent, groceries, fuel, property taxes or whatever ! The tax payers lose. Taking tax dollars simply so the powers that be can move it around on some real life monopoly board is a joke at best. In a capitalist system, money does not exist until it is held by a private individual. Any money that a government controls is simply numbers on paper and has no real effect on real people, because the government cannot create anything, it can only restrict or destroy.
    When government taxes the income of government employees, it is simply taxing the money it received from taxing private sector employees a second time, and since it paid out the money in the first place it is not actually receiving anything back. To pay and tax government employees is a loss, always, because unless the government taxes government employees at 100%, it is always paying out more than it gets back.
    The same principle applies to this bail out of the casinos. The state will give 8 million and get back nowhere near that amount on the dollar.

  22. Tuxamus Maximus says:

    Tuxamus Maximus thinks Frank skipped some Econ courses in college.

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