How to Handle the Walking Dead — or, The Casinos Are Coming for Your Tax Dollars

Filed in Delaware by on August 4, 2014

In the stuff I missed over the past couple of travel weeks, was this notice from the NJ that Delaware’s zombie casinos are still hanging around looking for more bailout effort from Delaware’s taxpayers:

One casino executive is hopeful lawmakers will provide relief for the state’s ailing casinos when they return to Legislative Hall in January. But don’t call it a bailout, says Dover Downs Hotel & Casino president Ed Sutor.

Talks about potential long-term fixes to keep the casinos competitive are set to begin by mid-September.

“They (the state) like the jobs created and the revenue,” Sutor said Tuesday afternoon during a quarterly meeting between casino stakeholders, industry professionals and state department of finance.

“They know that if something isn’t done, some of that is in jeopardy,” he said.

(A side note — I’ve been listening to reports on the crisis in New Jersey gambling and without fail New Jersey officials represent their competition as coming from PA and NY. Never Delaware.)

The GA’s real project here is to figure out how to replace this revenue in the long term — not to save a clearly dying business. A business they had a very big hand in helping to its death by protecting the venues that would always have longterm challenges for survival. They had a small window (I think) to extend the life of this industry by opening up venues in more trafficked places, but decided against that. (And here’s a tale of a recent, not-happy consumer experience of a couple from Virginia in the Harrington casino.) A good demonstration of why legislatures should not be making these kinds of business decisions, I think.

If this GA doesn’t have the cajones to make sure there is revenue for transportation projects (a business they are SUPPOSED to be in), then they shouldn’t be meddling in any other business. Their priority is supposed to be in making sure that our roads and bridges are functional and safe — not in making sure that casinos can still operate. Casinos are going belly up in a spectacular fashion in Atlantic City, for cryin’ out loud, there is just no reason to keep throwing good money after bad here.

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  1. Jason330 says:

    Nancy Fuchs is my new hero. A business run as poorly as the Harrington Casino has every right – no… it has a duty under capitalism to fail.

  2. pandora says:

    I have never been to DE casino. Who goes to these places? I don’t know anyone who goes. Am I missing something? Should I go?

  3. anon says:

    pandora Delaware casinos cash social security and welfare checks. That’s all anyone needs to know.

    If Delaware was serious about the casinos succeeding they would have given the casinos all of the sports betting and Keno instead of thoughtlessly allowing that gambling right into our neighborhoods (except any neighborhood in Greenville, of course, check the map). http://www.delottery.com/keno/keno-where.html

  4. Geezer says:

    If Delaware wanted to maximize casino revenue, it would take away Harrington’s license and put it up for bids.

  5. In The Know says:

    Anon,
    Sports betting was doomed from the moment it was revived because it was limited to the types of betting Delaware had back in the ’70s (or ’80s) — NFL only, no single-game bets.
    Further, if there was going to be a market for sports betting, the way to do it would have been to license it to bars and convenience stores along the borders, to bring in maximum possible number of bettors from MD, PA (and possibly NJ).
    In any event, the problem here is that the governor, the General Assembly and the casino operators are not smart enough to recognize what most commenters on this site have been saying for months, if not years: Casino gambling is a losing long-term bet that our elected officials have suckered us taxpayers into subsidizing for more than a generation.

  6. bamboozer says:

    The casinos are yet another Delaware racket gone bad, just like the horse racing tracks they were supposed to “save”. As for the “jobs and revenue” let the chips fall where they may like any other business, and keep their hands out of the state till while your at it.

  7. Jason330 says:

    I’ve always said that we need to legalize prostitution to support the casinos so the casinos can do their job supporting the 500 people in the state involved in horse racing. (All the while dumping tax money into the system.)

  8. Aint's Taking it Any More says:

    We already have prostitution at the casinos. You take the poorest, the least educated and the elderly and screw them out of their money. A classic fu%^ed without being kissed first business model.

    If any other business victimized the poor and elderly so flagrantly as gambling, we’d be screaming bloody murder. Instead we’re worried about the loss of some junk jobs.

    This is no way for a state to generate tax revenue.

  9. Brock Landers says:

    Most businesses located in Kent/Sussex that compete with similar businesses along the I-95 corridor are going to struggle. The cold, hard facts are that geographic isolation will be an evergrowing hurdle in a world that is becoming more urban.

  10. Geezer says:

    Uh…this “doomed” industry is still contributing $200 million annually to the state’s bottom line. I think reports of its death are being greatly exaggerated.

  11. Jason330 says:

    Is that a “net” contribution?

  12. m.v. buren says:

    pandora: of course you would never go anyplace where the rabble goes. lady bountiful knows what’s best for the lower types but looks down on them, like the progressives of old who gave us prohibition.

    that said, i don’t like the slots crowd either.

  13. Dana says:

    Remember when Nevada was the only place where gambling was legal? Then someone got the bright idea to legalize casino gambling in Atlantic City, and the AC casinos did wonderfully, because they had no competition.

    Then everybody else saw the cash cow, figured that they’d get in on it, and sha-zamm! it turns out that casino gambling doesn’t quite have the customer base people expected. Add a recession in, with people having less money to spend, and we can see what happened.

    I have no problem with legalized gambling — or prostitution, as Mr 330 suggested — but governments which see them as huge revenue makers are deluding themselves. There are too many of them, competing for a too-small customer base. If some of them fail, I really don’t care.

  14. Dana says:

    As for prostitution, I fail to see how it can be illegal to something for money which is perfectly legal to do for free.

  15. m.v. buren says:

    pandora again: i’m sure you’ve read your hofstadter, also a liberal but skeptical of progressive know-it-alls. that doesn’t mean they’re not mostly right, though. sometimes they just need tweaking.

  16. Dana says:

    ATIAM wrote:

    If any other business victimized the poor and elderly so flagrantly as gambling, we’d be screaming bloody murder.

    Uhhh, no: think how states and localities keep using cigarette taxes. Philadelphia wants the legislature to pass a bill allowing the city to add a $2.00 per pack tax on cigarettes to help fund the public schools. The poor already smoke at greater rates than the well-to-do, and people living closer to the county lines — meaning: not the very poor in Northeast Philly — will just go to stores in Montgomery County to buy a carton of cigarettes for $20 less.

  17. pandora says:

    m. v. buren, so you’re saying I shouldn’t go… because of the “rabble” and the “slot crowd” that you don’t like? And I’m lady bountiful?

  18. m.v. buren says:

    pandora: consider it just a reminder of liberal-elite hypocrisy. but no matter, it was ever thus and always will be. no big deal. on balance, much better than the hypocrisy on the right.

  19. Geezer says:

    @Dana: OK, think about how states and cities use cigarette taxes. In every case in which taxes were raised, revenue increased.

    Why are conservatives obsessed with people who cheat and chisel a few dollars? Why are they always willing to eliminate anything with which they don’t agree based on the fact that there are cheaters among us?

    Given that defense contractors steal more from us that all the welfare cheats combined, why don’t you ever call for the elimination of the defense department?

  20. Geezer says:

    @van buren: So to truly help people covered in shit, one has to be covered in shit oneself? Anti-elitism is just as toxic as elitism — perhaps more so, as at least intellectual elitism is generally made up of intelligent people.

  21. Dana says:

    Mr Geezer, I don’t smoke, and never have, and the proposed increase in cigarette taxes won’t bother me in the least. I was simply pointing out to ATIAM that the state itself goes harder after the poor with this stuff.

    Why are conservatives obsessed with people who cheat and chisel a few dollars? Why are they always willing to eliminate anything with which they don’t agree based on the fact that there are cheaters among us?

    Cheaters? I don’t see driving across to Montgomery County to save $20 a carton as cheating; I see it as economically wise. But you’re supporting a tax based on an addiction, which hits the poor harder. Tell me again about your oh-so-liberal principles! :)

  22. Dana says:

    Mr Geezer wrote:

    at least intellectual elitism is generally made up of intelligent people.

    Or at least of people who think that they’re intelligent. :)

  23. Geezer says:

    I don’t support the tax. The fairest way to tax people would be on wealth, not income, not sin taxes. But thanks to folks like you — the stupid ones who side with their overlords instead of standing for the people — we’ve made that unacceptable. Politicians have gotten the message: People with money will defeat you if you tax them; poor people don’t have the juice to do that.

    You don’t have the intelligence to talk about economics; for you it boils down to getting in the car to buy cigarettes. I’ll take the intellectual elite vs. your simple-mindedness every time.

  24. Jason330 says:

    That sums it up.

  25. Dana says:

    But that’s it, Mr Geezer: most public schools are funded by taxes on wealth, specifically taxes on property. People can avoid those taxes, to some extent, if they buy less expensive property, but they’re still being taxed on their wealth. By buying in Jim Thorpe, I paid $87,500 for a home that would have cost $287,500 in Conshohocken.

    Of course, some people with plenty of real property wealth don’t have as much in the way of liquid assets as others, and their property taxes are killing them. Legislators hear plenty of complaints about property taxes, and Tom Wolfe is running for Governor based, in part, on a promise to cut property taxes (which are local taxes, taxes over which the governor has no authority) by sending localities revenue from a natural gas extraction tax he wants to impose, which would wind up right back on people’s natural gas bills.

  26. jason330 says:

    That’s exactly what a brainwashed lackey would say. Somewhere along the line you’ve been tricked into thinking that taxes on Walmart of WPX Energy are a constraint on commerce. That identifies you as an idiot.

  27. Dana says:

    No, Mr 330, what I recognize is that all taxes are paid by the end consumer of any product. When you buy a gallon of milk, you are paying all of the taxes imposed on the diary farmer, on the guy who hauled the milk from the farm to the dairy bottler, on the dairy bottler, on the company which hauled the bottled milk from the dairy to the grocery store to the grocery store, and on the grocery store. You paid the taxes on the oil company which provided the gasoline to put in your car to get to the grocery store, and then, after you had digested the milk, wound up paying taxes to carry away the unsalable waste products you made.

    If the end consumers didn’t pay all of those taxes, then those companies would go broke, and you wouldn’t get any milk unless you molested a cow yourself.

  28. Davy says:

    @Dana:

    Consumers do not bear the entire burden. Supply and demand elasticities dictate tax incidence.

  29. Jason330 says:

    …all taxes are paid by the end consumer of any product.

    Is what an idiot would say. You’ve proven my point far more effectively than I could have hoped. Have a great day.

  30. Dana says:

    OK, Mr 330, if the end consumer doesn’t pay all of the taxes, who does? Corporations have to include their tax burdens in the price of their products; if they don’t, then they lose money and go out of business.

    Being such an absolute genius, I’m sure that you can edumacate me on this!

    Jason330: Super Genius!

  31. Jason330 says:

    I’m sorry. You are too dumb to engage in this sort of thing. Give a little more thought to your premise and if you can think of anything that might might happen if taxes are raised on Walmart (other than corresponding price increases or going out of business) I might consider replying.

    The ability to revise ones beliefs based on new evidence or insights is the hallmark of an healthy mind.

  32. Davy says:

    @Dana:

    Consumers will bear part of the tax burden, but the theory that they all of the burden is flat wrong. Again, read about tax incidence.

  33. m.v. buren says:

    geezer: agree that anti-intellectualism is worse than intellectual elitism. much worse. in fact, i am (or like to think of myself as) an intellectual elitist. that opens me up to criticism from some quarters. i just think it’s healthy to acknowledge our deeper attitudes and motivations.

  34. Dana says:

    Mr 330 wrote:

    I’m sorry. You are too dumb to engage in this sort of thing. Give a little more thought to your premise and if you can think of anything that might might happen if taxes are raised on Walmart (other than corresponding price increases or going out of business) I might consider replying.

    Translation: You don’t really have an answer, so you’ll simply resort to insults. I can’t say that your response was unexpected.

  35. Dana says:

    Davy at least tried to answer coherently:

    Consumers will bear part of the tax burden, but the theory that they all of the burden is flat wrong. Again, read about tax incidence.

    If tax payments by businesses don’t come out of revenues, from where else can they come?

    You might argue that competition will not enable a business to pass along enough of a tax increase to keep it’s net profits as high as they were before the increase, but even when such is the case, the total tax burden has to be paid out of revenues.

    Of course, since taxes have to be applied evenly across the board, raising taxes on WalMart also means raising taxes on other businesses, the businesses which try to compete with Walmart, the mom-and-pop businesses which are supposedly so great, but which have been falling by the wayside because WalMart has lower prices. Increase WalMart’s taxes, and mom-and-pop’s taxes go up as well, and they have to increase prices, or they go out of business.

  36. Aint's Taking it Any More says:

    Davy:

    Tax incidence always yields to the elasticity of demand. For some goods, notably food, prices are elastic because demand is constant, and without regard to price. Hence, to follow Dana’s point, for some goods the tax will almost always be passed to the consumer.

    Taxes are always an economic knuckleball. We almost always fail to truly understand where they end up but that rarely stops us from try to predict.

  37. Jason330 says:

    Think Dana. What other thing might happen if taxes are raised on Walmart (other than corresponding price increases or going out of business)?

    Think man. You are nearly there.

  38. Aint's Taking it Any More says:

    Jason330

    You’re too smart for me. Do elaborate on what would happen to Walmart if taxes could be raised solely against that company. Please enlighten.

  39. jason330 says:

    No more hand holding. The lesson will be better learned if he comes to it on his own.

  40. John Kowalko says:

    Jason330
    Yes that is net

  41. Aint's Taking it Any More says:

    That’s what I thought – all bullshit, no substance.

  42. Jason330 says:

    Think ATakingIt – there are only a few variables to consider. You guys are pitiful, but no more hints.

  43. Aint's Taking it Any More says:

    Dipshit660:

    I’ll give you credit for a creative bastardization of my pen name. Nothing more.

  44. Dana says:

    Mr 330 wrote:

    Think Dana. What other thing might happen if taxes are raised on Walmart (other than corresponding price increases or going out of business)?

    Think man. You are nearly there.

    Are you attempting to frame the question as taxes being raised only on WalMart, and not on its competitors? If that is your contention, Walmart either raises prices, which would cut into their competitive advantage, or its profits go down, but such a contention is not serious: you cannot penalize a specific individual or corporation like that.

    Of course, a huge company like WalMart has all of the accountants and all of the lawyers it needs to tie up such attempted legislation n the courts for years.

  45. Dana says:

    Or perhaps Mr 330 is talking about WalMart cutting expenses. that’s a normal corporate reaction, but WalMart already cuts them hard, using it’s buying power to beat down suppliers’ prices. About the only place to cut expenses is in labor. Right now, WalMart pays a little more than minimum wage; perhaps Mr 330 wants to see that cut to the minimum?

  46. Geezer says:

    @Dana: Jason’s right, you don’t understand enough to hold this conversation.

    What you fail to understand is that prices are not set by tax rates. If tax rates go down, there will be no corresponding drop in prices; prices are set by whatever the market will bear. If taxes go up and consumers won’t pay higher prices, the tax increase comes out of profits. Companies pass those expenses on when they can.

    But what you truly fail to realize is the concept of the commons. Companies routinely rip off the public by using the air and water, which belong to all, to dispose of the toxic byproducts of production. They do not pay the real cost of production, and consumers aren’t paying it, either. As a result, our air and water are crummy — and now they want to start buying up all the water (check out what Nestle is doing in California).

    Seriously, just stop. This is not the place to school Republicans on how an economy actually works, and you’re not even bright for a conservative.

  47. puck says:

    Plus, Walmart operates the biggest truck fleet in the world, yet our highways are crumbling and our transportation trust fund is broke, while Walmart makes record profits.

  48. Aint's Taking it Any More says:

    I can’t stand Walmart almost as much as I can’t stand the duct tape and hanger arguments people slap together here excoriating the company. So Walmart is now to blame for the deteriorating condition of the national highway system. If facts matter:

    15.5 million trucks on American highways: http://www.truckinfo.net/trucking/stats.htm

    6,500 trucks in Walmart’s fleet: http://corporate.walmart.com/our-story/our-business/logistics

    .43% of the total number of trucks on American highways are Walmarts.

    Turns out that Walmart isn’t even in to the top 100 commercial truck fleets. http://www.fleet-central.com/TopFleets/pdf/AUTOF_top100trucks.pdf

    Shit on Walmart but maintain your dignity while doing it.

  49. puck says:

    That’s the last time I let Tracy Morgan do my fact-checking.

  50. Aint's Taking it Any More says:

    Very good! Take care.

  51. Dana says:

    Virtually everything WalMart sells is transported by truck, and those trucks use diesel fuel; diesel fuel is taxed by both the federal and various state governments, normally at higher rates than gasoline. Those highway taxes are supposed to pay for the roads. Now, you can complain that they aren’t high enough to pay for the roads — Congress had to pass a stop-gap funding bill because the federal highway fund ran out of money — but you can’t complain that WalMart, or any other shipper, isn’t paying the price specified by the government for road use.

    Of course, the cost of transportation, including the price of fuel is simply part of the total price of the products sold, so, eventually, the consumer pays those, too.

  52. Dana says:

    ATIAM wrote:

    I can’t stand Walmart

    OK, why? WalMart brings a lot of different products to American consumers at lower prices than almost anyone else. Without WalMart, or another store like it, consumers would have fewer choices, and the choices that they had would probably be more expensive.

    WalMart is a creator of real wealth for consumers: if you have to pay only $95 at Walmart for goods which would cost you $100 elsewhere, you have $5 of savings which you can use for other things. Yeah, WalMart has driven out a lot of the mom-and-pop stores, but they did so by being less expensive than the other retailers. That might be bad for the smaller retailers, but the price savings have been a good thing for a lot more people.

    WalMart doesn’t pay a lot, but they do pay more than minimum wage; that’s more than you normally see from smaller retailers. You can argue that that’s bad for WalMart workers, but it’s good for WalMart customers, and there are a lot more WalMart customers than employees.

    And, in the end, the simple fact is that the American public have voted for WalMart, and its way of doing business, not once every couple of years in November, but every day, with their economic choices.

  53. Jason330 says:

    Dana, for someone as dumb as you, it is probably a good strategy to flee from the actual point and chase a red herring.

  54. Aint's Taking it Any More says:

    Dana:

    My off-hand remark about Walmart was not a criticism of their business model or practices. Really it was a personal dislike. The stores are scary, often dirty and unsavory things too often happen there. Nothing more.

  55. Geezer says:

    “you can’t complain that WalMart, or any other shipper, isn’t paying the price specified by the government for road use.”

    But I can complain that moving freight by truck or air is highly subsidized vs. the most cost-efficient way of doing it, by rail. Look it up sometime. Trucks do not pay their fair share for road repairs; virtually all the wear and tear caused by vehicles is caused by 90,000-lb. trucks (counting the 80K freight), not passenger vehicles at one-tenth the rate. If you had an original thought in your head it would die of loneliness.

    Seriously, dude, your understanding of all these issues is the simplistic pap we get every day from people like you — conservatives who have been fed pablum and now regurgitate it dutifully. Isn’t it nappy time yet?

  56. Aint's Taking it Any More says:

    Trucks do far, far more damage to roads and it is exponentially disproportionate to the size difference. Hence 20 cars do little road damage compared to single a truck of the same combined weight.

    Then again, in general, an single car generates more air pollutants (VOC/CO) than a heavy duty diesel truck (NOx).

    Nobody pays for all of their sins.

  57. LeBay says:

    >Then again, in general, an single car generates more air pollutants (VOC/CO) than a heavy duty diesel truck (NOx).

    Interesting that you left particulates out of the truck’s pollutants. 2007-up diesels have a Diesel Particulate Filter(DPF). These devices accomplish 4 things:

    1. They reduce the amount of particulate matter spewed from a diesel truck’s tailpipe.

    2. They choke the hell out of the exhaust flow & CONSUME FUEL to regenerate.

    3. When regeneration fails & the DPF gets clogged, they cost the truck owner a small fortune to have cooked out or replaced.

    4. They drastically lower the fuel efficiency of diesel engines, which drastically increases both the cost to operate a truck and said truck’s carbon footprint.

    Finally, many less-than-honest operators simply remove or gut the DPF and retune the PCM to increase both power and fuel economy.

  58. John Manifold says:

    Returning to the theme, here’s what happens when states bail out tottering gambling joints:

    http://www.eschatonblog.com/2014/08/heckuva-job.html

  59. Geezer says:

    Sorry, but the situation with Revel in Atlantic City has nothing to do with “bailing out tottering gambling joints.” It has to do with playing favorites in a crowded field. There are still 8 operating casinos in that city — five more than in our entire state.

  60. Jason330 says:

    I can’t get to Eschaton right now. How much money did Christie blow on that fiasco? What a doofus.

  61. Geezer says:

    And it still has 8 casinos. Your point, considering that your original one is invalid?

  62. Jason330 says:

    From October 2010

    Gov. Chris Christie today killed the multi-billion-dollar Hudson River commuter train tunnel, aborting the nation’s biggest public transit project as well as the state’s decades-long quest to double rail capacity to New York.

    Christie said that given the impact of the recession and the probability of continuing cost overruns, the state could no longer afford the tunnel’s escalating costs. More than a half-billion dollars has already been spent on construction, engineering and land acquisition for a project currently budgeted at $8.7 billion that the governor said could go as high as $14 billion.

    “The only prudent move is to end this project,” he said at a Trenton news conference. “I can’t put taxpayers on a never-ending hook.”

  63. Geezer says:

    We now know he killed the tunnel so he could use the money in lieu of raising taxes or tolls. If this is pursued, it could end the careers of both Christie and Cuomo, as much of that money was raised through the sale of bonds and it’s illegal to divert it elsewhere.

  64. cassandra m says:

    Christie’s support of the Revel (and other stuff sent to AC) was supposed to help revive a dying industry. But the thing that I never saw anyone ask was *why* some of these casinos were not re-investing in themselves to refresh properties and try to attract other audiences. I think that there was not enough investment in the City itself — trying to stabilize its own neighborhoods and population to re-create itself as the kind of destination (not wholly dependent upon gambling) that folks seem to think would have happened.

  65. Geezer says:

    I object to the constant reference to gambling as a “dying” industry. It’s an industry that has reached its saturation point, which means it no longer is growing, but it’s a capitalistic fallacy to equate lack of growth with death.

    On the other hand, slots players are not high rollers, and slots are where casinos make their money. With the purchasing power of the middle class eroding, casinos are feeling the effects, just as casual-dining restaurant chains are feeling it. The businesses suffering most are those dependent upon disposable income, which middle-class consumers have less of since 2008.

  66. cassandra m says:

    You have a good point, and my own reference to “dying” is more about an industry that is increasingly not able to deliver on the expectations that the politicians that pushed for it had. More locally, though, revenues are down enough for casinos to ask for give backs on the taxes they pay in order to improve their balance sheets. None of Delaware’s casinos are *destination* casinos anymore and I don’t see how they can grab back any market share, much hold on to what they have. At best, they’re convenience casinos and I don’t see all three of them surviving in the long term like that.

  67. Geezer says:

    Me either. Neither the state nor the owners have done a good job of maximizing their resources on this issue.

    Of course, given that gambling victimizes the poor more than the rich, we’d be better off in the long run with less gambling anyway. We’re years away from the backlash against gambling doing away with that source of revenue, but if history is any guide gambling will eventually be banned again. We have gone through that cycle two or three times now in American history.

  68. Aint's Taking it Any More says:

    Casino’s death will the equivalent of being pecked to death by a duck. Slow and bruising, slow and bruising.

  69. cassandra_m says:

    My problem with gambling is that too many politicians are sold on the whole “free money” thing. It is one thing for someone to buy some Powerball tickets or dump a bunch of coins into a slot machine looking for a fast-track to financial security, but quite another thing for an elected official to do the exact same thing. Revenue from gambling should go to fund stuff like college tuition for residents who make a GPA. There were a number of states who used lottery and other gambling revenue for this. A few are cutting the programs back because of the increased cost of college and because revenues are not keeping up, but even if the program pays a portion of tuition, that is still better than nothing. Counting on that revenue as a way to pay for day to day operations is just a cowardly way of paying for the services that are promised.

  70. Liberal Elite says:

    @G “I object to the constant reference to gambling as a “dying” industry.”

    It’s simply a rent seeking industry that works to exploit the poor. The industry would die if politicians grew some morals and had a little spine.

    The problem with America is that politicians are too willing to screw the average citizen when a few bucks are thrown at them.

  71. John Manifold says:

    Cassandra: I agree with most of what you say — except that money is fungible. The excuse of “helping of kids” [Zell Miller prime example] helps shoehorn the lottery into a state’s revenue assumptions. As the years pass, business taxes are cut, upper income taxes are cut, but the lottery stays.

    Mike Castle vetoed slots.

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