A Dover City Council committee gave the nod to licensing fees for sports betting, horse racing and gaming table positions that would generate anywhere from $10,000 to $14,000 in additional annual revenue for the city.
Four new business license categories also were discussed, bringing in $7,000 to $15,000 more per year.
The Aug. 25 vote was 3-1 in favor of the new fees, with Councilman Thomas Leary acting as the sole dissenter. The matter now will have a first reading, with meetings tentatively set for Sept. 14 and Sept. 28.
Public Services Manager Scott Koenig said the new gambling business licenses have been formulated in preparation for the expanding gaming options authorized by the state legislature.
From estimates, the sports betting and horse racing or simulcast licenses, which are based off total gross receipts, would produce approximately $4,600 to $9,200 per year. For every $1 million made by the casino, the city would collect $460.
This puts those activities equivalent to the licenses for contractors and manufacturers, he said.
“That was the closest thing that we had in ordinance that we felt was reasonably comparable to this category,” Koenig said.
For table gaming, the idea is to keep video lottery or slot machine licenses at $121 per machine per year but license gaming positions at $150 per position. He said Dover Downs Hotel & Casino has indicated they want to remove 340 slots and install 311 standing or seated gaming positions, which would mean a total net revenue increase of $5,510.
Under that assumption, Koenig said, total revenue from slots and gaming tables would be $384,119 per year.
Councilman Kenneth Hogan asked why the license for gaming is more than slots when table games are more expensive to run.
“I don’t understand why we are charging more for the thing that is less profitable,” he said.
City Manager Tony DePrima said it was more of a question of space and keeping the city from going backward in revenue.
“The bottom line is you can fit more slots in the same area than you can fit gaming positions,” he said. “Had we kept the gaming positions at the slots’ number we would actually have been losing and giving up more than we were making. So I tried to equalize it.”
The fee for slots was originally decided upon as $121 because the same category of coin-operated electronic video machine also licenses arcade machines, DePrima said. The Pac-man machine in a pizza shop pays the same fee as slots.
He explained that Dover is in a unique position in regards to gaming compared to a city in Pennsylvania.
“In a lot of states, what we find, is that there actually is in the state law — that allowed the gaming — there is some carve out for host local government,” DePrima said.
In order to be fair and equal, he said the license is important.
“We need to capture a business license because every other business right down to the pet groomer has a business license,” DePrima said.
Dover Downs Hotel & Casino President Ed Sutor agreed with the planned fees but has concerns about the future.
“We find what you’re proposing acceptable,” he said. “I don’t see this as an argument tonight. It’s just be careful going forward that it doesn’t start to be a revenue-sharing type of thing where we’re getting into areas where the state might have to get involved.”
Dover Downs’ attorney has reported if the city cuts too much into the lottery revenue Dover might have to get licensed, Sutor said.
“We’re concerned with some things we read in the paper that this is step one,” he said. “And once you’re established thereafter you can revisit and jack up the rate.”
Sutor pointed out that the casino only would get less than 39% of the revenue so the license fee should be on their commission, not the gross — to keep from taxing the state tax. The city also shouldn’t take the licenses from any revenue where betters in other states bet on Dover’s horses.
In addition, the city is looking to start licensing four new types of business. Those are ATM machines, $49; fitness trainer, $67; home day care, $25; and real estate development corporation, $333.
The committee voted to discontinue a number of business license categories staff feel aren’t being used; currently there are zero licenses for them, Koenig said. They are bowling alley operator, dental lab, outdoor music festival promoter, taxidermist, parking lot or garage operator, television repairman and telephone answering service.
If a license under any of those categories does become necessary, he said it would come under the all other category and be based on the number of employees.
Committee member Leary was opposed to all the new fees.
“When we did this last budget our mission to staff was to not increase fees, not increase taxes; keep everything the way it was,” he said. “Now here we are within weeks of that point attempting to increase fees and taxes.
“So I think, speaking for myself, it would be hypocritical to vote for this at this time.”
Others aside from Leary were against the new fees. Councilman Timothy Slavin, who couldn’t vote as he is not on the committee, said he is opposed for a variety of reasons such as the fact that they assess a fee on a machine owned by the state.
“If the state requires this activity, doesn’t it seem opportunistic and greedy of us to jump in and tax a mandated state activity?” he asked. “Isn’t that giving with one hand and taking away with the other?
“I appreciate our desire to identify new revenue streams … but I can’t help but feel that this is a tax on success,” Slavin added. “In the Third District a lot of my constituents are employed there. It supports a lot of lives in our community and this kind of overtaxing is I think bad for business and also bad for the overall business climate.”
Councilman Eugene Ruane raised some other concerns, including that the gaming licenses also are about making sure the machines are operating fairly and whether operators are qualified.
“It’s not just about money, right?” he said.
He asked that city keep an open dialogue with Dover Downs to make sure everyone is going with the best solution. Ruane said he’s seen information about other casinos and municipalities where casinos undertake economic development, which to his mind “is better than this nickel and dime stuff” getting 34 cents per day on slots that earn $210 per day.
Email Jayne Gest at jayne.gest@doverpost.com
PROPOSED BUSINESS LICENSES
Sports betting and horse racing (simulcast): Each activity licensed individually and pay fee at rate of $0.00046 of aggregate gross receipts with a minimum license of $121
Gaming position: $150 per position, seated or standing
ATM machines, off bank premises: $49
Fitness trainer: $67
Home day care: $25
Real estate development corporation: $333
