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Dover Downs cut twice as many jobs as expected

Scott Goss
The News Journal

Dover Downs says it eliminated 48 jobs over the last three months – twice the number the company planned to make just three months ago.

The additional 24 job cuts resulted from a decline in business stemming from the casino's recent decision to close table game operations during early weekday mornings, according to CEO Denis McGlynn.

"When we cut those table games, it had a domino effect," he said Thursday. "We ended up not needing food and beverage workers, valet operators and other jobs that provided services during that same time period."

Dover Downs announced in late April it would stop offering table games between 2 a.m. and 8 a.m. Monday through Thursday.

As a result, the company initially planned to eliminate 20 dealer positions and four security jobs. Those cuts resulted in layoffs for about a dozen employees with the remainder reassigned to open positions on other shifts.

McGlynn said the additional 24 job cuts enacted since May 1 also were made through a combination of attrition and layoffs, although it was not immediately clear how many of those workers were able to fill other positions at Dover Downs.

The latest round of job cuts was announced Thursday in conjunction with Dover Downs Gaming & Entertainment's release of an improved second-quarter earnings report that showed a $467,000 bump in net gains – a nearly 285-percent increase over the same period in 2014.

"Historically, the spring and summer months are stronger months for the company and that held true during our second quarter," said McGlynn, who also serves as president and CEO of Dover Motorsports Inc.

"We benefited from growth in hotel rooms revenue and a decision to take on-site retail operations in-house," he said in a statement that accompanied the earnings report. "Unfortunately, we also had to engage in another round of expense reductions, which included the elimination of 72 jobs so far this year."

Those jobs include the 48 eliminated in the last quarter, as well as another 24 housekeeping, dealer and security positions that were cut in the first quarter of 2015, he said.

The 24 jobs that Dover Downs says it cut in the first quarter is a revised number from the 10 layoffs that were initially reported in April.

The 72 jobs eliminated by Dover Downs this year represents 4.9 percent of the casino and hotel's total workforce of 1,468 as of Jan. 1. Another 302 people work in the casino and hotel for outside vendors

Casino executives have been warning for months that additional job cuts would be needed if the General Assembly failed to reduce the taxes collected on Delaware's three casinos.

The state has not changed that tax formula since taking a larger cut of casino revenue during the 2008 financial crisis.

Last year, legislators approved a $9.9 million payment to help the casinos' cover their payments to slot machine vendors.

But lawmakers declined to take up a proposed $46 million package before July 1 that would have cut the state's share of revenue from table games and eliminated a fee the casinos pay to operate table games, among other changes.

"We can do well," McGlynn said Thursday. "The problem is the state takes so much that at the end of the day, it's all for nothing."

McGlynn said he's hopeful state legislators will take action when the General Assembly reconvenes in January.

In the meantime, Dover Downs is not anticipating any more job cuts, he said.

"I think going forward the cuts will be in advertising, marketing and possibly eliminating some slot machines to save on vendor costs," he said. "We may also have to look at eliminating some of the entertainment and events we have here."

McGlynn said that could include nixing Friday Night Fights boxing matches, as well as the Wine & Music Festival held in October and the Chocolate & Holiday Festival in November.

Dover Downs on Thursday reported a net gain of $631,000 from March 1 to June 30, compared with $164,000 during the second quarter of 2014.

Yet overall revenue over the last three months fell to $45.3 million, down nearly 2 percent from the same period last year.

Gaming revenue also continued to slide – dropping 3.1 percent to $38 million compared to the second quarter of 2014. That follows a 2.5-percent decline in the first quarter.

McGlynn attributed the ongoing drop in gaming revenue to growing competition in the Mid-Atlantic gaming market and a lower table game hold percentage.

The losses in gaming revenue last quarter were offset by a $1.46 million reduction in expenses, largely resulting from the 72 job cuts this year, he said.

Dover Downs also received $269,000 from a one-time settlement with a third-party vendor that previously operated five retail "pods" in the casino and the lobby of the hotel.

"Because of the drop in business, that third-party stopped paying rent," McGlynn said. "We were able to negotiate a deal that got them out and resulted in them paying that back rent, but that's money that's not going to show up on our books next year."

Dover Downs' stock rose 3 cents from an opening price of 90-cents after the quarterly earnings were released, but fell back to 88 cents by the closing bell Thursday.

Last week, Dover Downs was notified it faced being delisted from the New York Stock Exchange because stock price has remained below $1 for 30 consecutive days – the second time in a year the company has received such notice.

Contact Scott Goss at (302) 324-2281, sgoss@delawareonline.com or on Twitter @ScottGossDel.