Hollywood Casino, the largest tax payer for the city of Bangor, has finally settled a tax dispute after a year and half long disagreement over the value of the casino property. After the long row, both the city and the casino owner have agreed that the casino has reduced in value, partially due to the increased competition from the Oxford Casino.
Hollywood Casino Bangor
Hollywood Casino Hotel and Raceway, more commonly known as the Hollywood Casino Bangor, is a gambling facility located in Bangor, Maine. The property, which is owned and operated by Penn National Gaming, was the first venue in the state to acquire a license for slots and table games, in 2012. The hotel-casino has 152 rooms for their guests including four suites, 923 slot machines and 16 table games at their casino; the venue is also famous for their half-mile long “Epic Buffet”.
The property is a major tax contributor for the city of Bangor; the taxes recovered from the property have contributed an approximate $12 million toward the construction of Bangor’s Cross Insurance Centre and also sponsors classes at the Eastern Mainer Community College to train card game dealers.
Churchill Downs owned, Oxford Casino is located in Oxford, Maine and is the only other licensed casino in the state of Maine. The casino opened in 2012 and currently offers 848 slot machines and 22 table games along with a 100 room hotel to their customers.
Being the only other casino in the state, Oxford Casino is biggest competition Hollywood Casino Bangor has. According to the Maine Gambling Control Board, a slot revenues for Hollywood Casino have fallen by 15% since Oxford Casino opened.
The city announced the terms of the deal they struck with Hollywood Casino, on the morning of last Thursday, the 12th of May 2016.
City Tax Assessor, Phil Drew, said in a press release that the value of the property has been reduced from $97.5 million to $82.5 million for the April 1, 2015 assessment; and will be further “normalised” to $80 million for the April 1, 2016 and 2017 assessments.
While that is far less than what Hollywood Casino had asked for in their appeal, they have agreed to drop the case in return. In the original appeal, Penn National had filed, they challenged the 2014 assessment for the Main Street casino and argued that the casino, hotel and racing track had been massively over-valued, by more than $60 million.
City Assessor, Drew felt the negotiations had gone well and had led to a “reasonable, fair and equitable assessment.”
He added, “The settlement is fair and provides certainty for the city’s finances going forward.”
Dan Cashman, a spokesperson for Hollywood Casino said that both sides are happy with the outcome; they have worked out their differences and are prepared to move forward under the new normal with expanded gambling in Maine.
He added, “I think it’s very fair for Hollywood Casino and they are very happy with how it has played out.”
Jose Flores, the General Manager of Hollywood Casino, said, “We are pleased to have reached an amicable agreement with the city of Bangor and look forward to continuing our mutually beneficial relationship for years to come.”
As a result of this assessment reduction, the city has agreed to reimburse $327,000 of the $2.14 million Hollywood Casino had paid this year on the properties, which were included under the appeal. As taxes for 2016 and 2017 have not been set yet, it is not possible to comment on how the reduction in assessment for the casino will affect the city’s revenues.
History of the Dispute
The dispute over the value of the Hollywood Casino property started in early 2015, when they filed an abatement request with the city, alleging that Bangor had overestimated Hollywood Casino’s Main Street properties and leases by a sum of $36.8 million. Hollywood Casino sought an assessment reduction and reimbursement of $877,000 in taxes that were paid in 2014. However, that request was denied by the Bangor Board of Assessment Appeals.
Later that year, 2015, the casino filed another appeal with the Maine State Board of Property Tax Review, claiming that the Bangor had overestimated their gaming properties and leases by $61.98 million; this was more than half of the venue’s total assessed value. If this appeal had been successful, the city would have been forced to return more than $1.3 million of the casino’s 2014 tax contributions.
The State Board, which was expected to hold hearings to resolve the dispute in summer, said they could not do so because they were working on their own resolutions during the months of March and April.
Both sides agreed that he main factor behind the lowered assessment was to be attributed to the talks, which stemmed from the decline in revenues that Hollywood Casino has suffered since the opening of Oxford Casino.
Revenues for Hollywood Casino
In 2015, Hollywood Casino reported net revenues of $53.2 million from slot machines and table games, a 2% year over year decline compared to 2014. The dip occurred despite an overall increase in casino gaming revenues in the state of Maine. 2015 was the second year in a row that the casino had seen loss; in 2012, the casino had reported massive net revenues of $62.6 million.
Drew said the loss of income the casino has suffered was the main contributed behind the city’s willingness to drop the assessment on the property; however, not nearly as much as its parent company, Penn National Gaming, had hoped for.
New Gambling Ventures in Maine
The overall increase in gaming revenues has seen recent attempts to bring another casino to southern Maine. Hollywood Casino has also faced competition from new casinos developments in neighbouring New England states; the $2 billion resort casino development in Evertt, near Boston, could also eat into the gaming business profits for Maine’s casinos in the future.
With regards to competition faces by Hollywood Casino, Cashman said, “There is pretty hard proof that there is an impact and you also have to look at not just in Maine but the borders outside of Maine. There are new casinos in Massachusetts, there's a possibility of casinos in New Hampshire and Canada.”
However, Cashman did add that Hollywood Casino is likely to continue to be successful because of the strong relationship they have with the city of Bangor and the increased popularity the city has seen as a tourist destination, with an increase in events such as Waterfront Concert Series and the Queen City's many festivals.