Casino group claims revenues could offset state grocery tax

David A. Lieb

Thursday, Oct. 26, 2000 | 5:37 a.m.

LITTLE ROCK - Taxes on six casinos proposed for Arkansas could generate as much as $249 million annually - enough to eliminate the state sales tax on groceries, casino supporters said Thursday.

Backers of proposed Amendment 5 based their projections on a study by an Arkansas State University professor, who also has forecast $230 million annually from a state lottery that would be authorized by the amendment.

Gambling opponent Larry Page dismissed the projections as ridiculous.

"It's a paid report. It comes with some serious credibility problems," said Page, director of the Arkansas Committee for Ethics Policy. "What amazes me the most is how outlandish their claims are. There is no basis in reality for that."

The proposal on the Nov. 7 ballot would grant Arkansas Casino Corp. exclusive rights to run casinos in the home counties of Fort Smith, Hot Springs, Harrison, Little Rock, Texarkana and West Memphis.

The amendment would levy a 15 percent tax on casino revenues but would prohibit the state Legislature from imposing any other taxes, such as property or sales taxes on casino-related ventures.

Eighty percent of the casino tax would be dedicated to reducing or eliminating the state sales tax on groceries, which is projected to generate $173 million next fiscal year.

The study by economics professor Daniel Marburger said the casino tax revenues could range from $66 million to $249 million, depending upon the size of the casinos. That means the revenues to offset the food tax could range from $53 million to $199 million, according to his study.

The Amendment 5 campaign is using the largest projections.

"We are going to have very large, first-class, Las Vegas-style casino resorts" at all six locations, said Amendment 5 campaign spokesman Glen Hooks.

Marburger said he based his study primarily on Mississippi, which has 30 casinos. For every 1,000 square feet of gambling space, casinos there attracted 10,000 more customers per quarter, he said.

He estimated a small Arkansas casino could attract 1.6 million visitors and generate $73 million annually while a large casino could have 6 million patrons and $276 million in annual revenues.

Page said the professor's estimates are overly optimistic and are being used by Amendment 5 supporters to try sell Arkansans a bad deal.

"This is all about distracting the Arkansas voter from the real issue, and the real issue is do we want to give these guys an unregulated monopoly on casino gambling?" Page said.

Besides offsetting the sales tax on groceries, part of the casino tax revenues also would go toward education purposes, anti-gambling programs and local governments.

Marburger estimated the education fund would get $6.6 million to $25 million a year. The fund, which also would receive lottery proceeds, would pay in-state college tuition costs for Arkansas high school graduates and help fund pre-school programs and tutorial programs for elementary and secondary students.

The study said the tax would generate $660,000 to $2.5 million annually for the Arkansas Compulsive Gambling Foundation and $550,000 to $2.1 million annually for each of the casino's home counties - Boone, Crittenden, Garland, Miller, Pulaski and Sebastian counties.

Marburger was paid $2,350 for the casino study and $1,250 for his previously released study on the lottery, Hooks said.