Gaming news briefs for December 31, 2003

Wednesday, Dec. 31, 2003 | 11:31 a.m.

Legislator seeks to end tax on comp rooms

INDIANAPOLIS -- A tug of war is forming in the General Assembly over a small piece of state tax revenue affecting riverboat casinos.

On one side are those who argue every little bit of money helps alleviate the state budget crisis. On the other side are those who say a 6-month-old tax that generates few tax dollars might be driving away business.

Sen. Patricia Miller, R-Indianapolis, has filed a bill to end the tax on complimentary hotel rooms that casinos provide to their best customers and other hotels use largely as marketing tools.

"The bottom line is that it's more trouble than it's worth," Miller, a member of the Senate Finance Committee, said. "For the amount of revenue -- which is minuscule when you look at our budget -- and the kind of complications it causes for conventions, it's not worth it."

The Indiana Department of Revenue said it has not calculated how much the tax generates. The nonpartisan Legislative Services Agency estimates the eight Indiana casinos that have hotels will pay an additional $2.1 million annually.

Casinos often give away half or more of their rooms to good customers. The tax is calculated on the average daily rate of the rooms given away.

Gaming operator faces higher interest costs

ATLANTIC CITY -- Donald Trump's Trump Hotels & Casino Resorts Inc. may pay higher borrowing costs in 2004 if profit doesn't improve at its Atlantic City properties.

According to the prospectus for the company's March sale of $490 million of bonds, Trump Hotels must increase the interest rate paid on the debt by as much as one percentage point if its debt exceeds a measure of profit by 4.8 times. At the end of the third quarter, debt exceeded the profit measure by 5.1 times.

More competition from the new $1.1 billion Borgata casino means an increase in the rate on the bonds is likely, said John Maxwell, a debt analyst at Merrill Lynch & Co. For Trump, the prospect of paying as much as $4.8 million in extra interest a year comes with the company already having little left over after debt service to reinvest in its properties.

The debt level will be measured on Feb. 28.