We already pay a lot, casinos say in wave of ads

By Liz Benston

Wednesday, Sept. 12, 2007 | 7:35 a.m.

Nevada's casino industry, perpetually targeted by teachers and others to pay more taxes, has launched its most aggressive effort yet to defend its financial contributions to the state.

The new yearlong advertising campaign is intended to soften voters and politicians toward the industry in advance of the 2009 legislative session. The industry hopes that by kicking off the campaign now, well ahead of any particular initiative or cause has gained traction, it can help shape public opinion and frame any tax debates.

One of the television commercials, sponsored by the Nevada Resort Association, shows a dealer stuffing a $100 bill into a drop box - and the money making its way into a schoolhouse.

The message isn't subtle: The casino industry helps schools.

Printed promotions say that one- third of all funding for Nevada public schools comes from the gaming industry.

The campaign is intended to remind voters of the extent to which the gaming industry contributes to the economy and helps pay for schools and other public services, Nevada Resort Association President Bill Bible said. Voters too easily forget t hat the gaming industry pays for nearly half of the state's general budget , he added.

"Educating the public is an important exercise," he said. " And gaming is not a social experiment. It is intertwined with the fabric of the economy."

Tinkering with that fabric - by getting casinos to pay more taxes - could upset the delicate balance of taxes and profit, hurting growth, said Bible, a former state budget director and ex-Gaming Control Board chairman who has a depth of knowledge about tax systems.

His association's ad campaign comes as the Nevada State Education Association is readying a petition to raise teacher salaries by increasing gaming taxes. A separate, more radical proposal would raise the state's tax on gaming revenue from 6.75 percent to about 20 percent, eliminating residential property taxes while raising additional tax money for schools, transportation and other needs.

Bible says the public service campaign was in the works well before these initiatives were known and grew out of polls conducted early this year in Las Vegas and Reno.

The polls found that the public wasn't aware of the extent to which gaming taxes pay for basic services.

Resort Association lobbying and marketing firm R&R Partners did the polling to assess reaction to the industry's advertising to commemorate 75 years of legalized gambling.

The association has run few commercials in previous years. The recent slew of ads, besides positioning the industry in advance of the 2009 Legislature, is the latest attempt by the behind-the-scenes lobbying group to become a more public and accessible source of information on the gaming industry.

That desired role is evident on the group's new Web site, www.bettingonnevada.org, which contains backup material showing that contributions from the gaming industry - $838 million in fiscal 2006 - account for 48 percent of the tax revenue collected in the state 's general fund.

The industry is expected to contribute about $1 billion, or 35 percent, of the nearly $3 billion K-12 education funding in fiscal 2007. The biggest percentage of the state budget, education funding is the most dramatic example of gaming dollars at work and is one of the easier figures to calculate, which is why those ads are running first, Bible said.

Future ads are expected to focus on how the industry supports the economy through employment and health insurance for workers.

Efforts to defend against gaming tax increases, although shaping up more aggressively this time around, are nothing new for the association.

Various groups have proposed significant gaming tax increases over the years, arguing that the gaming tax rate in other states is much higher and that the industry is rich and therefore can afford incremental increases.

The association argues that Nevada's tax rate can't be compared with other states', where companies are willing to pay much higher taxes as a function of a monopolistic system in which states limit competition by allowing a limited number of casinos. By comparison, Nevada offers the only true free-market system for commercial gambling operations, making it one of the world's most competitive, volume-driven gaming markets.

Instead, the association has pushed for a broad-based business tax that would have other businesses contribute a greater share to the tax base. The recent payroll tax has pulled in nongaming businesses somewhat , although it still falls short of the nongaming tax revenue that would have been raised by the gross receipts tax the association pushed in 2003.

Although self-serving for the industry, the concept of a broad-based business tax is supported by economists, who generally warn against tax structures that are dependent on any single industry.

Besides the television ads, the campaign includes radio spots, Internet banner ads and stickers that appear in the school supply aisles of grocery stores and drugstores.

Here's the challenge facing the industry: It hopes harried parents of school-age children will notice the ads underfoot or click on the group's Web site for more information, taking the time to study the economic minutiae of gaming taxes.

More likely, the public will watch as billions of dollars' worth of new resorts take shape on the Strip - the strongest and most visible suggestion that the industry can afford at least some small increase in gaming taxes.

Even small gaming taxes can add up. And with employment growth in nongaming businesses surpassing that of the gaming industry, casinos fear they will end up shouldering an even more disproportionate share of the tax burden in future years.