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Friday, Oct. 7, 2011 | 2 a.m.
For decades, Nevada held a near monopoly on legalized gambling, other states put off by the social stigma and moral qualms surrounding the industry. But in their search for more revenue, nearly every state in the country, and many foreign nations, have come to embrace gambling as a way to pay for schools, universities, transportation and public safety.
These gaming latecomers have lured potential customers away from Nevada, and are now surpassing the Silver State in the tax dollars they generate for the state and local governments that sanctioned them.
Consider these recent figures:
• Indiana and Pennsylvania both collected more in direct gambling taxes from casinos in 2010 than Nevada, according to the American Gaming Association.
• Including money raised through lotteries — the Nevada resort industry has successfully fought creation of a state lottery since at least 1975 — 11 states brought in more gambling-related tax revenue than Nevada, according to numbers compiled by the Rockefeller Institute of Government.
• And Macau — the Chinese province that has exploded with financing and guidance of Las Vegas companies — has surpassed Nevada as the “gaming capital of the world” and with that — a fact almost unremarked upon — in the amount its government collects in taxes from the industry.
The government there charged an average tax rate of 39 percent on gaming revenue, and collected almost 10 times the gambling taxes paid to Nevada in 2010 — $8.1 billion, compared with the Silver State’s $856 million last year. Each month this year Macau has collected $1 billion in gambling taxes, and the government has only been able to spend half of what it collected, according to Reuters columnist David Cay Johnston.
•••
Nevada charges a 6.75 percent tax on gross gaming win, the amount casinos keep after paying customers’ winnings.
The tax rate is the lowest in the nation and has seen little change as legal gambling has spread, starting in Atlantic City in 1977, then to riverboats, tribal gaming, and, in the past decade, to Asia and Eastern states looking to bolster tax revenue.
While the amount of money other governments are collecting from gambling grows, no Nevada elected official or advocacy group has proposed a gaming tax increase. (No such proposal has been considered by the Legislature since 2003, when the gaming industry agreed to a half-percent increase as part of a broader tax package.)
The Nevada Resort Association, the lobbying and advocacy collective for the largest industry players, says that with Nevada’s share of gaming rapidly eroding, now is not the time to consider raising the tax. The casino industry might pay a lower tax rate here than anywhere else in the country, and perhaps the world, but it still pays for a disproportionate share of the state’s budget, the industry argues.
Nevada Resort Association lobbyist Billy Vassiliadis said comparing gaming revenue with other states is “silly.” Nevada’s tourism industry employs so many people, and now has expanded beyond gaming, that “just to look at the gaming piece and ignore the rest would be irresponsible.”
“I don’t care who you compare us to. Nevada’s got a great deal,” he said.
When factoring in sales tax, property tax, room, liquor, tobacco and other nongaming taxes collected by the tourism and hospitality industry, it generated about $1.26 billion for the state in 2010. That equals 46 percent of the state’s general fund, according to the association.
Virginia Valentine, president of the Nevada Resort Association and a former Clark County manager, said increasing gaming’s payments to government would leave less for “investment for renovations and innovations.”
“I think you have to be very careful with the consequences of how it affects the state’s largest industry,” she said. “And before you look there, look long-term at broadening the tax base.”
Indeed, the casino industry has advocated spreading the tax burden to other Nevada businesses, supporting in 2011 a “margin tax” on businesses’ gross receipts and a sales tax on services.
But former state Sen. Bill Raggio, R-Reno, who retired before the 2011 session after over 30 years in the Legislature, said the question of whether gaming contributes enough to state coffers deserves consideration.
“Over time, there’s no question gaming in Nevada has had an advantage compared to how revenue is collected across the world, and other states,” said Raggio, a partner at the law firm Jones Vargas.
But Nevada lawmakers who believe more money is needed for government services, like education, warn against singling out Nevada gambling.
Assemblyman Tick Segerblom, D-Las Vegas, said that while figures from other states make it “clear that gaming can afford to pay more,” Nevada first needs to broaden the list of companies funding government services.
“The problem is nobody else pays anything,” Segerblom said. “Until we can make corporations pay something, it’s hard to ask gaming to pay more.”
Gaming, which is heavily unionized, has provided its employees with a living wage that has allowed the workforce to raise families and buy homes. Yet gaming’s dominance has also scared off some high-paying businesses.
“We have businesses that are not coming here that other states have,” Segerblom said. “We have buses driving around town with naked women. ‘What happens here, stays here,’ has gone around the world. What high-tech company is going to move here? It’s not going to happen.”
•••
Comparisons between Nevada’s rake and the rest of the world’s are likely to continue with the exporting of our state’s No. 1 product. Major gambling operations have opened in Singapore and other Asian countries, while states like Massachusetts and Florida are consider offering concessions to “Las Vegas-style” resorts.
Steve Wynn declared in May that his was a Chinese company with a Las Vegas presence, and floated the possibility of moving its headquarters to Macau.
(Wynn representatives did not respond to a request for comment. MGM Resorts International and Las Vegas Sands, the other Nevada companies with major footprints in Macau, also did not respond to requests for comment.)
With Nevada companies so eager to do business in a locale that charges them more than six times the tax rate as here, some wonder if the state has gotten the best deal it could from its homegrown industry?
Guy Rocha, a historian and former state archivist, said, “I’m of the opinion that Nevada could’ve done better, or should’ve done better, but didn’t do better.” But with Nevada’s loss of its veritable monopoly on legal gambling, the window of opportunity has closed, Rocha said.
Nevada’s political history is notable for the small handful of lawmakers who chose to take on the industry, despite polls consistently showing popular support for raising the tax on gambling.
No one in Nevada “wants to kill the golden goose,” Rocha said. But, he wondered, “what’s wrong with the boy asking for a little more gruel?”
Nevada legalized gambling in 1931, and the gaming industry, as it came to be known, has with few exceptions had a close relationship with policymakers. Elected leaders, at the urging of the casinos, have kept Nevada’s tax rate low. The rate has only increased marginally since 1955, when Gov. Charles Russell raised it 2 1/2 points, to 5 1/2 percent for the largest casinos.
Today, it sits at 6 3/4 percent.
In Massachusetts, the tax rate being considered for the rights to one of three resort-style casinos is 25 percent.
The gaming industry’s role in Nevada politics has sometimes been subtle, sometimes not. In decades past, the industry ranked lawmakers with a color-coded system for friendly, not friendly, and neutral. It has quashed legislation that would have clarified state law on whether it should be paying sales tax on meals comped to customers and employees. (Nevada casinos are still seeking to recoup hundreds of millions of dollars in taxes they paid over the years on those comped meals.)
The most striking example of the industry’s influence in recent years came in February 2010, when lawmakers struggled to close a massive budget deficit and considered raising the fees that gaming pays to cover the cost of regulating the industry. Vassiliadis, the gaming lobbyist, went before the special session of the state Senate and said: “I’m sorry to say, this year, for the first time, we just can’t help.”
The message was clear: Nevada can’t look to gaming for help until the industry says so.
Billy Vassiliadis should compare his $1.26 billion estimate (that includes non-gaming taxes) to Macau's tax revenues with the same inclusions.
Hey Gov want to save the great state, go to a 10% gaming tax, The Big boy is paying 30% and more in taxes in other states, paying 400milion for gaming lic.Tell Gary Lovechecks his Caesars Brand will have to buck up and help the state, the new tax will be a good reason for Gary to BK cant pay the 22.5 billion in debt he has now, Get rid of the Cancer casino company now,or it will happen in two years TAKE THE MONEY GOV. Taxes and death . ps casinos do have a lic. to steel
These are the first grains of the landslide to come.
Billionaire investor Kirk Kerkorian and his Tracinda Corporation were the majority shareholders of MGM Mirage until May 2009. (Kirk and Tracinda are headquartered in Los Angeles. His Lincy Foundation gave approximately $200 million to the University of California while the Univ of Nevada got the equivalent of a kiss.)
Following a one-billion-dollar stock offering by MGM Mirage, Tracinda's shares were diluted from 53.8 percent to 39 percent. In May 2010, hedge fund Paulson & Co acquired 40 million shares (about 9%) to become MGM Resorts's second-largest shareholder. So a hedge fund manager controlsa MGM - Mirage.
As with the MGM - Mirage, many of today's owners of Nevada's large casinos are not Nevada residents. Their objective is to pull as much money out of Nevada as possible and live the good life somewhere else.
Vist the Wynn Macau (www.wynnmacau.com) and you'll see where Steve's heart is moving.
I have lived here for 22 years. I've watched the growth of casino gambling for all that time, even though I am not a gambler. I have long wondered why casino owners and operators in Louisiana, Mississippi, Illinois, Pennsylvania and all the other states that now legalize gambling pay significantly more in casino taxes than do casino owners and operators in Nevada. I have long wondered why Las Vegas residents drive 42 miles each week to Primm to play the California Lottery and send their money to California. Perhaps this article will not be ignored by local media and a reasonable discussion about a reasonable tax rate for casinos can follow. Perhaps we can even get the other local newspaper to participate in the discussion, along with the television commentators.
Most of the Casino Jobs are now low paying service sector jobs with fewer and fewer benefits. So now the Taxpayer will be subsidizing these workers with Health Care and other Social Services so these Billion Dollar Corporations can return more money to their low tax paying greedy owners. All this while the politicians carry their begging cup for campaign contributions. It's time to Tax Billionaires (at the minimum) at the same Tax Rate as their staffs. Its time to tax casinos and mining
at rates closer to the prevailing world tax rate.
If any Casino has a problem with taxes - let them move to China, if the grass is so much greener.
Steve Wynn should put his Vegas properties up for sale. Wynn prefers the Socialist People's Republic of China. Quite odd that he prefers a socialist government when he's complained about Obama being socialist. Strange that he complains about taxes, but endorses China's 39% tax rate. Why does he prefer China? Employees are slaves and make the equivalent of $50 per month.
Another little known fact is China's employment ministry telling the casinos how many people they MUST hire. Can you imagine Wynn's reaction if that happened in the USA?
If an increase in gaming taxes was proposed in a way that cuts other taxes (like Pennsylvania cutting property taxes) it would easily pass amongst residents.
a few years into our 'lost decade', life goes on...184 gambling establishments in California, 125 in Washington. The children of today will not be coming to Nevada for gambling. The Washoe county of today is the Clark county of tomorrow. Big Nevada casinos started moving their $ to Macau when the economy crashed. The $ won't be coming back. Meanwhile Nevada spins in a whirlwind, seemingly helpless, hopeless. I left 2 years ago, & i don't foresee ever going back...sad, but a man must go where he sees his future, not his past.
Just listened to a KNPR show about how Macua is good for Las Vegas and it made me wonder if the people who live, work and raise their kids here are as short sighted as the people who report about living here. I quote"If your not number one then you are number two". Soon the largest gaming conventions will move to Asia, the largest boxing events and the best entertainment will follow. Then we will be the dim wit politician and intellectually lazy citizenry capital of the world. WHAT HAPPENS HERE BURIED US
Yet another smoke screen for the gold mining corporations.
You can gamble anywhere, but you cannot get gold out of the ground anywhere.
Anyone remember The Goose That Laid the Golden Eggs? This is one of Aesop's fables and even a dummy 2,500 years ago knew that it was true.
Attention Las Vegas residents.The casino industry is in charge and calls all of the shots in Nevada.Politicians gave them that power years ago and sometimes their payback is something as small as some free food or a comp to a show. These are our elected officials.
Well most of the casinoes in America are owned by Vegas companies or casinoes pay them for management and/or using their brand name. They need to have a least a 10% tax rate and they need to legalize the lottery. "A lottery is a voluntary tax on dreamers" The casinoes don't want a lottery because they see thru greed tunnel vision. Actually people who win the lottery would take that money and spend lots of it in your casino's.
Taxes are low because the barriers to entry are low. In the high gaming tax states, operators have one of a limited amount of licenses. In the three states were there are no limits on licenses--Nevada, NJ and Mississippi--gaming taxes are low. Casino owners assume more risk in those places so they wouldn't build casinos there unless there were low taxes to compensate for the risk. Too bad your writer doesn't mention this simple fact.
Ms. Johnson,
The property tax rate in the State of Pennsylvania is more then double what it is here in Nevada.
Our Casino industry is currently providing 46% of all taxes paid into the state budget. No other state or gaming area can say the same thing.
Be careful what you wish for. There is always a price to pay for others paying your way in life.
6.75% in Nevada vs. 25% in Massachusetts. Seems like we've got a lot of room to negotiate here. While I don't like it sometimes my employer asks me to contribute more to expenses either in larger premiums to my insurance, or eliminated benefits. In the current economic environment what we're talking about is a consesion from the largest portion of the tax base for the state of Nevada. And YES mining is stripping our resources and they should contribute more too. But they simply can't raise enough money through DMV fees from everybody, and raising the sales tax would just send everyone back to California to shop.
So we would be foolish to not look at the big sources who no matter which way you look at it do seem to get a deal in Nevada.
If Nevada would open its doors and diversify our economy, then perhaps gaming would not have to pay the lions share of taxes.
I have a nightmare every night. I see Nevada in 5 years. The higher education system is destroyed, as well as K-12. The K-12 classrooms are filled with 50+ students because CCSD can't hire teachers because no teacher will move to Nevada, and the qualified substitute teachers aren't enough to fill all the vacancies. Schools are closed and standing empty. Crime rates are jumping and the visitation to the strip has dropped to record low levels. No high tech businesses have moved to Nevada and in fact, businesses are leaving because they can't find qualified workers and anybody who is qualified won't come to Nevada. Unemployment in Nevada is triple the national rate, which has dropped as the recovery has taken hold. All along the strip, casinos are closing towers. The long shuttered construction projects are still waiting for completion, and more and more strip malls are empty of stores. The foreclosure rate has doubled as more and more people lose jobs or just walk away. In some blocks, the number of vacant homes outnumber the occupied ones. The population of Las Vegas has dropped by half as people leave to search for jobs. Is it a nightmare or will it become reality? I am afraid that we are well on our way to finding out, and that makes me terrified for this is my home, my children's home and my grandchildren's home. Is this the future you want for your state and city? Because if it is, you are well on your way to getting it, be careful what you wish for, you may get it.
In 2009, the mining industry had gross revenue of 5.8 BILLION. After deductions, including some that may have not complied with state law, the net profit was 1.8 BILLION. The tax paid to the state of Nevada was 48.6 MILLION. The state of Alaska collects a royalty of 25% on oil. Alaska currently has a 3 BILLION surplus in the state budget, and Exxon just reported record 1st quarter profits of over 10 BILLION, so the royalty payment doesn't seem to be causing the oil companies financial problems. The Barrack annual report has just been published, and shows record profits and dividends above the record levels of 2009. This is a link to the report, you may want to look closely at pages 2, 3, and 4. http://media.lasvegassun.com/media/pdfs/...... Net earnings and profits have jumped dramatically between 2009 and 2010. Shareholders return on investment jumped from 12% in 2009 to 19% in 2010.
In 2010, the Cortez Hill mine in Nevada produced 1.14 MILLION ounces (31.6 TONS) of gold at a cost of $312 per ounce. In the first quarter of 2011, the mine produced 366000 ounces (11.4 TONS) at a cost of $220 per ounce. Nevada is the SECOND largest producer of gold in the world. Gold is selling for approximately $1800 per ounce. Assuming a profit of $1000 per ounce for the first quarter, that is $366,000,000 in profits which may produce $25,000,000 in taxes for Nevada.
All of the large businesses in Nevada like Costco, Wal-Mart, Target, Smiths, Chase, B of A, etc pay NO state taxes on income generated in Nevada. The only taxes paid are a payroll tax and unemployment.
In a new report released today, "Southern Nevada's workforce isn't very well educated, the cost of living here is relatively high, government budget cuts are going to limit growth and Las Vegas is often perceived to be "just another gambling and entertainment town." Depending on one industy to provide the economic support for the entire state is fatal. Action must be take to solve the revenue problems and fix the tax structure. Only then, will it be possible to truely diversify the Nevada economy. http://www.vegasinc.com/news/2011/oct/07...
Sad commentary that "this monopoly" that our legislators and gaming executives created is falling apart; or, has fallen apart. Increase the gaming tax, increase the taxes the miners pay, but most importantly establish a State Lottery - don't listen to the gaming industry when they say it will hurt gaming. Nevadans are now driving to the state lines to purchase lottery tickets. Keep the money in Nevada, and use the money for education, and the senior programs. Seems obvious! How much is being spent by all of us buying California lottery tickets.
<<Attention Las Vegas residents.The casino industry is in charge and calls all of the shots in Nevada.Politicians gave them that power years ago and sometimes their payback is something as small as some free food or a comp to a show. These are our elected officials>>
You're not telling anyone anything new. Everyone who lives in Vegas knows the politicians are in bed with the casinos. And have been for years and will continue that stance for years to come.
More fuel for the Occupation Movement.
Nevadans are plain stupid for keeping gaming and mining taxes so low. Plain stupid.
+++++
Is it really all that unreasonable to expect the gaming companies to pay at least as much in taxes as taxpayers pay in sales tax.
Sales tax in Nevada ranges from 6.85% to 8.10%.
The highest taxes on gross revenues for a nonrestrcited gaming license are 6.75%.
Gaming companies with nonrestricted licenses are saddled with a whole $330 a year in taxes/fees for a slot machine and 6.75% of revenue.
Meanwhile, taxpayers are stuck trying to make ends meet while paying sales taxes at 6.85% to 8.10%.
Would the average taxpayer like to get a "break" like the gaming companies, or what?
=========
Monthly Percentage Fee (Nonrestricted Gaming License)
(NRS 463.370) based on gross gaming revenue - payable on or before the 24th day of each month covering the preceding calendar month at the following rates.
3.5% of the first $50,000 during the month, plus
4.5% of the next $84,000 plus
6.75% of revenue exceeding $134,000.
Slot Machines:
Annual Tax (Nonrestricted Gaming License)
(NRS 463.385) $250.00 per machine, payable in advance; computed on a prorated basis.
Slot Machines:
Quarterly License Fee (Nonrestricted Gaming License)
(NRS 463.375) $20.00 per machine, payable in advance; no proration.
Lynn, please check out this link in reference to PA Taxes.
http://www.taxrates.cc/html/07l-property...