Nevada Casinos Face Push For Gambling Tax Increase

There is a widespread movement across Nevada to raise the casino taxes to provide the state revenue.

Las Vegas casinos have enjoyed many advantages over their gambling brethren for years. Even as the exclusivity of Vegas gambling has declined as states pass new laws allowing forms of gaming, still Vegas generally has less restriction on both amounts and types of play available. Further, Las Vegas has always reaped the benefits of relatively low tax structures; while around the world casinos and gambling are taxed at exorbitant rates, Nevada casinos pay 6.75% of revenue. However, this may be about to change.

There is a widespread movement across Nevada to raise the casino taxes to provide the state revenue for education, infrastructure, and other services as the state's population continues to grow. The Nevada Resort Association is scurrying to prevent initiatives from reaching the ballot, as polls show voters likely to pass tax hikes.

The Nevada State Education Association is currently circulating a petition to raise the tax three percetage points for school spending. Recently, a judge struck down two petitions authored by attorney Kermit Watters which would have effectively tripled the revenue tax. Waters is expected to appeal; in any case, he may rewrite the petitions to avoid the conflicts and language which the judge found unlawful.

Nevada currently has no corporate or income tax, and Governor Jim Gibbons was elected after campaigning on a platform which promised the citizens no new taxes.

Atlantic City casinos pay 9.25%, while Mississippi casinos pay 24%, and Pennsylvania over half. Florida's Class III slot racinos pay 50%. Even overseas, Macau casinos are taxed at a 40% rate.

Nevada casinos are taxed at a lower rate because of unlimited competition. Casinos in other areas pay higher rates as much for the exclusive gaming rights as the license.

For the casino corporations, the tax movement couldn't come at a worse time. With revenues largely stagnant other than high-roller play, and billions of dollars committed to new casinos and resort projects along the Strip and elsewhere, the casinos find themselves short on cash and caught in the credit crunch, as financing for the expansion projects becomes far more difficult to find.

Still, Nevada casinos have to see that the tax reform may be inevitable. Perhaps the best solution would be a proactive one, reaching an agreement with the state and lawmakers to set a moderately higher new tax rate while guaranteeing not to revisit the rate for a pariod of time.