|It’s a familiar story: when the budget trough runs dry, treasury officials tend to look towards casinos as an easy cash cow. A Nevada tax panel is looking at ways to solve the states’ budget deficit, which could mean an increase in casino tax, despite falling gambling revenues in the state.|
“We believe operators will have to continue to fight potentially higher gaming taxes as lawmakers scramble to plug budget gaps,' Jason Ader, a casino analyst for Bear, Stearns & Co., said in an industry research note last week.
Tax on gambling revenues looks likely to increase from the 6.25% rate, but casinos are arguing for a wider-ranging tax increase to include all Nevada businesses. The argument is that non-gambling industries have benefited from the state’s growth and must pay their fair share of taxes. Others outside the industry say that the casinos can afford higher taxes and are responsible for the increased needs for services and tax dollars.
Analyst Ader recommended against higher casino taxes, saying that casinos have become easy targets for states facing budget deficits. Ader noted how a casino tax hike in Illinois 'sent a chill through the gaming industry' sending stock prices tumbling when the top-tier tax rate on casino revenues was raised from 35% to 50% in June this year.
According to Gov. Kenny Guinn, Nevada’s budget deficit is 'getting worse by the day 'and will reach $275 million by next year. The tax panel’s report, due in November, will be reviewed during the 2003 legislative session.