What will be left after taxes?

The primary purpose of the new casinos to be built in New York is to raise revenue for the State and its subdivisions.  The mechanism for doing so is by taxing revenue.  While it is very difficult to get “apples-to-apples” figures on state tax rates on casinos, the sketchy information available suggests that New York’s tax will — not surprisingly — be among the nation’s highest, at least on slot machines in the capital district, at 45%. (for rates in other states, see the compilation  at http://www.americangaming.org/sites/default/files/uploads/docs/aga_sos2013_fnl.pdf) .

The rate of tax (as well as other costs of doing business) will determine what the casinos have left to work with to offer players comps and games that are competitive with other gaming venues.  I see the primary opportunity afforded to casinos in New York the repatriation of dollars that New Yorkers presently are spending elsewhere, particularly Atlantic City and southeastern Connecticut, as well as, more recently, Pennsylvania.  If a confiscatory tax rate precludes casinos in New York from offering reasonable comps and good games, will gamblers who play in other states return?

While there certainly are many innumerate gamblers who will play anything, particularly if it is convenient (how else can you explain Quick Draw?), inferior casinos will eventually appear unpalatable to most gamblers who, even if unable to analyze the return of the games, will realize that their money is disappearing faster — and they are getting less in the form of comps — than at the casino at which they used to gamble.  The idea that New York casinos can flourish under a high tax rate ignores the competitive environment in which casinos operate today.  While it once may have been true that you could make a living offering a lousy game if it was the only game in town, I’m not sure there are enough suckers with enough money to sustain a place offering lousy games when better ones are a reasonably short drive away.

And speaking of taxes, has the state attempted to project how much gambling money the casinos will divert from existing gambling venues in the state, such as the lottery and horse racing?  Any proceeds the State expects to realize from taxes on casino revenue should be netted against the projected decrease in tax revenue from those other gambling sources before the state starts making spending promises based on the projected gross casino tax revenues.

 

 

 

Advertisements

One Response to What will be left after taxes?

  1. […] already have expressed concern on this blog that the high taxes New York will impose on its casinos might inhibit their ability to […]

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: