Greed, or maybe frustration with soaring state budgets, is becoming more prominent in some states where gaming is currently taking place or where it is being contemplated and that has the American Gaming Association (AGA) issuing dire warnings.
"The idea that (government) can tax itself into prosperity is one of the cruelest delusions which has ever befuddled the human mind," is a quote from Winston Churchill that Frank Fahrenkopf, president and CEO of the AGA repeated last week. He was addressing the attendees at the New York Gaming Summit.
He cited concerns in locales such as Illinois, where the governor recently suggested increasing all gaming taxes including the top rate from 50% to 70%; New Jersey, where that state’s governor has suggested a tax rate boost for casinos from 8% to 10%, and in other states such as Missouri, Iowa and Nevada.
Fahrenkopf noted that New York state lawmakers have passed a racetrack slots bill that puts 60% of revenues in the state’s coffers while leaving the tracks with 25% after requiring that they pay a $350 million licensing fee. He said other states where successful racino programs have been undertaken have permitted tracks to retain as much as 60% of the revenues.
New York politicians, he said, are among the most deluded in their attempt to wring too much from the gaming industry. He advised the gathering that the industry needed to "do a better job of providing a basic education on the fundamental economics of our business."
"Stakeholders in any business," Fahrenkopf concluded, "have a right to expect a fair return on investment."
Under a reasonable approach to the division of revenues, said Billy Nader, senior vice president of the New York Racing Association, the proposed 4,500 video lottery machines proposed for Aqueduct racetrack would yield $400 million a year for public education. The key, he said, is getting lawmakers to modify the existing legislation in such a way as to encourage investment.