Smart operators would boost casino tax
Now that the Big Y2K Scare has been revealed for what it was – an over-hyped hoax designed to frighten us into buying thousands of dollars worth of unneeded survival gear and supplies – we can turn our attention to more serious issues facing our state in the new millennium. High on my list of 21st century concerns is the future of Nevada’s multi-billion-dollar legal gambling industry.
Last January I wrote a column asking whether newly inaugurated Gov. Kenny Guinn would have the political courage to confront the casino interests who financed his $5 million campaign for the governorship by advocating a minimal increase in gambling taxes to offset a $130 million state budget shortfall. After almost a year in office, we now know his answer to our question: A resounding “No.”
While Gov. Guinn and the 1999 Nevada Legislature recognized the need for additional revenues to offset the deficit and to pay for better schools, gambling taxes were off the table.
When no one had the courage to face this taboo subject, Sen. Joe Neal, D-N. Las Vegas, demagogued the issue with an ill-considered proposal to raise taxes on the largest casinos by 32 percent, from 6.25 percent on “gross handle” – the total amount wagered – to 8.25 percent. And then, frustrated because his plan was quickly killed in committee, Neal threatened to place an initiative petition on the 2000 ballot that would hike the top gambling tax rate to 11 or 12 percent of the gross, which could bankrupt some large casinos.
I keep hearing that Las Vegas casino mogul Steve Wynn is a marketing and public relations genius, but if that’s true, he and his allies would have long since offered up one-fourth to one-half of one percent of their winnings to finance education in the Silver State. This would represent great PR for the casinos and guarantee defeat for Senator Neal’s dangerous initiative petition.
And by endorsing a much more modest casino tax increase, power brokers like Wynn, Gov. Guinn, Senate Finance Committee Chairman Bill Raggio, R-Reno, and Nevada Resort Association president Bill Bible (the former Gaming Control Board chairman) would demonstrate the leadership that is sorely lacking on this critical issue.
The budget situation hasn’t changed much since last year. Just last month Guinn’s former chief of staff, Pete Ernaut (who bailed out to join George W. Bush’s presidential campaign), told state lawmakers that “Nevada is on the precipice of some very, very difficult decisions.” He said preliminary reviews of funding needs in two key areas – public education and Medicaid – reveal a distressing financial picture.
In Clark County alone, Ernaut said, $650 million to $720 million in additional state funding will be needed to educate 135,000 new students over the next few years. And he added that the state must find an additional $40 million to $50 million per year to meet the Medicaid requirements of Nevada’s rapidly growing senior citizen population.
At the same time, casinos were reporting record winnings. In October, statewide gaming winnings rose more than 6 percent compared to the same month of 1998. And winnings were up nearly 16 percent to $1.5 billion in Clark County (Las Vegas and vicinity) between July and October 1999. But casino owners still refuse to consider any gambling tax increase, no matter how small.
So here’s an opportunity for our alleged “leaders” to demonstrate political courage on an issue vital to the future of our state. But will they? Don’t hold your breath.
Meanwhile, our out-of-state competition is hitting some rough weather. Legal gambling, mostly video poker, is on a losing streak in the Bible Belt and in neighboring California, Gov. Gray Davis and 60 Indian tribes continue to squabble over how many slot machines, and what kinds, are authorized under an agreement they signed last September. Davis estimated the potential number of Nevada-type slots at about 43,000 but the Legislative Analyst’s Office said the number would be closer to 113,000. And Indian casino operators, including some Nevada companies, continue to attempt to avoid state gambling controls and taxes. That’s how it is with unregulated gambling.
Speaking of unregulated gambling, I was pleased when California courts ruled that Internet gambling debts are legally uncollectible. They decided in favor of a woman who ran up $115,000 worth of credit card debt with Internet cyber-casinos, most of which are based in the carefree Caribbean. Providian National Bank of San Francisco, one of the nation’s largest Visa card issuers, has already said that it will no longer process gambling transactions for its 11 million customers. If enough banks follow suit, that could effectively kill Internet gambling.
And if the banks don’t kill it, Congress probably will. Nevada senators Richard Bryan and Harry Reid, among others, are leading the fight to ban Internet gambling. On the other hand, suckers who are stupid enough to give their credit card numbers to cyber-casinos deserve what they get. Nothing! Betting on unregulated gambling is like throwing money down a rat hole. Or betting on the lottery with odds of several million to one.
I’ll end on that happy note. If Nevada political leaders and casino owners have half a brain, they’ll preempt the Joe Neal gambling tax petition by offering up a small tax increase to finance education and other popular state programs. I’d call it a no-brainer. But if they don’t, they’ll reap the consequences of their short-sighted selfishness. Have a nice millennium.
Guy W. Farmer, a semi-retired journalist and former U.S. diplomat, resides in Carson City.