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Question of the Day - 22 May 2020

Q:

How much tax revenue has Nevada lost due to casinos closing for COVID-19?

A:

It’s a moving target, because we don’t yet know when the casinos are going to reopen. They’ve been closed since March 17 and could reopen as soon as tomorrow or perhaps as late as the end of June; it's different for the various casino companies. Some might not reopen at all. The Lakeside at Stateline (Lake Tahoe) was an early casualty and the Rampart in Summerlin seems to be heading in that direction. 

But to give you some idea of how much money we’re talking about, gaming tax collections for April 2020 will be $0. In Fiscal Year 2019 it was $919.5 million for the entire year. That translates to $2.5 million per day, according to Nevada Gaming Control Board Senior Research Analyst Michael Lawton. So last month alone represents a $90 million hole in Fiscal Year 2020. During the truncated March, casinos in the state generated $37.1 million in gaming taxes for the state, a 53.6% drop-off from the previous year, when just under $80 million was collected.

The lack of gaming taxes isn't the only drain. In FY19, Nevada collected $105.6 million in entertainment taxes, $10.4 million in non-restricted-slot taxes, $8.3 million in restricted-slot taxes, and $36.4 million in miscellaneous gaming levies, all part of the $919.5 million overall haul. The vast majority of that ($875.5 million) went to the General Fund, with the remainder dedicated to education.

Needless to say, those cupboards are going to be a good deal barer in the next state budget. And to underscore the importance of Las Vegas, 86% of gaming-tax dollars derive from Clark County. So as Vegas goes, so goes Nevada — and right now it’s not going at all well.

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Comments

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  • David May-22-2020
    Forgot a few taxes/fees/surcharges
    Don't forget about the car rental taxes, taxi taxes, the reduction in tax from food, beverage and hotel, gasoline taxes (people driving less) and the upcoming change to the unemployment tax rates and base (for employers (and especially for employers who laid off staff)).  In Illinois commercial property owners can even protest their real property tax based on sales/income earned from the prior year.  Yea it's real ugly and based on some taxes paid and calculated in arrears, the full extent won't be known for a while.

  • rokgpsman May-22-2020
    Lost revenue
    All 50 states are losing millions of dollars due to businesses being closed or operating at lower volume. That means quarterly income tax payments are way down. People are laid off or working less, they have less income to spend and they will be paying less personal income tax to the state. So money to the states for various things like sales tax, hunting/fishing/camping, state parks etc will be lots lower. Just about every economic thing you can think of has been affected badly. Places that depend on tourism like Las Vegas, Hawaii, Florida etc are doing much less business, which means a lot less revenue for every state. But their budgets still expect the same amount of money as last year so they can pay for all the programs and the state employee's salaries with benefits. There will be bigtime pressure for states to get more money by increasing property tax, income tax, sales tax, drivers license fees, license plate fees, gasoline tax and other things. It will all get considered.

  • jeepbeer May-22-2020
    departure tax
    some countries have a departure tax, they tax you when you leave.  "Leaving Las Vegas" tax next?  and what if you didn't think ahead and keep enough to pay the tax?  that could be a lot dishes needing washing.

  • Ray May-22-2020
    slow recovery
    As Rok said, all 50 states are losing, but the residual affect of people being out of work and struggling, is that there is much less spendable income available, too. And if anyone, (state, city, or business) tries to recover the money too fast by raising prices and/or taxes, they may lose even more clientele. The only real solution is to slowly recultivate the business that was lost, write off what was missed, and rebuild. The reason they got away with all the excess fees was because the economy was good and people just held their nose and grudgingly accepted it. That may not happen when the economy isn't so good, and money is tighter.

  • Kevin Lewis May-22-2020
    But...
    How much more money is in people's pockets because they haven't been able to throw it away in the casinos?

  • rokgpsman May-23-2020
    Extra money
    Well, the government did send $1200 to millions of people, and a good portion of them are retired so they aren't out of work and struggling to get by. A lot of my friends see that $1200 as "extra" money. Some people may just need an incentive to visit Las Vegas, like no resort or parking fees, good room deals, safe feeling about getting on an airplane, etc. There's an opportunity for Vegas to market itself, if the corporate idiots will just get out of the way and do things like were done in the 1980's and earlier. Make people "feel" like they are valued and getting a good deal for their vacation. Little giveaways go a long ways.