This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

States Weigh Gaming Tax Hikes

Few obstacles stand in the way of casino companies' recent roll, but one -- the specter of higher state gaming taxes -- can appear out of nowhere and hammer the stocks.

The market received a reminder of that recently, when shares of gaming companies with Louisiana operations sold off on news the state's governor was looking into raising gaming taxes to fund pay raises for teachers.

The potential Louisiana tax hikes are still only in the discussion stage, but casino investors have seen enough gaming tax increases in recent years to know they shouldn't underestimate state government efforts to raise so-called sin taxes. With many states struggling to fill fiscal holes, governments may find dipping into casino tills all too tempting.

"Anytime there's a tight budget in a state that has gaming, legislators commonly look to raise the casino taxes," said Bradford Smith, who heads International Gaming Consultant Services and is the former head of the New Jersey Casino Control Commission. "A lot of them have rates that are already high. There's always that pressure on the gaming industry."

Casinos already contribute significant sums to government coffers. In 2003, gaming companies in the 11 states with commercial casinos paid more than $4.3 billion in state and local taxes, out of gross revenue of more than $27 billion, according to the American Gaming Association, an industry group. (The commercial-casino tally excludes Native American casinos, which the AGA considers government-run businesses.)

The special gaming taxes casinos pay come on top of normal business taxes.

Lawmakers in other states are eyeing increases. John Mayo, a Democratic representative in Mississippi's legislature, last month introduced a bill that would raise taxes on casinos by 1% and increase the tax on winnings of more than $1,200 to 5% from 3%, according to local media reports. Even so, Mayo has acknowledged the bill doesn't stand a good chance of passing; Governor Haley Barbour has threatened to veto any legislation that would increase taxes.
1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
MBG $27.10 0.00%
BYD $18.68 0.24%
CZR $6.76 -1.60%
ISLE $14.55 0.00%
AAPL $94.30 -0.92%


Chart of I:DJI
DOW 17,651.26 -99.65 -0.56%
S&P 500 2,051.12 -12.25 -0.59%
NASDAQ 4,725.6390 -37.5850 -0.79%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs