Taxation at Casinos and Gambling

Stream, Christopher., Thompson, William. and Myers, Nathan. "Casino Taxation Rates: Politics as Unusual" Paper presented at the annual meeting of the Southern Political Science Association, Hotel InterContinental, New Orleans, LA, Jan 03, 2007 http://www.allacademic.com/meta/p141982_index.html

Abstract: Taxes matter to business. They affect location decisions, job creation and retention, international competitiveness, and the long-term health of a state’s economy. But relatively little attention has been paid to the taxes on casinos and legalized gambling businesses. Research on gambling and casinos has largely focused on the adoption of such policy innovations in the states.

Less attention has been paid to the taxes rates on these types of firms. Among the states, the gaming tax rates vary considerably. Some states have adopted tax rates in the low teens while others collect close to 50 percent of a casino’s profits. It appears that while states with legalized gambling mimic each other in terms of the types of gaming allowed, they do not appear to follow each other in the types of rates “charged” to the casino firms. This Article examines gaming taxation rates and identifies some changes across all fifty states. We attempt to identify the factors that influenced the adoption of these tax rates in each state. We argue that state policymakers view casino taxes differently than the way they view taxes on other business firms.

These views greatly alter the politics of casino taxation in the states. The authors also provide updates on the status of gambling in several venues and suggest future research questions on the impact of gambling as an economic development tool for the states.