Barbwire by Barbano: Casinos CookDaBooks

The gambling industry has placed a formidable array of disinformation before the public in its continuing attempt to sway the legislature to raise taxes on average Nevadans. The industry published and publicized a $22,000 study paid for by the Nevada Resort Association from the University of Nevada-Reno's Institute for the Study of Gambling and Commercial Gaming.

In his public statements, the principal author, Prof. William Eadington, gave the impression that an increase in the gaming tax would cause mass closings of casino properties. This is the same scare tactic the industry has successfully employed for decades. The facts on the record tell a different story.

Nevada casinos not only enjoy the world's lowest gross gaming tax, they also get about one-third back through Nevada's generous corporate welfare subsidies. A recent UNLV study showed that the costs of gambling addiction very probably eclipse whatever remains.

Nevadans have recently seen a slate of clever commercials which focus only on the "general fund" which represents only about a third of overall spending. In fact, most of the state's money comes from the federal government. The conservative Nevada Policy Research Institute recently pegged the gambling industry's true contribution at less than 10 percent. (NPRI E-Bulletin 4-25-2003)

In Reno on KRNV TV-4's "Nevada Newsmakers" program, Mr. Eadington even tried to lay the blame for growth elsewhere than on the state's principal industry.

His statements seem geared to rebutting research by the Nevada Commission on Economic Development which I placed on the record before the Senate Taxation Committee on Feb. 25, 2003 and back in 2001. In that report, the Guinn-Hunt administration found that the root cause of the state's fiscal crisis is the casino industry's creation of low-wage employment.

In a March 11 story about the gambling industry study, the Las Vegas Review-Journal published a graph showing a curious dip in gambling profits beginning in July of 1998 at the start of Nevada Fiscal Year 1999. From that point on, the chart shows gambling profits nosediving. But the trough precisely coincides with the industry changing its accounting standards.

In 2000, just after Sen. Joe Neal began circulating an initiative petition to raise the gross gaming tax, the state gambling abstract was delayed for months while the industry engaged in some creative accounting. For the first time, casino companies factored in corporate expenses which had not previously been charged against Nevada profits.

The result: an understatement of actual profits by $423 million. That creative accounting continues today. The most recent state gaming abstract, published in February, says that major casinos (those with gross winnings of more than $1 million per month) lost $33.5 million from July 1, 2001 to June 30, 2002 (Fiscal Year 2002). Without the accounting change, their profits would fall hundreds of millions of dollars into the black. The Associated Press was able to obtain the difference for 1999, but a Gaming Control Board representative says current numbers are no longer available.

Isn't that convenient?

Prof. Eadington likes to call gaming our "export" industry, as he did in the Las Vegas Review-Journal. In a Review-Journal guest editorial on July 2, 2000, he wrote: "Gaming is by far Nevada's largest 'export' industry, and therefore the state's largest employer, taxpayer and engine of economic growth."

A highly placed state official recently offered a different definition of export: "The number one Nevada export is capital to build non-Nevada casinos."

The gambling industry uses profits from its lowest-taxed jurisdiction — Nevada — to invest elsewhere. Our casinos compete with themselves to the detriment of our citizens.

What's worse, casino spokesmen keep talking about how the industry now pays 6.25 percent on its gross win, a figure which has not changed since 1987. However, people tend to forget that because the gaming tax is levied in three mildly progressive tiers, the actual revenue to the state never reaches 6.25 percent.

Please contact your legislative representatives and tell them that before they consider raising taxes on anyone else, the gambling industry must begin to pay a fair share.

The time has come for fairness. Make your voice heard. Call your lawmakers at 1-800-995-9080, that's 1-800-995-9080. You will find complete information on how to contact the legislature, breaking news and sources for all of the above statements at www.joeneal.org.

It's time to make the gambling industry pay a fair share for the growth it causes and for the impacts of that growth on our communities.