Gambling Taxes PowerPoint Presentation, PPT - DocSlides

Gambling Taxes PowerPoint Presentation, PPT - DocSlides

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Doug Walker. College of Charleston. 85. th. Annual Meetings, Southern Economic Association. Session on . Taxing More Choice. 21 November 2015. Background. Lottery. First modern lottery in NH, 1964. Now all but 6 states (AL, AK, HI, MS, NV, UT). ID: 588431

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Gambling Taxes

Doug Walker

College of Charleston

85

th

Annual Meetings, Southern Economic Association

Session on

Taxing More Choice

21 November 2015

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Background

LotteryFirst modern lottery in NH, 1964Now all but 6 states (AL, AK, HI, MS, NV, UT)Many earmark revenues for “good causes” Designed to maximize revenue (Garrett 2001)CasinosNV, 1931; NJ, 1978; recent spread started 1989Now about 1,000 casinos in U.S.Half owned by sovereign Indian tribesEarly motivation was tourism, tax revenuesRecent motivation is “defensive” – tax revenues

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Gaming taxes

Lottery “tax” is about 30%20% admin./commissions50% paid back in prizesCasino tax varies by stateLow of 6.75% in NVHigh of 55% in PA, and slots higher in DE, NYStates with lower taxes have higher levels of capital investment

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Gaming taxes, cont.

Overall, state revenues from gambling taxes are small, less than 5% in most statesProvides relief from “fiscal stress”Don’t have to raise other taxes as muchDon’t have to cut spending

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Issues for concern

Inter-industry relationshipsCasinos and lotteries are substitutesWalker & Jackson (2008)MD study showed -5% impact of casinos on lotteryNet tax effect of additional gambling is positive Taxed higher than any other industryMarket “saturation”Not well-defined, but a concern, esp. in NEParticular state may not care about regional saturation

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Issues, cont.

Social issuesSocial costs of gambling are difficult to estimateCrime, divorce, suicide, bankruptcyMay have implications for public budgets, depending on social programsPublic choice issuesArtificial restriction of supply => rentsNH free market model would be interestingLink between casino legalization and corruption

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Technology & the future

Online poker & lottery face uncertain futuresWire Act ‘reinstatement’Sports betting, limited legalityDaily fantasy sports has explodedBanned in NY as online gamblingAttracting state and federal regulatory attentionDifficult for govt to keep pace with technology

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Conclusion

During past 2 decades, legal gambling has been a popular tool of public financeTax revenue value may decline as availability expandsFree games on phonesOnline gambling supplied from abroadIndustry is beginning to adapt to changing landscapeSome governments have begun considering changing tax rates to account for increased competition

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Contact information

Doug WalkerProfessor of EconomicsCollege of Charleston66 George StreetCharleston, SC 29424WalkerD@cofc.eduWalkerD.people.cofc.edu(843) 953-8192

InternationalGambling Studies RoutledgePublication Frequency: 3 issues per year 2014 Impact Factor: 1.288ISSN: 1445-9795 (Print), 1479-4276 (Online)

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