Tax Study Shows Higher Rate will have Chilling Effect on Gaming IndustryDES MOINES – A comprehensive report summarizing the serious implications of changing the current tax structure for Iowa’s commercial casinos will be available Tuesday, January 7th. It was prepared by RSM McGladrey with analysis from two principals of the Strategic Economics Group; Harvey Siegelman, Iowa’s former chief economist and Dr. Dan Otto, Professor of Economics at Iowa State University.
Click here to view the tax study.
According to Wes Ehrecke, President of the Iowa Gaming Association (IGA), this independent report titled, “The Effect of A Gaming Tax Increase on the State of Iowa”, was commissioned to provide legislators with important information to help them understand the significant factors involved in a casino’s tax structure, so that informed decisions can be made based on fact. The study will also be made available to the media and the general public.
The timing of the study’s release coincides with the convening of the Governor’s Gaming Tax Task Force, on January 7th at Iowa Lottery Headquarters, 2015 Grand Avenue, Des Moines. The IGA will present the key findings of this report; plus printed copies will be available at that time. A copy will also be sent to each legislator this week, and distributed to legislative caucus staff, and the Executive branch. Public access will be available January 7th via a link on the IGA’s web site at www.iowagaming.org.
“This report uses highly regarded input-output models to demonstrate the significant level of taxes already being paid. It also shows how important casinos are to their respective areas in generating tourism revenue, jobs and charitable contributions,” said Ehrecke.
“It clearly indicates the chilling effect that could occur if a change to the existing casino’s tax structure is seriously considered. The ability of a business to thrive instead of just survive is based on growth and investment and not stifling the dollars that are earmarked for capital improvements, expansion, payroll, and marketing,” Ehrecke added. “Any increase in taxes will have an exponential impact on the casino’s ability to generate more revenue long term, which ultimately hurts the state in the long run.”
Nancy Donovan, IGA Chair, and Vice President & General Manager of Rhythm City Casino in Davenport noted what is at stake for the state’s ten riverboat and three racetrack commercial casinos. “The ripple effect of a tax increase is dramatic. There is fierce competition from surrounding states for the available tourism and entertainment dollars; and the capital investment necessary to offer premiere facilities could go to the state that offers the most attractive tax structure,” said Donovan.
“Presently, Iowa’s current tax structure for the gaming industry is fair, which allows significant tax revenue paid to the state for visionary uses; but also allows for significant dollars to be spent locally,” Donovan added. “That includes Iowa based purchases, charitable contributions, ongoing upgrades and expansion of the facility and competitive wages and benefits for a stable employment base. Keeping that balance is critical for these viable mainstream businesses to maintain progressive strategic growth plans.”
