Tribal, Land-Based and Internet Gambling in the US Contribute $38 Billion in Taxes

The US casino market might be over-saturated in certain areas, but the gambling industry is still among America’s biggest tax contributors.

Casino supporters have always argued that the gambling industry can help the economy grow. For those who still aren’t convinced, the American Gaming Association (AGA) is prepared to shatter all doubts. The latest financial report shows exactly how much casinos are worth to US tax payers, and how important they really are.

While the media keeps telling readers that casino profits are declining, tax reports show that the industry is still powerful and has a huge impact on the nation’s economy. In 2013, American poker rooms, casinos and other gambling venues have contributed a jaw-dropping $38 billion in federal, state and local taxes.

Out of this amount, $10 billion came directly from gambling, and the rest of it from worker income, social security and property taxes paid by casinos.

Casinos, a safe bet

Oxford Economics was commissioned to study the financial impact of the casino industry, at a time when gambling companies and industry officials are pushing for the expansion of casinos across the country.

While Atlantic City is collapsing and Detroit has gone bankrupt, investors need something palpable to support their expansion plans. And what could be more convincing than actual numbers showing just how much casinos are generating in the US?

After seeing the reported figures, AGA president Geoff Freeman concluded that the gambling industry is a safe bet for America’s economy. “The results prove that that bet is paying off,” he said.

Freeman is expected to talk more about the issue on Thursday morning, when the association will hold a press meeting before its annual G2E conference. The event will take place at the Sands Expo and Convention Center.

Tribal casinos help figures go up

On the other hand, it’s for the first time that tribal casinos, software developers and gaming providers, as well as online casinos and poker sites were included in the annual study, so it comes as no surprise that results look more encouraging than ever.

Under American gambling laws, licensed land-based and online casinos are to provide the state gaming board with regular income reports, and tribal associations are required to do the same. However, they’re not obligated to report on personal income taxes paid by individual gamblers for any big jackpots they may have won.

Closely held tribal casinos don’t usually reveal much about their private revenue so the study only includes information made available through official agreements tribes have with state authorities.

The unbelievers

Atlantic City’s fall has caused some voters to become skeptical about the financial benefit of casinos. Opponents of the gambling industry argue that profits are not big enough to compensate for all the harm casinos are doing, exposing locals to problem gambling and addiction.

Some parts of the country are more difficult to conquer than others. In Massachusetts, for example, voters will soon be deciding whether to shut down the state’s existing casino industry or not.

Meanwhile, New Jersey’s gambling market isn’t turning out to be as productive as expected. It’s not just Atlantic City, where several casinos have gone out of business and thousands of people were left out of work; it’s also online casinos in the US state. Local authorities have promised huge revenues, but the newly legalized industry is far from reaching the announced.

But Freeman doesn’t believe Atlantic City’s financial difficulties will affect the figures for 2014, pointing to the casino industry’s expansion in other states, including Maryland and Pennsylvania. This growth, which might be at the root of New Jersey’s problems, will compensate for its losses on a national level.

Adam Sacks, who represents Oxford Economics, explained: “It’s not that there’s lower demand for casino gaming, it’s that there’s more competition.”

Vegas still shining

While Macau has long surpassed Las Vegas and is now dominating the world casino industry as the number one gambling hub, Sin City is still shining back home. Despite competition from tribal casinos and online gambling industry, the area has seen an increase in slot and casino table revenues lately. Year-on-year profits have gone up over the past few months, and the number of visitors has also picked up.

Hotels and casinos in Las Vegas are relying more and more on sales from other forms of entertainment, such as dining and drinking, nightclubs, shopping and tourist attractions. MGM Resorts has partnered with AEG to build a sports and performance venue. The facility will be linked to a new shopping and entertainment district dubbed “The Park”, which will be located near MGM’s New York-New York and Monte Carlo properties.

“If you want gaming to thrive, you need to diversify the economy,” Freeman pointed out. And it looks like this might be the solution for America’s financial problems.