Slot Machine Taxes – Good morning, and welcome to the indie gaming newsletter, a weekly look at gaming matters nationally and internationally and how events play out in Nevada.
Representatives from Congress and the American Gaming Association asked the Treasury Department in 2019 to raise the tax reporting limit on slot machine jackpots from $1,200 to $5,000.
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On Thursday, the House Congressional Gaming Caucus, with the support of the AGA, filed bipartisan legislation asking Congress to authorize the changes. The Transfer Limit on Threshold (SLOT) Act would require the Treasury Department to set a higher limit.
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“Treasury dragged their feet, and it’s become a burden on the industry,” Representative Dina Titus (D-NV) said in an interview
Titus, one of the co-chairs of the Gaming Caucus, has long fought for changes to be made to reporting thresholds.
“If we wait any longer, because of inflation, we may have to raise the limit to $6,000,” Titus said.
When the threshold was set 45 years ago, Nevada was the only state with a legalized commercial casino. That same year, the New Jersey Casino Control Act was signed into law, setting the path for Atlantic City’s casino industry. Since then, commercial casinos have opened up in 34 states and slot machine jackpots have become more lucrative.
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According to the AGA, slot machine revenue was responsible for a record-setting $53 billion of the $32.5 billion in gaming revenue produced by the country’s commercial casinos in 2021.
Proponents of the change said the $1,200 jackpot slot machine shuts down until the IRS meets the paperwork requirements.
“We are an industry where you really have to take revenue-generating assets out of production to comply with our tax reporting obligations,” Chris Silke, AGA’s senior vice president of government relations, said in an interview.
The challenge before the lawmakers in passing the law is time. It is an election year and the Congress is at a standstill over party rifts on issues like the legislative agenda of the President.
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Global Market Advisors partner Brendan Bussman, who is also the firm’s director of government affairs, said, “While it makes logical sense that slot winning limits should be raised, it will face a lower priority in today’s Congress. “
Silke agreed that timing presents some difficulties, but noted that many tax bills come out at the last minute, adding to the possibility that the law arises again during the lame-duck session following the November election. .
Representative Dinah Titus (D-Nev.) during a keynote interview at G2E on Tuesday, October 5, 2021. (Jeff Scheid/The Nevada Independent)
Titus suggested that the law could be linked to an all-encompassing tax bill at the end of the year.
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He also said that the support of Republican members of the Gaming Caucus, including co-chair Rep. Guy Reschenthaler (R-PA), and Rep. Mark Amodei, (R-NV), would aid in this effort. Reschenthaler represents a district south of Pittsburgh in a state that had more than $4.8 billion in gaming revenue in 2021, second only to Nevada’s $13.4 billion.
“Raising the limit will eliminate this hard red tape, ensure the gaming industry can continue to support well-paying jobs and spur economic growth in southwestern Pennsylvania and across the country,” Reichenthaler said in a statement. “
The other two co-signers on the law were Representative Steven Horsford (D-NV), and Representative Anthony Brown (D-MD), whose district includes MGM National Harbor, the largest gaming revenue producer of Maryland’s six casinos.
Titus, whose southern Nevada district includes the Las Vegas Strip, said he and gaming industry leaders believe that raising the limit will continue to collect appropriate taxes on slot winnings, but will “reduce paperwork.” and ensure that it is completed more efficiently.”
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Three years ago, the gaming industry and their representatives saw constructive talks with Treasury officials about raising the threshold.
Meanwhile, Silke said the AGA had “laid some good foundations in Congress,” including discussing it with members of the House Ways and Means Committee.
“They know about it,” he said. “We have to continue working this whole year to get this as something that will be under consideration when some of those packages start running.”
In 2015, Titus and other gaming industry leaders backtracked on an effort by the Internal Revenue Service to lower the reporting limit to $600.
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“I’m going to say I’m optimistic because the limit is not only a burden on the industry, it’s a burden on the IRS,” Titus said. “You’ll still have regulation and reporting, but it won’t be needed at that low level.”
Two gaming analysts sharply praised Century Casino’s announcement of the purchase of Nugget Casino Resort in Sparks, citing the economic climate in northern Nevada.
David Bain, gaming analyst at B Riley Securities, told investors last week that revenue and cash flow from the nearly 1,400-room resort — one of the largest gaming properties in northern Nevada — could nearly double the Colorado casino operator’s stock price. Is.
Meanwhile, Stifel Financial Gaming analyst Jeffrey Stantial said on Monday that Reno’s favorable business environment outlook has piqued investor interest in Century. The Colorado Springs-based company operates two casinos in Colorado, two casinos in Missouri and one casino in West Virginia, as well as four gaming properties in Alberta, Canada.
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“We believe that management is committed to repositioning the company as a North American regional gaming pure-play,” Stantial wrote. He added that by increasing its US exposure, Century would become “more accessible to a broader investor base.”
Century executives said the company was exploring ways to enter the northern Nevada gaming market at the time the transaction was announced on February 23. Century will pay $100 million for Nugget’s operations and $95 million for 50 percent ownership of the real estate. Century has a five-year option to buy the remaining 50 percent of Nugget’s site from Interstate 80. The resort is located just three miles from Reno-Tahoe International Airport.
Stantial gave high marks to the Reno business environment, which is significantly more financially diverse than southern Nevada. He also cited Nevada’s 6.75 percent gaming tax rate, which is one of the lowest in the country.
In 2021, Washoe County reported more than $1 billion in gaming revenue. Renault Casino had a total stake of $728.4 million with Sparks Casino contributing approximately $167 million.
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In its purchase announcement, Century noted northern Nevada had attracted a number of technology and manufacturing companies, including Google, Tesla, Switch, Amazon and Apple, to enter the market.
Bain told investors that the acquisition was a “stock re-rating catalyst,” predicting that the casino’s contribution to Century’s overall cash flow would increase by more than 300 percent by 2024.
“Clearly, Century is already reloaded for more and we believe there is more to come in the intermediate term,” Bain wrote in a March 1 research note. “Century can emerge as a very big name, especially over time.”
Nugget is owned by Las Vegas-based Marnell Gaming, which acquired the property in 2016 for an undisclosed price. Nugget was developed by Northern Nevada gaming pioneer John Eskuga, who died in June at the age of 96.
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IAC/Interactive Corp. President Barry Diller, who sits closest to the camera, is seen in video from the Bellagio board room during the Gaming Control Board on Wednesday, March 2, 2022. (Daniel Clark/The Nevada Independent)
Nevada gaming regulators have temporarily approved media mogul Barry Diller and his IAC/Interactive Corp as 14 percent owner of MGM Resorts International.
Diller, 80, founded Fox Broadcasting Company and USA Broadcasting. He is currently ranked number 206 in the Forbes 400 with a net worth of $4.6 billion. He founded IAC in 1995 and is also the chairman of online travel giant Expedia, which acquired its holding company, Liberty Expedia, in a $2.6 billion deal in 2019. Angie’s List among over 150 brands of IAC and
Diller attended the Gaming Control Board hearing with IAC CEO Joy Levine on March 2 in downtown Las Vegas, virtually from a conference room at MGM Resorts’ corporate offices in Bellagio. Hours later, MGM’s board — both Diller and Levine are members — approved a new $2 billion stock repurchase program.
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On Tuesday, the Wall Street Journal reported Diller and two others, including entertainment mogul David Geffen, are being investigated by federal prosecutors over a January acquisition of Activision Blizzard Inc., after agreeing to be acquired by video game maker Microsoft Corp. few days back .
IAC spent $1 billion in August 2020 to acquire its initial 12 percent stake in MGM Resorts. This figure has swelled as has the effect of the dealer.
Levine, who has been Diller’s right-hand man for nearly two decades, said IAC’s commitment to MGM Resorts is long-term.
When Diller acquired a stake in MGM Resorts, he told IAC shareholders about the company’s potential for online gaming. At the time, BetMGM – a 50-50 sports betting and online gaming joint venture between MGM and Anten plc – was in its early stages. Diller said MGM’s revenue from online gaming was “so small that it came down to zero.”
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“We believe MGM has provided a ‘once in a decade’ opportunity for IAC to own a meaningful piece of a flagship brand in a large category.