Casinos may be able to pass part of tax hike to gamblers

7/22/2003 (Judy DeHaven, The Star Ledger) Now that the dust has settled, it seems the 12 Atlantic City casinos will not fare as badly as Wall Street thought under Gov. James E. McGreevey’s tax hike.

Initially, plans called for the casinos to come up with an additional $135 million, mostly by increasing the casino revenue tax from 8 percent to 10 percent. What passed, however, was a package of taxes and fees that the state says will raise $90 million. And analysts expect only about half of that will be paid by the casino companies. The rest likely will be paid by gamblers.

While a major component of the package is a 7.5 percent tax on net profit and management fees, much of the rest includes things casinos can easily pass on to gamblers, such as higher parking and hotel charges. Already, many casinos are charging more than the $3 state fee for parking to make up for revenue lost elsewhere.

“Operators come out ahead under this plan,” Deutsche Bank Securities analyst Marc Falcone said in a recent report. “In reality, we think they will end up paying $50 million to $55 million of the $90 million, while passing the remainder along to customers.

Borgata boosts union’s ranks

Borgata didn’t just add 2,000 rooms and 3,640 slot machines to the Atlantic City market. It also will boost membership of the Hotel and Restaurant Employees International Union Local 54.

The union organized nearly 2,000 Borgata workers, including food and beverage workers, bellmen, doormen, housekeepers and public-area attendants– “by far the broadest classifications we have in the city,” said Bob McDevitt, the local’s president.

In an unusual move, the casino also allowed workers at restaurants not owned by Borgata to join the union, McDevitt said. “It was incredibly important for our union,” he said.

The additions will boost the union’s membership to 17,500, making it the second-largest local in the gambling industry outside Las Vegas, McDevitt said.…

Casino Industry Slowly Recovers

Nevada’s casino industry is beginning to recover from Sept 11, showing a significant increase in statewide gambling revenues. Yet analysts on Wall Street remain tentative.

Compared with last year the revenues seem healthy, but analysts are sharply aware of the toll the terrorist attacks took on the industry. The biggest indication that casinos still haven’t quite found their feet is the telling lack of high rollers. Tourist travel remains low, keeping them from returning in force. In fact since September 2001 baccarat revenues are decidedly down, sliding 32 percent statewide.

Gaming equities analyst with Deutsche Bank Securities, Marc Falcone, expresses his disappointment: “Given a fairly strong special event calendar, which included the De La Hoya-Vargas fight (at Mandalay Bay), we would have expected a stronger turnout in the market from high-end table customers, particularly against easy 9-11 comparisons.”

A comparison with September 2000 of the total amount wagered – or “total drop” – shows a decline of 6.1 per cent. This has been put down to the emphasis casinos have since put on encouraging the attendance of convention goers in an attempt to bolster occupancy and room rates. Bond analyst John Kempf, of Goldman, Sachs & co: “The convention segment is traditionally a weaker gaming customer.”

Nevertheless recovery is being made. Even Falcone has a positive outlook for the near future: “A pickup in convention activity and a strong special events calendar should improve the outlook for Las Vegas.”…

Casino industry concerns are latest obstacle for Internet gambling ban

WASHINGTON (AP) – The casino industry is opposing the latest effort to ban gambling on the Internet, adding a new obstacle for lawmakers who have tried for six years to arrest a burgeoning online activity.

The American Gaming Association, which represents commercial casinos, says a bill by Rep. Bob Goodlatte, R-Va., gives special treatment to the horse racing industry while adding unwarranted new restrictions on casinos.

Goodlatte is among a handful of lawmakers who have been trying since 1996 to crack down on the proliferation of virtual casinos, many operating outside the United States, which allow people to gamble from the comfort of their personal computer.

The lawmakers have tried to appease Indian and commercial casinos, the horse- and dog-racing industries, state lotteries, “fantasy” sports leagues and Internet service providers, all of whom have expressed concern about the impact of proposed bills.

Until now, the casino industry has not opposed any of the proposed measures. Goodlatte said he hopes to work with the industry on at least some of its objections but remains intent on not letting any sector of the gambling industry use the legislation to take advantage of another.

“Everybody wants to get a leg up on their competition,” he said. “We’ve been very careful not to let that happen.”

The Senate passed Internet gambling bans in 1998 and 1999. An earlier version of Goodlatte’s bill earned 245 votes in the House in 2000, falling short of the two-thirds majority needed for passage under rules governing the vote.

As Congress grapples with the issue, Internet gambling grows. Christiansen Capital Advisors, which studies the gambling industry, estimates that bettors worldwide wagered $2.2 billion over the Internet in 2000 and will wager more than $6 billion in 2003.

Nevada is working on regulations that would let it become the first state to allow Internet gambling. Lawmakers in New Jersey last year proposed letting gamblers wager through the Internet on “real time” games being played at Atlantic City casino tables.

The online gambling industry has urged the U.S. government, thus far without success, to regulate and tax its games rather than try to outlaw them.

The House Judiciary subcommittee on crime approved the Goodlatte bill March 12. The bill would update the 1961 Wire Communications Act, which was written to cover sports betting via telephone.

It would ban gambling businesses from accepting credit or checks, and give law enforcement broad authority to seek injunctions against intermediaries, including banks and Internet service providers, that enable gambling online.

The casino industry opposes a sentence in the bill specifying that the legislation does not prohibit any activity allowed under the Interstate Horseracing Act. That 1978 law authorized racetracks to transmit signals of their races for wagering in other jurisdictions.

Frank Fahrenkopf Jr., president of the American Gaming Association, says the Goodlatte provision would assure horse racing the right to grow via the Internet, giving it a leg up on its gambling competitors.

“Other activities such as casino gaming, Native American gaming, lotteries, dog racing, jai alai, and charitable gaming are subject to the full brunt of the prohibitions,” Fahrenkopf wrote in a March 11 letter to Goodlatte.

Jay Hickey, president of the American Horse Council, declined to address Fahrenkopf’s objections but said the horse racing industry supports the Goodlatte and Leach bills.

“Both bills take into consideration that pari-mutuel horse racing has been doing interstate wagering under federal and state law for some time,” Hickey said.

The House Financial Services Committee has approved a separate bill by Rep. Jim Leach, R-Iowa, that would prohibit anybody engaged in “unlawful Internet gambling” from accepting payment by credit card, check or electronic transfer.

That bill has its critics, too. Mark MacCarthy, senior vice president at Visa USA, told the financial services committee that credit card companies should not be given the responsibility to judge what transactions are illegal.

Goodlatte said House Republican leaders will ultimately decide which bill, if any, to bring to the floor.

Leach’s bill has seven co-sponsors; Goodlatte’s has 155. Rep. Jim Gibbons, R-Nev., was another co-sponsor of the Goodlatte bill but pulled his support when the casino industry made its objections.…