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It's Been Five Years: Time to Review Casino Taxes, Adjust Inequities

Revenues At 3 Detroit Casinos Up 5.3 Percent Last Month Despite Recession

August 17, 2009       Leave a Comment
By: Dave Rogers

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The reasons why Detroit casinos are taxed at 24 percent of revenues and all other casinos in Michigan pay only 12 percent need immediate review.

Why? The state and the cities need the money!

Outstate cities like Bay City, Saginaw and Midland, are getting yentzed on the deal while Detroit is getting a two percent bonus.

With the decline of state revenue sharing, Michigan's cities are finding it difficult to continue vital operations like police, fire, water/sewer and other utilities. Casino revenues could help make up the shortfalls.

Pennsylvania now has a 55 percent tax rate on that state's nine casinos, although proposals are to charge a $10 million license fee for each casino and reduce the rate to from 12 to 21 percent.

It has been five years since Michigan casino taxes were raised from the John Engler era "sweetheart deal" 12 percent to 24 percent for the Detroit operations and from 8 percent to 12 percent for all others.

The state's 26 casinos lately rose with the opening of the FireKeepers near Battle Creek. About 80 percent of the casinos are located on Native American tribal land. Of the 46 states with casino gambling, Michigan is 14th in the number of casinos.

Michigan casino number 27 is on the horizon after the U.S. Department of Indian Affairs Monday approved 147 acres for a reservation for the Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians (Gun Lake Tribe).

The land 20 miles south of Grand Rapids was put into trust by the U.S. Department of Interior in February after the U.S. Supreme Court in January refused to hear a group's petition to block the casino.

Adjustment in casino taxes is especially crucial in view of the recession and falling state sales tax revenues and a budget squeeze that hurts Michigan families and school children.

A blogger complained of casinos on a Lansing website: "Soaring Eagle gives $80,000 a year to each of its tribal members from casino profits. They also get free health insurance. Just remember that to pay them that much, you have to lose. And lose you will!"

This corner has no problem with Native Americans receiving payrolls from casinos, we just wish the funds were equally distributed to all natives in the state. Many are not on the "golden goose" tribal rolls and continue in poverty while others wallow in luxury.

Casino bettors apparently are unaffected by the recession since in July they poured in more than 5 percent more in betting revenue to the three Detroit casinos than the previous month.

The State of Michigan took in $10.6 million last month in wagering taxes from the three Detroit casinos.

Greektown and the MGM Grand were about tied with the tax take, at $3.8 million each, while Motor City trailed with nearly $2.9 million.

The Michigan Gaming Control Board reported that the aggregate revenue and taxes for all three Detroit casinos for the month of July 2009 were down by less than 1/4 percent compared to the same month last year, but were up by 5.3 percent compared to June 2009.

Revenue for MGM Grand Detroit, and MotorCity Casino were down by 5.4 percent, 9.62 percent respectively, whereas Greektown casino was up by 24.83 percent compared to the same month last year. The market shares for MGM, MotorCity and Greektown for the month of July 2009 were 41 percent, 31 percent and 28 percent respectively.

For the month of July 2009, gaming taxes for the 3 Detroit casinos were $10.61 million compared to $10.38 million for the same period last year.

Public Act 306 of 2004 increased the wagering taxes paid by the three Detroit casinos from 18 percent to 24 percent. The extra 6 percent is divided between the State of Michigan and the City of Detroit (two thirds of the tax (4 percent) is paid to the State and one third (2 percent) to the City of Detroit.

Despite the apparent bonanza in extra tax revenues, gambling may not be the panacea for states that some think it is.

Writing in the Atlantic Economic Journal, Paul M. Mason and Harriet Stranahan of the University of North Florida, assert that it is clear that casino gambling is likely to adversely impact lottery tax revenues earmarked for education. "In the longer term, as casino gambling proliferates, increasing competition among states, there will be negative revenue consequences due to fewer tourism and employment dollars," they concluded. ###

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Dave Rogers

Dave Rogers is a former editorial writer for the Bay City Times and a widely read,
respected journalist/writer in and around Bay City.
(Contact Dave Via Email at carraroe@aol.com)

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