Casino industry reacts to tax initiative

RENO -- A casino tax initiative backed by the teachers union to fund education would seriously hinder the gambling industry in Northern Nevada and rural communities, according to the executive director of the Nevada Resort Association.

"Many of these places in rural and Northern Nevada, their margins are very small, and clearly, it would have a significant impact on how they operate," Bill Bible said.

The Nevada State Education Association is proposing the tax be raised by 44 percent from 6.75 percent to 9.75 percent for any casino that takes in more than $1 million a month in gross gaming revenues.

Bible said the threshold would include most casino operations in Carson City, Douglas County and Washoe County.

A casino industry analyst agreed with Bible's assessment.

"When you talk about these casinos, the margins are quite thin, and when you raise their tax by a factor of 44 percent, in the face of other economic issues moving against you, it would be a horrible situation to be in," Bill Lerner, a senior gaming and lodging analyst for Deutsche Bank, told the Reno Gazette-Journal.

The teachers union must gather at least 58,628 signatures by May 20 to get the proposal on the November ballot.

Lynn Warne, president of the Nevada State Education Association, said the union felt the $1 million threshold was fair.

She said it would raise $250 million to $400 million annually and cited a study commissioned by the 2005 Legislature that showed the state would have to boost funding of public education by $1 billion to provide an adequate education in 2013-14.

"In our analysis, in looking at what the tax rates are around the country and around the world, we felt that $1 million was fair," Warne said.