Head of Gaming Commission defends state's tax rate

By Bobby Harrison / Daily Journal Jackson Bureau

JACKSON – The executive director of the Gaming Commission, which regulates the state’s casinos, said Monday that it’s unfair to compare the industry’s tax rate in Mississippi to that of other states.
Larry Gregory, testifying during a hearing called by Rep. George Flaggs, D-Vicksburg, said the states with higher tax rates restrict the number of casinos that can locate there.
In Mississippi, he said, any company that can comply with the regulations can open a casino on the Gulf Coast or along the Mississippi River
States like Louisiana and Pennsylvania “are limited license states. Mississippi takes the free market approach … When you have exclusivity, it comes with higher tax rates. There is a tradeoff when you know there is a certain amount of casinos in your neck of the woods.”
Gregory was responding to a study by the Mississippi State University Stennis Institute of Government prepared at Flaggs’ request to determine whether the tax rate is fair.
Flaggs held a hearing Monday where Judith Phillips, a research analyst at the Stennis Institute, presented the study.
Only Nevada and New Jersey have lower tax rates than in Mississippi, which has a 12 percent levy on gross casino revenue. New Jersey and Nevada, with rates of between 8 percent and 9 percent, and Indiana, with a rate of 31.37 percent, are the only states with higher gross gaming revenue than Mississippi.
Phillips said Mississippi “has an extremely favorable environment for the casino industry.”
Flaggs said he has no intention of attempting to raise taxes on the industry this legislative session, but did say a poll is being conducted on the issue. And in the next term, if he is re-elected, he said he would be “on a mission to determine whether all taxes are fair.”
Rep. Diane Peranich, D-Pass Christian, said the study also did not take into account the state mandate that a company match its casino investment with an equal investment in non-gambling activities, such as hotels and golf courses. Those investments, she said, have enhanced the local property tax base.
The Stennis study did highlight the decline in revenue, employment and visits to Mississippi casinos in recent years.
From 2000 to 2009, the number of patrons dropped 40 percent, to 33.6 million visitors in 2009. The number of those visitors who are Mississippians is just under 30 percent. In the middle of the decade, the number of patrons who were Mississippians dropped to less than 23 percent.
Gross revenue peaked at $2.89 billion in 2007. It is projected to be $2.29 billion for 2010.
Employment also is down significantly from nearly 40,000 in 2000 to less than 25,000.
Phillips said the industry has been hit by Hurricane Katrina, the recession, the BP oil spill and by competition from legalized gambling in other states.
House Gaming Commission Chair Bobby Moak, D-Bogue Chitto, said that as the economy improves, more companies will look to locate casinos in Mississippi while states where expansion is limited will not get that growth.
Two casinos are set to open in the coming months on the Gulf Coast.
The state currently has 30 casinos. In the early ’90s, the state legalized casino gambling along the Mississippi River and the Gulf of Mexico, subject to approval by local voters.
Contact Bobby Harrison at (601) 353-3119 or bobby.harrison@journalinc.com.