SID SALTER: GOP should heed Moak’s online gaming tax effort

By Sid Salter

In this age of hyper-partisan politics at every level, Democrats and Republicans generally torpedo the political initiatives of their partisan opponents on sight and if a Democrat is for it, the GOP is against it and vice-versa.
But in terms of how Mississippi policymakers deal with the question of online gaming, perhaps Mississippi’s Republican majority might be well-served to review the pass they’ve taken on a Democratic lawmaker’s initiatives in online gaming. That’s a matter of economic impact and tax revenue.
Back in the 1990s, Mississippi ranked third in the nation behind Nevada and New Jersey in terms of consumer spending on commercial casinos.
According to a 2013 American Gaming Association report, that ranking had slipped to sixth in the nation by 2012 with Nevada at $10.56 billion, Pennsylvania at $3.16 billion, New Jersey at $3.05 billion, Indiana at $2.6 billion, Louisiana at $2.40 billion and Mississippi at $2.25 billion.
The AGA report showed that New Jersey clearly lost market share when Pennsylvania got in the gaming business and Atlantic City was hit by Hurricane Sandy.
With Nevada and New Jersey now in the online gaming business, the threat of additional market erosion for all other state gaming markets is clear. Commercial casinos employed 23,377 Mississippi workers in 2012.
The Mississippi Gulf Coast gaming market is ranked eighth in the nation at $1.095 billion and the state’s Tunica/Lula casinos comprise the nation’s 10th best gaming market at $821.9 million. Gaming brings 24.77 million “visitors” or customers, according to the AGA data.
According to the Mississippi Department of Revenue, gaming in the last fiscal year generated $279.7 million in taxes in the form of $91.7 million to county and municipal governments and the state’s portion of $152 million. Overall, gaming provided 3 percent of general fund revenues.
Tobacco taxes generated $157 million, or 3 percent of the general fund. Alcoholic beverage taxes generated $75 million, but $9 million went to county and municipal government, leaving $66.6 million, or 1 percent of general fund revenues for the state.
For the past two years, state Rep. Bobby Moak, D-Bogue Chitto, introduced online gaming legislation. In both years, Moak’s legislation failed. The bills – virtually the same legislation – died in committee both years after being double-referred.
The bill proposed to regulate, license and tax online gaming at 5 percent of gross revenues. The bill would have restricted online gaming licenses to those companies already holding land licenses to operate in the state.
Moak wrote the legislation in reaction to a 2011 U.S. Justice Department ruling which clarified that the ban on interstate betting in the Wire Act of 1961 applied only to a “sporting event or contest” and that all other gambling operations are outside the purview of the act.
According to the National Conference of State Legislatures, the DOJ decision opened the door to any form of online gaming over the provided it isn’t the so-called “sports book.”
Under the ruling, states can sell lottery tickets online and authorize online poker, roulette, blackjack and other casino games, as long as the actual betting takes place within a respective state’s boundaries, even if out-of-state credit cards are used to finance the gambling.
Moak argued that the legislation was necessary to allow Mississippi’s existing gaming industry to have more control of its own destiny and to allow the state to regulate what will already be taking place online and to tax it as other competing states are doing.
Nevada, New Jersey and Delaware now allow online gambling. Lawmakers in California, Hawaii, Illinois, Iowa, Massachusetts and Texas are considering online gambling proposals.
Every additional state that enters the online gaming market threatens Mississippi’s current traditional gaming sales, tax revenues and jobs.
Democrat, Republican or whatever, Moak is right that online gaming is a threat in Mississippi to tax revenue that isn’t easily replaced.
Sid Salter is a syndicated columnist. Contact him at 601-507-8004 or sidsalter@sidsalter.com.