09/30/2014 2:43PM

Industry report: U.S. casinos generate $38B in tax revenue

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The American Gaming Association, the lobbying and public-relations arm for casinos across the United States, released a study on Tuesday purporting to show that the U.S. “gambling industry” accounted for $38 billion in tax revenue to federal, state, and local governments and has a total economic impact of $240 billion.

The estimates, part of the AGA’s larger annual report, are the opening salvo in what is expected to be a years-long campaign by the AGA to reposition the gambling industry in the United States. The campaign is likely to result in casinos seeking tax relief from state governments, an effort that could jeopardize the massive subsidies that the racing industry receives from casinos in many states.

Last week, the head of the AGA, Geoff Freeman, wrote an op-ed in USA Today arguing that “basic economics applies to casinos,” an indication that casinos will be seeking a greater share of their revenue in the future.

Some casinos send as much as 60 percent of their revenue to the state, with that money being used to provide tax relief or fund education or other popular programs. In addition, approximately $350 million of racing’s current $1 billion in annual purse distribution is provided by casino subsidies, nearly all of those mandated by state law.

“Understanding [gambling’s] proper role in smart economic development requires a different political approach to [gambling] and the rules that regulate it,” Freeman wrote in the USA Today piece. “ … With competition among casinos at an all-time high, restrictive regulatory environments pose hurdles to casinos that must reinvest and adapt to today’s changing consumer to continue to add jobs and provide much-needed tax revenue.”

The AGA’s report on the economic impact of U.S. gambling is being released at a time when some jurisdictions have begun to question whether casinos are providing the economic benefits that the industry promised, especially in Pennsylvania. In addition, many casinos are facing pressure from the growth of casino gambling along the East Coast over the past 10 years, a phenomenon that has played a large role in the recent closing of three large casinos in Atlantic City.