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Best of Howard Stutz

Gaming Guru

Howard Stutz

Lanni: Free meal is history

16 November 2007

LAS VEGAS, Nevada -- MGM Mirage Chairman and CEO Terry Lanni used the Nevada Development Authority's annual luncheon Thursday to say the free meal is over.

Lanni said Nevada's economy is in disarray because the tax structure, which relies heavily on gaming and sales taxes, is broken. And he repeated his recent call for Nevada to adopt a broad-based business tax.

"We must fix the recurring chaos created by this flawed system," Lanni said to more than 800 people who were meeting at Bellagio.

"I see the only solution to the economic chaos we face coming from within the community itself. We must all face up to the reality of the needs of the state of Nevada in a new century and beyond.

"The time came long ago for the establishment of a business tax paid by every large business that benefits from operating in this state," he said.

The message wasn't overly well-received. Lanni was interrupted by applause just five times during his 30-minute speech, once each at the beginning and the end of the talk, and twice when he discussed the $33 billion MGM Mirage has invested or is planning to invest on the Strip.

Lanni was also applauded when he said he wouldn't allow Nevada to turn itself into Illinois, which is considered a high-tax state.

Last month, Lanni said Gov. Jim Gibbons should withdraw his campaign pledge not to raise taxes during his term in office and support a broad-based plan to fund state government. Gibbons has said projections show a potential revenue shortfall and he has asked several state agencies to cut 5 percent from their budgets. Meanwhile, two separate initiative proposals have been floated that could increase the state gaming tax above its current 6.75 percent on gross revenues.

On Thursday, Lanni asked the development authority to take a leadership role in discussing how to change the state's tax structure without relying solely on one industry.

"We have to accept the fact that a no-tax environment is a relic of a bygone era," Lanni said.

Development authority President and CEO Summer Hollingsworth said after the speech the organization welcomed being part of the discussion. While he did not come out and support a broad-based business tax, Hollingsworth said that option might be one of several proposed solutions to solve the state's budgetary problems.

"It's important that we all get together and be on the same page," Hollingsworth said. "I agree with Terry that we can't put all our eggs in one basket and we want to work with (gaming)."

Lanni used his speech to reject a proposal by the state's teachers union that would increase Nevada's gaming tax by 45 percent. MGM Mirage, which operates 10 Strip resorts and is building the $7.8 billion CityCenter development, would be heavily affected by the increase. However, he said gaming was not afraid to step up when called upon.

Lanni recited an historical timeline over the past two decades where the gaming industry took a lead role in solving the state's budget problems, especially in 2003, when the gaming tax was increased 0.5 percent while the major components of a new tax package were paid for primarily or solely by gaming.

"Each time we were faced with new needs, the gaming industry would come to the table along with the hope that the broader business community would recognize the need to participate in some small way as well," Lanni said. "Sadly, with virtually no exception, each time we have been disappointed."

After the speech, Lanni said he's had private discussions with other leaders in the gaming industry about the state's tax structure. He told he audience that the issue was not about gaming versus all other businesses in the state.

"For 75 years, gaming has done its part and more," Lanni said. "And we will continue to do so. It's time for other industries to do their part."

Lanni: Free meal is history is republished from