Lobbyist Warns of 'taxfest' on Casinos

The recent "taxfest" on casinos will prove counterproductive, the casino industry's top lobbyist warned lawmakers from gaming states on Friday.

Frank Fahrenkopf, head of the Washington, D.C.-based American Gaming Association, cited Illinois, which raised its top marginal tax rate to 70 percent, and prospective racino states such as Maryland and Pennsylvania, where lawmakers toyed with tax rates nearing 60 percent.

Those states, Fahrenkopf said, are key examples of the mistaken belief that casino gaming revenues are an inexhaustible resource for depleted state treasuries.

"It is the states with the lower, stable tax rates that are willing to attract operators willing to make the investment in destination resorts, which employ more people, promote tourism and generate a strong economic ripple effect throughout the region in question," he told the National Council of Legislators from Gaming States, which included state legislators and regulators, Indian casino regulators and operators, as well as gaming company executives, meeting at Harrah's.

Fahrenkopf has been making a similar pitch for much of the past year, having been dispatched by the association's members to testify before legislative committees in states considering gaming tax increases.

And it's Fahrenkopf's new battleground, in the states, where he is on shaky ground, said casino opponent the Rev. Tom Grey.

"We're set up now," Grey said after the meeting, noting that it's easy to engage a Washington, D.C., insider like Fahrenkopf outside of the Beltway. "What he's saying makes my day. What he doesn't understand is what's going on in the countryside."

Both men like to cite their recent victories, with Fahrenkopf citing 2002 votes in Iowa, where victory margins ranging from 63 percent to 81 percent in separate votes in 11 counties allowed the state's riverboats to remain. ("They're addicted to the tax revenue," Grey said.)

And Grey listed the recent failure of a number of casino votes.

Tax increases may annoy Fahrenkopf and his casino industry backers. But Grey said tax boosts are another strategic weapon for casino opponents.

"We want to contain it and constrain it," Grey said.

By working to prevent gambling expansion while simultaneously making the business less profitable, opponents think they've found a strategy for success, he said.

Besides working to raise gaming taxes, casino opponents also plan to push for increased regulation over casino operations and advertising and strive to make casino operators pay more for costs associated with problem gambling, Grey said.

Florida state Sen. Steven Geller, D-Broward County, the council's president, said Fahrenkopf's "kill the golden goose" warning was appropriate.

"It's already happening in Illinois," Geller said. "People are not stupid, and businesses are not stupid. If you raise taxes too much, companies are just not going to stay in business."