AGA Launches 10th Anniversary Research Series

1 June 2005

WASHINGTON -- (PRESS RELEASE) -- In commemoration of its 10th anniversary this month, the American Gaming Association (AGA) is launching a series of research white papers that will highlight the evolution of casino gaming during the past decade and provide analysis of key issues currently facing the gaming-entertainment industry. The first paper in the series, released today, discusses the impact of gaming privilege taxes on capital investment, job creation and other economic contributions in casino host jurisdictions. Subsequent papers periodically will be released throughout the next 12 months.

Each white paper in the 10th anniversary research series will be authored by an individual or organization with expert knowledge of the paper's topic and will provide either an analytical or broad-stroke examination of a different industry-related subject. Planned topics include economic impact of the industry, workforce diversity, Wall Street impact, employee wages and benefits, responsible gaming, and more. Eugene Christiansen, CEO of Christiansen Capital Advisors and a leading gambling and entertainment industry analyst, authored the first paper.

"The goal of the 10th anniversary white paper series is to fill a void in the information currently available about the commercial casino industry," said Frank J. Fahrenkopf, Jr., president and CEO of the AGA. "The series will create a comprehensive, up-to-date resource for our members, regulators, policy makers, members of the media and others with a stake in our industry. We have gathered leading experts to author these diverse pieces, ensuring that the series will be a relevant research tool for years to come."

Christiansen's paper, "The Impacts of Gaming Taxation in the United States," theorizes that unreasonable tax rates on gaming operations can have the opposite effect legislators intend – thwarting capital investment, forcing job cuts and ultimately leading to long-term revenue losses. He provides hard data and concrete examples to show that lower tax rates are the key to creating jobs, capital and, in fact, increased tax revenue.

To demonstrate this point, Christiansen notes that, of the more than $30 billion that has been invested in major U.S. casinos or casino resorts since 1989, fully 91 percent was invested in

Nevada and New Jersey, the commercial casino states with the lowest gaming privilege tax rates. These lower tax rates, Christiansen notes, have given Nevada and New Jersey an advantage in the competition for gaming-related capital investment, and that advantage is a strong argument for keeping gaming privilege taxes low in those states. Lower privilege taxes make larger, more diverse gaming facilities possible, he said. These full-service resorts contribute more to the economy than machine-only facilities can, but the capital investment necessary to develop them simply isn't feasible if tax rates are too high.

Conversely, Christiansen uses New York as an example of how unreasonably high tax rates can stunt capital investment, which has led to less than expected levels of employment and tax revenue for the state.

Christiansen describes that when lawmakers in newer gaming jurisdictions have opted for higher tax rates, they are trading jobs and capital investment for short-term government revenues and quick fixes to state budget crises. Moreover, he notes that gaming taxes are rising at a greater rate than the tax base. Since 1994, the average privilege tax for commercial casinos in the United States has increased by 60 percent – significantly higher than the rate of increase for gross casino gaming revenues during that time.

The full text of "The Impact of Gaming Taxation in the United States" is available in the "10th Anniversary Research Series" section of the AGA Web site. Subsequent papers will be added to the site as released.

The AGA represents the commercial casino-entertainment industry by addressing federal legislative and regulatory issues. The association also serves as a clearinghouse for information, develops educational and advocacy programs, and provides leadership on industry-related issues of public concern.