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Comp Tax has MGM Rethinking Atlantic City

"…`I am not wild about recommending to our board that we continue to proceed with a major project in Atlantic City in the face of this type of proposal,' [John Redmond, CEO of the company's MGM Grand Resorts unit ]said.

"In outlining his proposed $23.7 billion state budget last week, McGreevey said the state could raise $33 million yearly by taxing the rooms and meals that casinos and hotels give free to patrons.

"Local casinos gave away almost two-thirds of their rooms, or 1.9 million rooms through the first nine months last year, as a marketing tool for their best gamblers. They also gave away 13.7 million meals during that period.

"Casinos would pay a 6 percent tax on the value of the rooms, meals and possibly show tickets, according to McGreevey's plan. They now pay taxes on only those rooms and meals that are sold.

"The comp tax might cost a large casino hotel such as the one MGM plans between $3 million and $4 million per year out of more than a half-billion in revenue.

"…`We're looking at building a lot of hotel rooms. We obviously would be the largest payer of this type of tax. It's the whole aspect of an uncertain tax environment that gives one cause for concern,' [Redmond] said.

"…MGM Mirage says it wants to build a wholly owned casino hotel on a 55-acre Marina District site it owns next to Borgata, the $1 billion casino hotel being built by partners Boyd Gaming Corp. and MGM Mirage.

"Redmond said the company could announce the size, cost and name of the casino project by year end. So far, the company has said only that it would likely cost up to $1.5 billion."

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