Video gambling tax collections up 7.59 percent
Pub Date: 5/1/2007
Video gambling tax collections in the second quarter of Fiscal Year (FY) 2007 October through December 2006 rose 7.59 percent, a tick above the previous quarter's growth rate and a full percentage point ahead of the growth rate the same quarter last year.
Tax revenues from the 17,300 machines operating at 1,700 licensed establishments totalled $15.04 million for the period, compared to $14.99 million the previous quarter, and $13.99 million the same quarter of the previous year.
Total taxes collected over the last four quarters are $58.89 million. Since 1990, $623 million has been paid to state and local governments on video gambling.
According to Rich Miller, Gaming Industry Association executive director, "If you look at (the new tax figures) in the broad view, it seems to be within the trend. And, considering the news in the paper recently, that Montana personal income growth is among the highest in the country, it doesn't seem out of line that people have more discretionary entertainment dollars to spend and are choosing to spend them on gambling as well as other forms of recreation."
Historically, gambling tax collections grew at rates well into double digits in the early 1990s, posting gains of up to 24.54 percent. That growth slowed well into low single digits in 2001 just 2.47 percent but began to accelerate somewhat when a new strategy for implementing an automated accounting system for the machines was adopted.
This resulted in development and introduction of a new round of game entertainment enhancements. Game developers had been holding off on upgrades until they clearly understood what the impacts and technological implications of automated reporting were going to be.
Gaming tax growth recently peaked at 8.54 percent in 2004, but then dropped back to 6.59 percent in 2005 and 6.48 percent in 2006.
The robust rate of spending for game upgrades is evident when studying the conversion from single game platforms offering poker or keno, to the newer multi-game platforms which offer both. One chip set even runs bingo.
In FY 2005 the first year multi-game software was available, there were 4,616 poker games permitted, 10,019 keno games and 6,220 multi-games.
Currently there are just 1,908 poker games, 4,700 keno games and 13,4467 multi-games.
So, since 2004, almost exactly two-thirds of permitted machines have been upgraded or are replacements. Upgraded chips sets may cost in the neighborhood of $1,500, but often require hardware upgrades as well, along with cabinet modifications. Some older machines are deemed obsolete altogether and replaced by brand new "boxes" costing well over $10,000.
If the average upgrade is valued at $3,000, it would indicate that over $40 million has been invested in equipment since late 2004, and would also underscore the highly competitive nature of the gaming business in Montana today.
Statistics breaking collections down by city and county were yet unavailable at Tavern Times deadlines because, Gene Huntington, Gambling Control Division administrator, said the division has been somewhat backed up as they focus resources on completion and implementation of the new internet based automated reporting system.
Other statistics indicate machine permitting is about 400 ahead of last year and the year before and is on pace with the three preceding years. Distributor licenses are five ahead of last year but in line with previous years.
Operator licenses are at 1,719, up 14 from one year ago but down 34 from 1998. Card table licenses remain at an all-time high currently 457, compared to an all-time low of 187 in 2002. So far in 2007, it appears card dealer licenses are lagging far off the pace of the previous year with 425 licenses issued or renewed, compared to 888 in 2006.
Live bingo and keno permits continue to decline to 80 compared to 139 in 1999. About half of those were issued to charitable organizations.
Source: The Montana Tavern Times, May. 2007, published monthly by Continental Communications, 125 W. Granite St., Suite 102, Butte, MT 59701.