Gaming tax collections up 3.9 percent last quarter
Pub Date: 9/1/2006
Video gaming machine tax collections, following a strong third quarter uptick, dropped back to a more sanguine pace during the fourth quarter ended June 31 to bring the close of the fiscal year in at a healthy 6.48 percent annual growth.
Machine tax collections in the final quarter of Fiscal Year (FY) 2006, April-June, were $14.22 million, up 3.9 percent or $542,850 from the same quarter one year ago, though lagging the previous quarter by $405,568.
The first quarter (July-September 2005) saw fairly typical 6.35 percent growth'; the second quarter was up 6.53 percent but the third quarter rose 9.13 percent.
For the year, tax collections were $56.8 million, up $3.5 million over the previous year. Since 1990, $623 million has been collected, helping to hold down other taxes on Montana citizens. Video gaming machine taxes have increased every year since 1990, averaging a 5.47 percent annual bump.
Rich Miller, executive director of the Gaming Industry Association of Montana (GIA) said of the numbers, "The growth in taxes is another reflection of the generally positive state of the economy in Montana. That and the consistent tax and enforcement policies."
Montana Tavern Association Government Affairs Counsel Mark Staples concurred with Miller. "Once again I think we've seen a demonstration of what a stable and predictable regulatory environment can do when coupled with a tax rate that's fair rather than confiscatory," he said.
"That the tax rate is set an appropriate level has been proven again and again by the stable, consistent and reasonable growth of revenue that has been the hallmark of gaming since It's legalization in 1989."
Gaming machine permits climbed from 20,853 in FY '05 to 21,445 in FY '06. But permits merely indicate how many machines have been placed in service over the year, not how many machines are operating at any given time. For example, if an old machine is replaced mid-year with a new one, a permit is issued, or if a route vendor moves machines from one venue to another, new permits are issued with each move.
The increase in total permits issued indicates a healthy rate of machine replacement and a more competitive environment encouraging more frequent changes to location equipment mixes.
A more accurate way to gauge how many machines are in operation is to check the number of permits issued on July 1 when all annual permits are due. On July 1 of 2006, 17,333 machines were permitted, whereas on July 1 of 2005, 17,014 were licensed, for a net gain of just over 300 machines. However, the July 1 2006 volume was up just nine machines compared to 2004, a relatively static rate.
Figures from the last fiscal year indicate there were 2,839 poker-only machines permitted July 1 compared to 4,172 at that time the year before. There were 6,239 keno-only machines permitted July 1 last year versus 8,878 the year before. However, there were 7,936 dual-game machines permitted July 1 last year versus 4,274 the year before, illustrating that conversion from single-game platforms to dual-game continues apace. The great majority of the mid-year permits were issued to dual-game machines.
The machine permits $200 each annually produced $4.2 million of revenue, of which $1.9 million goes to local governments and the balance to fund Gambling Control Division licensing and enforcement activities.
At the close of the fiscal year, there were 96 route vendor permits issued versus 118 in 1999 and 132 in 1991. There were 1,667 location operator permits issued last year versus 1,705 the year before, down 38 locations offering gaming. That figure has not changed appreciably over the years, but is down almost 100 locations from 1999.
The booming popularity of live card games has peaked, according to some industry authorities. As of July 1, 409 card table licenses were issued, but more will likely apply throughout the year. The total for FY 2006 was 491. Live card game permits have been increasing since a low of 187 in 2002.
Card dealer licenses have been increasing exponentially. In 1998, 401 dealers were licensed, but that fell to a low of 224 in 2001 before shooting up to 411 in 2004, 802 in 2005 and 929 in 2006. Gambling control is preparing legislation to ease the dealer licensing burden and to provide additional funding for licensing and enforcement.
Live bingo and keno continue their decline, now down to 86 licenses from 139 in 1998.
GIA's Miller said, "We're not real certain why these particular live games are in such decline with players, but it would be a real shame for consumers to lose these options."
Source: The Montana Tavern Times, Sept., 2006, published monthly by Continental Communications, 125 W. Granite St., Suite 102, Butte, MT 59701.