Gaming taxes drop 17.8 percent
In mid-January the state Gambling Control Division (GCD) released preliminary figures for video gambling machine tax collections that closely mirror what operators in the business had been saying for months.
GCD Administrator Rick Ask told the Montana Tavern Times Jan. 19 that gross VGM tax figures for the Second Quarter of Fiscal Year 2010 (Oct. 1-Dec. 31, 2009) will be about $12.5 million or $2.7 million less than the same quarter one year ago, a decrease of 17.8 percent.
He also noted collections will have fallen $2.5 million from the First Quarter of FY 2010 (July 1-Sept. 30, 2009), a decrease of 16.8 percent.
A decline of $2.7 million in tax collections translates into an $18 million decline in gaming revenue for location operators, which is a little over $800 per week for the average establishment.
Tax collections for individual cities and counties weren't ready at Tavern Times deadlines so will be featured next month.
On Jan. 7 the state's largest video gaming machine route vendor, Century Gaming, which owns and manages about 4,200 machines or close to one-fourth of the state's total, estimated gaming machines revenues would be down state-wide by 17 percent.
Heidi Schmalz, the company's Chief Financial Officer, said, "I believe the state total (VGM tax collection) is going to be about $12.5 for the second quarter, down approximately 17 percent. This is only an assumption ... (and) I hope I am off," which, of course, state figures later proved she was not.
Century is using a quarter-to-quarter comparison as they believe the first quarter, down almost six percent, already showed the effects of an economy heading south, so in this case a quarter-to-quarter comparison more accurately represents the portion of the decline due solely to the state-wide indoor smoking ban that went into effect for bars and casinos Oct. 1, 2009.
The company has seen weekly post-ban percentage declines, compared to the FY 2010 First Quarter of:
Oct. 3-9: -7.46
Oct. 10-16: -14.97
Oct. 17-23: -16.73
Oct. 24-30: -15.54
Oct. 31-Nov. 6: -16.26
Nov. 7-13: -15.37
Nov. 14-20: -16.27
Nov. 21-27: -19.82
Nov. 28-Dec. 4: -21.52
Dec. 5-11: -20.87
Dec.12-18: -23.98
Dec.19-25: -17.85
Dec. 26-Jan. 1: -26.47
Jan. 2-8: -17.18
Jan. 9-15: -23.92
Bill Stedman of American Music Company, a route vendor with over 900 gaming devices covering the greater Great Falls/Helena regions primarily, told the Tavern Times Jan. 20 that "not much has changed since we talked the last time. Business is up and down, more down than up."
He said, "AMC's collections for the Second Quarter of FY 2010 were off by 11 percent compared to the same quarter in FY 2009, so I guess we may have fared better than some or maybe even most.
"Right now the weather is cooperating and we are going into what has been traditionally our strongest time of the year in Great Falls with conventions, basketball tournaments, tax returns, art auction, et cetera."
"We are working with our locations to provide the best in service for the gamers that are out there, keep expenses down and profits and attitude up."
Tim Carson of Amusement services, a route with over 800 devices primarily in the Billings and east area, said his collections remained depressed, now down about 13 percent in a same-quarter comparison.
He also said the first week of January looked relatively hopeful but collections dropped substantially again the second week of the month.
He said in the last six months he has lost 13 locations on his route, 11 of them closed and two quit offering gaming.