Gaming taxes top $60 million for FY '07
Pub Date: 9/1/2007
Video gaming machine tax collections for Fiscal Year (FY) 2007 topped $60 million for the first time and wound up at 6.84 percent ahead of FY 2006. Machine taxes amounted to $60,721,551, up $3.89 million over the previous year. Gaming machine taxes for state and local governments have amounted to $684 million since 1990.
The last six years have been characterized by stability in the regulatory and tax spheres which is reflected in the tax numbers.
Tax collections and the regulatory environment had been quite volatile from 1994 to 2001 when the percentage gains fluctuated between 2.47 and 11.97 percent.
In the years 2002 through 2007, tax collections grew by 5.12, 5.56, 8.54, 6.59, 6.48 and 6.84 percent respectively, reflecting market stability.
Machine tax collections in the final quarter of Fiscal Year (FY) 2007, April-June, were $15.31 million, up 7.64 percent or $1.09 million from the same quarter one year ago.
The first quarter (July-September 2006) saw 7.11 percent growth, followed by 7.59 percent in the second quarter and 5.10 percent in the third quarter.
Rich Miller, executive director of the Gaming Industry Association of Montana (GIA) said recently, "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 Legal and Government Affairs Counsel Mark Staples concurred with Miller. "Once again we see the positive result of a stable and predictable regulatory environment 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 consistent, reasonable growth of revenue that has been the hallmark of gaming since It's legalization in 1989."
Gaming machine permits climbed from 21,445 in FY '06 to 22,200 in FY '07. 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 new 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 or updates 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.
But since the Gambling Control Division is making the transition to a new database, permitting counts were unable to be tabulated as timely as in the past, so the July 2007 figures are uncharacteristically low, followed by August numbers that are inordinately high, indicating some July permit payments this year weren't posted until August.
July of 2007 shows 16,277 permits posted (compared to 17,333 the year before) while August 2007 shows 1,485 compared to 289 last year.
July-August 2007 is 17,762 compared to 17,622 for the same two months last year. Thus, it would appear that the number of machines in operation currently has increased by about 140 over last year.
During FY '05, machine owners were allowed to run both poker and keno games on one platform. Prior to that, a machine was either poker or keno but not both.
Figures from the Gambling Control Division show in FY '07 there were 1,946 permits issued for poker-only machines, and 4,828 permits for Keno only machines with 15,426 permitted to run multi-game software. Just two years ago there were only 6,220 multi-game permits issued, illustrating the rapid pace at which machines have been upgraded.
In addition, manufacturers have been simultaneously improving the quality of game play with enhanced graphics, audio, animation, ergonomics and innovative bonus game features.
The recent resurgence in the popularity of live card games may be cooling as 494 tables were licensed in 2007 compared to 491 in 2006. This is up from 199 just four years ago. And dealer licenses issued was pegged at 726 compared to 888 the year before.
At the close of the fiscal year, there were 103 manufacturer/route vendor permits issued versus 95 in FY '06 but 118 in 1999 and 132 in 1991. There were 1,665 location operator permits issued last year versus 1,705 the year before, down 40 locations offering gaming. That figure has not changed appreciably over the years, but is down 88 locations from 1998.
Live bingo and keno continue their decline, now down to 82 licenses from 99 in FY '06 and down from 139 in 1998.
Source: The Montana Tavern Times, September, 2007, published monthly by Continental Communications, 125 W. Granite St., Suite 102, Butte, MT 59701.