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Montana's limited gambling allows residents one more valued entertainment option that helps drive the state's economy while creating badly needed jobs and revenues for local and state governments. |
Getting a gaming license application approved in Montana is a process that will cost from $5,000-$10,000 in fees and legal bills.
Each machine that is installed also carries with it a $220-$240 annual permit, depending upon the number of machines in the establishment.
On top of that, the state levies a 15 percent gross revenue tax on the difference between what players put into the machine less the amount they take out in winnings, before any other expenses are deducted (see list of typical gaming establishment expenses). No other industry in the state pays a gross proceeds tax at such high level.
According to the American Gaming Association, the average effective gross revenue tax on gaming nationally is 16 percent. Some jurisdictions levy higher tax rates, others lower.
These tax rates, themselves, are somewhat irrelevant unless viewed in the larger tax context. For example, Montana has no sales tax so relies heavily on income and property taxes, both of which gaming licensees pay on top of the special "sales tax" they pay on gaming income. Other jurisdictions may have comparatively low income and property tax rates, along with sales taxes levied on every business and citizen.
The gaming gross revenue tax yielded $50.1 million dollars in Fiscal Year 2004 (July 1, 2003-June 30, 2004), up $3.94 million over the previous year. Under a complex redistribution formula, approximately one-third of that revenue is retained for state government operations with two-thirds funnelled back to local governments.
Gaming taxes have been growing in the 4-7 percent range annually since the mid-1990s.
The last time the issue was studied (1998), gaming revenues were providing an average of 14.4 percent of city government revenues. Some cities were realizing as much as 24 percent of their budgets from gaming machine taxes.
At the beginning of FY 2005 (July 1, 2004) there were 17,324 machines in operation in the state: 4,172 keno machines, 8,878 poker machines and 4,274 that run both games. 1,684 premises were licensed for gaming, 17 fewer than in 1996 and 75 fewer than in 1999.
The annual permit fees amounted over $4.1 million in FY 2004, some of which goes to local governments, but most of which funds gaming's chief regulatory apparatus, the Gambling Control Division of the Montana Department of Justice.
The state's live card table licenses produced $66,500 in fees in FY 2004.
Source: Montana Department of Justice Gambling Control Division web site <[doj.state.mt.us]>; Continental Communications, 125 W. Granite St., Suite 102, Butte, MT 59701.
Typical licensed establishment operating expenses:
401K Profit Sharing
Accounting Expense
Advertising - Newspaper, Radio, Television, Other
Bank Service Charges
Cash Over/Short
Cleaning Supplies
Consulting Fees
Contract Labor
Credit Card Charge (prohibited for gambling purposes)
Credit Card Processing
Depreciation Expense
Donations Expense
Dues & Subscriptions
Employee Purchases
Employer Portion of Health Insurance
Insurance - General
Interest Expense
Legal Expense
License and Permit Fees
Management Fee Exp.
Market Research Exp.
Meals & Entertainment
Miscellaneous Exp.
NSF Current Year
Office Supplies
Other Employee Benefits
Other Taxes & Fees
Overhead Allocation
Property and Casualty Insurance Expense
Payroll Taxes Exp. (FICA Tax, Medicare Tax, Unemployement Tax)
Personal Property Tax
Postage & Freight
Promotion and Customer Comp Expense - Cash; Beverage; Food & Non-Food Goods; Coupons; Player Redemptions
Property Tax
Employee Recruiting and Training
Rent - Equipment; Gaming Machines
Rent - Real Property
Repairs & Maintenance - Building & Lot
Repairs & Maintenance - Equipment; Gaming Machines
Salary Expense
Store Supplies
Taxes - Federal
Taxes - State
Telephone Expense
Theft
Travel & Lodging
Uniform Expense
Utilities - Power; Water; Sewer; Garbage
Workers Comp. Exp.
Source: Actual gaming business expense accounts ledger, as presented to Continental Communications, 125 W. Granite St., Suite 102, Butte, MT 59701. |
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