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PROMOTES THE DESIRES OF INDIANA ALCOHOLIC PERMIT
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5-20% INSURANCE DISCOUNT EXCLUSIVELY FOR ILBA
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A New Revenue Source:
Legalized e-Gaming |
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Legalization, taxation and
regulation of stand-alone
electronic gaming devices (EGDs)
present a new revenue source for
the state as well as for local
units of government, many of which
are in financial straits similar
to the state.
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Adjusted gross revenues from EGO
play at riverboat casinos in
Indiana continue to show
comfortable growth, despite
ongoing competition from the
existing, untaxed, stand-alone
EGDs that have operated for many
years in Indiana. (See Charts 1
and 2.)
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The
National Gambling Impact Study
Commission (NGISC) reported in
1999 that legalized, stand-alone
EGDs were in operation in six
states.
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The
revenue estimation model presented
here uses conservative assumptions
and examines two alternative rates
of taxation on EGD adjusted gross
revenues (25 percent and 30
percent) and three levels for the
number of machines installed per
location (3,5,7).
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At
the lowest tax rate we examined,
and utilizing three machines per
location, the lowest proposed
parameter, a gaming tax on EGDs
can raise about $144 million per
year. At the two-third/one-third
split between state and local
government, this means that
Indiana would receive about $96
million in additional revenues,
while local governments would
receive about $48 million. (See
Charts 3,4,5.)
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If
the EGD gaming tax were to be
levied at the higher rate of 30
percent and the number of machines
per establishment raised to seven,
the amount of revenue generated
would exceed $400 million. In this
scenario, state government would
receive more than $268 million in
additional revenue, and local
units of government would share
more than $134 million.
The legislation proposed would:
- Permit holders of
on-premises consumption of
alcoholic beverage licenses to
operate EGDs on the licensed
premises.
- Establish an appropriate
rate of taxation that ensures
a positive revenue stream to
the state.
- Establish a maximum number
of EGDs that may be operated
on the premises of a license
holder.
- Prohibit EGDs play by
minors.
- Require that EGDs be out
of sight of minors.
- Thousands of Hoosier
businesses, most of them small and
locally owned and operated, would
benefit from the additional
revenues that would be generated
by stand-alone EGD gaming.
Summary
There are
alternatives to the traditional
responses to a budgetary
challenge, and the legislature
would be well-advised to consider
a wide range of options in lieu of
budget cuts or increases to
general-purpose taxes in addition
to those enacted in the special
session. One such alternative is
proposed here: the legalization,
taxation and regulation of
electronic gaming devices (EGDs)
in stand-alone configurations.
Action to legalize stand-alone
EGDs would have important benefits
to the citizens of Indiana. It
would recognize the reality that
such activity already takes place
in venues across the state, bring
it under regulatory control to
ensure that the machines are
operated appropriately and fairly,
and assess taxes that would help
to meet the current fiscal
challenge. An EGD gaming tax can
be an important source of revenue
for the state, and the legislature
should give it serious
consideration.
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