In Indiana Jones and the Temple of Doom, the big bad guy likes to pull people's hearts out of their chest. This, obviously, kills them. And it's a beautiful picture for what the Nevada teacher's union wants to do to the state economy.
Another apt picture is the story of the goose who laid the golden egg. The farmer gets greedy, and slices open the goose, hoping to get much more gold now, instead of waiting for it to reliably deliver.
With the economy down and the gaming industry already laying off people because times are hard; with gas prices pinching auto traffic to the state and jet fuel prices pinching airlines; and with the housing market beating up on construction employment - it takes blind fools to think that raising taxes by 44% on the biggest industry in the state won't be a major blow.
The profits made in business aren't a pot of money that we can draw from through taxes without consequence. It so happens that people like their money, and the ability to get big pots of money is the whole reason they are in business. The casinos will stay in business, but it will be their employees who suffer. It will be lost construction jobs when they don't expand and rennotave. It's the industries that support gaming that will suffer.
In the end, the teacher's union will get its tax increase. And it will fall squarely on the back of people making $7 an hour who will end up making $0 per hour. And that really makes me mad. It's some of the 197,200 people who are currently employed by the casino hotel industry in the state, making a pittance even compared to teachers, who will get the shaft.
Tuesday, May 13, 2008
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7 comments:
What's interesting to me is that the plan will likely leave Vegas pretty much as-is (perhaps with a minor downturn) while completely farking over casinos in Reno-Tahoe-Carson and small northern towns like Elko and Wendover. And since northern NV and Vegas are competing for tourist dollars, of course Vegas voters are going to vote to screw over their northern competitors...
I'd say that's a pretty reasonable take on what will happen. Everything but Vegas is already struggling, and Vegas isn't too hot either.
For those who are really curious, here's the numbers. Note that this is just revenue, not profit. This is money coming in, before any expenses are added.
Here's the Yahoo Finance detail for publicly traded companies in the Resorts and Casinos sector.
The more I think about it, if this bill passes, could the gaming board take some of the pressure off by allowing casinos to adjust their slots more toward the house? If I'm not mistaken, they're required to pay back 98% now - could they change that number to 96% so casinos can cover the onerous new tax? Would the NV legislature/gaming board/whoever makes those decisions ever do that?
And could casinos start putting commissions on sports-book bets to cover the cost? I'm just trying to think of ways to help casino owners cover with this big chunk out of their pockets... I still don't like the tax, I'm just wondering if there are ways to make it hurt the industry less.
If 98% is the target, then just about everyone's in trouble, because over the last 12 months the Strip (for example) has a 6.89 win percent, or a 93.11% return rate. I do think there is some limit, but I don't know what that is.
That is an interesting idea for addressing this - let the casinos bring in more gaming revenue (I'll think of the "win" as revenue, so that payouts aren't thought of as a cost), so that their revenue can go up to offset the tax.
The problem is that if casinos are seen as becoming stingier, that could have a negative effect on their image and negatively affect gaming on the flipside.
Side note: Evidently, if you don't want to lose your shirt in Vegas (but want desperately to pay the 1-armed robber), play the $25 slots. With the lowest win%, it's the one that will take the smallest amount of your money over time. If you want to help Wynn build a new casino, play Megabucks and the nickel slots.
Wikipedia says the limit's 75% payout, so if the Strip's at 93%, that obviously means market pressures are keeping them from making their slots tighter. So that's probably not an option... unless you rely on the stupidity of people and pull down the payout percentage to 90% while boosting the jackpots to absurd levels.
To that I'd say "look at MegaBucks." It's about a 12-13% margin. Penny and Nickel slots are a bad deal overall (because people feel like they're not spending as much), and the "Hit a $40 million progressive jackpot" machines have similarly terrible odds.
The thing is, you need to advertise those huge jackpots. Megabucks doesn't get a lot of play until the progressive gets really (psychologically) high, and then I've seen lines at the machine. Fortunately, ever-present inflation should make "biggest ever" not too hard to advertise.
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