Special gambling taxes provide large amounts of revenues to many of the jurisdictions with legalized gambling. In the state of Nevada, casino taxes provide the largest share of public revenues from any tax source. In 1997, more than $586 million was generated by the 6.25% gross win tax, plus various fees on licensing, machines, and table games. Additional revenues go to local governments in the form of fees as well as property taxes. That year more than 40% of the state’s internal source funding came from the casino sector of the economy. More revenues flow to the state treasury as a result of the nongambling activities of tourists who are drawn to the state because of its casinos. These taxes take the form of room taxes, entertainment taxes, and general sales taxes. No other state or provincial jurisdiction in North America receives as high a proportion of its revenues through gambling activities.
In a recent year the state of Mississippi receives $262 million, or about 10 percent of its internally generated revenues from casino taxes. No other state receives as much as 4 percent of its revenues from casino taxes. Lotteries yield low portions of state budgets as well. At the low end, New Mexico’s lottery gives the state only 0.4% of its budget; at the high end, Georgia receives 4.1 percent of its state revenues from its lottery (Christiansen 1999).
Although Nevada is the state that is most dependent upon gambling revenues, many other states receive more dollars from gambling sources. Nevada ranks only thirteenth among the states in taxes and other gambling revenues. New York leads the list. Governments of the Empire State, Texas, and Massachusetts each receive over $1 billion a year from lottery operations. Illinois and New Jersey each receive approximately $900 million from a combination of lottery revenues and casino taxes. Ohio, Florida, and California receive between $700 million and $800 million from lotteries. Lottery receipts in Pennsylvania and Georgia exceed Nevada gambling tax revenues, as do the combined lottery revenues and casino taxes of Indiana and Michigan. Quebec and Ontario, the two largest Canadian provinces, also receive more government funds from gambling sources than does the state of Nevada. Both provinces have large lotteries. Quebec has three government-owned casinos, which provide all their profits to the government. In Ontario, the government is the casino owner, but there are private operators. The operators pay a 20% gross win tax, then they take 5% as their share of the profits. After other casino expenses are paid, the province is given the remainder of the revenues.
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