Casino Amendment Would Build Highways By Fleecing the Poor

FOR IMMEDIATE RELEASE
Thursday, January 25, 2018

Little Rock, Ark. – On Thursday the Arkansas Attorney General rejected wording for a ballot proposal authorizing casinos in three counties in Arkansas.

Family Council President Jerry Cox issued a statement saying, “I am glad Attorney General Rutledge rejected this measure. This amendment is so bad it’s hard to know where to begin. Casinos prey on the poor, but this amendment deliberately builds casinos in some of Arkansas’ poorest counties. In fact, it actually prohibits casinos in prosperous counties in central and northwest Arkansas. Why would they want to put casinos in the poorest parts of the state? That’s just going to entice poor people to gamble away what little money they have.”

Cox also said the amendment benefits gambling corporations from other states. “The way the amendment is written, wealthy companies who have experience running casinos elsewhere are the only ones who would be eligible to operate casinos in Arkansas. That’s going to favor big gambling corporations from other states who are looking to expand business. Local people won’t be the ones who own the casinos. Exactly how does that drive Arkansas forward?”

Cox also pointed out the tax rate the amendment imposes on casinos is well below the national average. “Most states tax casinos at a rate of twenty-percent to fifty-percent or more. Under this amendment, casinos in Arkansas would be taxed at twelve-percent. That means casinos in Arkansas would not generate as much tax revenue as they do in other states.”

Cox said in the end casinos will not improve Arkansas’ economy. “Just look at Mississippi and Oklahoma. Their counties that have casinos also have high levels of poverty. Arkansas already has casinos in Garland and Crittenden counties. Garland Count’s poverty rate is forty-percent higher than nearby Saline County’s. Crittenden’s poverty levels are some of the highest in the state. You can’t gamble and tax your way to prosperity.

“And what about the social cost? Casino gambling is linked to homelessness, domestic violence, divorce, and bankruptcy. Supporters say the amendment will improve Arkansas’ roads. If any roads get improved, the poor will be the ones paying for it, and the best roads in town probably will be the ones leading to the casino.”

Family Council is a conservative education and research organization based in Little Rock.

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Photo Credit: By Brian Turner (Flickr: My Trusty Gavel) [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons.

Interim Report on Taxes Hints at Cutting Exemptions, Increasing Gambling Taxes

A week before Christmas, consultants for Arkansas’ Tax Reform and Relief Legislative Task Force released an interim report analyzing the state’s tax structures.

The report is some 180 pages long, and touches on everything from motor fuel taxes to K-12 education funding.

The report does not make any final recommendations about tax policies, but it does contain a few elements we find troubling.

#1. The Report Hints at Cutting Charitable Tax Exemptions

Under Arkansas law, sales to nonprofit hospitals, sanitariums, and nursing homes are exempt from state sales tax.

The report says exemptions like this one “significantly erode the state and local tax base.” In other words, the state’s consultants seem to think Arkansas might have a lot more tax revenue to work with if it started taxing sales to these charities.

The report refers to this exemption as a “prime candidate for review” by the Arkansas Legislature. It also highlights sales tax exemptions on churches and other nonprofits.

Charities and churches contribute at least $378 billion to the U.S. economy each year — and possibly much more than that, according to some estimates.

Many charities operate on budgets that are so tight they likely would have to shut their doors if they were taxed at the same rate as for-profit corporations. However, this report by the state’s consultants could lead some to conclude the State of Arkansas would somehow be better off if it taxed charitable organizations. That’s a dangerous conclusion.

#2. The Report Hints That Gambling Might Be a Good Source of Tax Revenue

The report notes that many states are turning to legalized sports betting as a source of tax revenue, and says,

While most excise taxes have shown little growth in recent years, the revenue from electronic games of skill [the casino games operated in Hot Springs and West Memphis] is a notable exception. Revenue generated by the tax shows a strong upward trend in recent years. Since 2012, revenues have more than doubled.

This hints that Arkansas might somehow reap more tax revenue if it legalized more gambling. However, no state has gambled and taxed its way to economic prosperity.

The Arkansas Lottery pulls hundreds of millions of dollars out of the state and local economy each year; casinos and other forms of gambling do the very same thing. As we noted a few years ago, poverty levels are above average in parts of Mississippi, Arkansas, and Oklahoma that have casinos.

What’s more, many experts will tell you the social and economic cost of gambling dwarfs any tax revenue the state might glean. The bottom line: Arkansas won’t improve its economy or its state budget by legalizing more gambling.

Conclusion

This report is not the final word on Arkansas’ tax policies. However, it could lead some to believe Arkansas might benefit by taxing charities and legalizing more gambling. Arkansans should think twice before venturing down that road.

You can read the entire interim report here.

Judge Rules Against Illegal Gaming Devices in St. Francis County

A judge in St. Francis County recently ruled against gambling machines operated by the company Arkansas Amusements.

The company apparently owns several gambling-style machines across the state, and has tried to justify the machines by paying taxes on their revenue.

In his ruling against the machines, the judge wrote,

Illegal gaming devices do not become legal by paying taxes on them. Plaintiffs allegation that skill or dexterity is involved does not make the illegal gaming devices legal.

This is a good ruling. We have written repeatedly about the proliferation of illegal gambling machines in Arkansas. With the exception of the state lottery and the casinos and racetracks in Hot Springs and West Memphis, Arkansas law generally prohibits gambling.

Some of Arkansas’ anti-gambling laws are vague. Others have been on the books for nearly a century — long before the Internet and electronic gaming. As a result, we are hearing  reports of illegal gambling houses opening in some parts of the state.

Earlier this year authorities in Saline County arrested several people in connection with four gambling houses. In August authorities in Jefferson County raided two gambling houses and indicated they might raid others in the future. We have heard rumors of similar establishments in east Arkansas.

These gambling houses often use machines that look more like video games than traditional slot machines or card games. Some attorneys consider them legally “gray” — the machines probably are illegal, but the case against them isn’t always black and white.

From what we are hearing, these gambling houses sometimes locate in former liquor stores or old gas stations. They may look like legitimate businesses, but — as this judge’s ruling in St. Francis County indicates — their activities could be illegal.

We plan to work with lawmakers and prosecutors to clarify state laws and ensure our existing anti-gambling laws are enforced.

If you suspect a gambling house is operating in your community, please notify your local authorities. Then call us at (501) 375-7000.