Tilman Fertitta, whose Fertitta Entertainment Inc. owns Golden Nugget Lake Charles, criticized Louisiana slot machine laws at a conference this week. Mr. Fertitta’s remarks were made at a meeting of the Riverboat Economic Development and Gaming Task Force.
Speaking at the event, Tilman Fertitta proposed possible changes that would allow the Louisiana casino industry to be more competitive over the next 25 years of business. The suggestions focused on making commercial casino operators more competitive with tribal gaming facilities.
Tilman Fertitta’s Casino Law Suggestions
In particular, the CEO of Fertitta Entertainment called for changes to the maximum number of slot machines allowed in Louisiana riverboat casinos. Fertitta, who is no relation to the Fertitta Brothers of Station Casino and UFC fame, also called for a lowering of the tax rate on Louisiana slots, because his company works at a disadvantage.
During the conference, the American Press reported Houston casino executive saying, “It is shocking to me how much business we lose to tribal gaming here in the state of Louisiana. What in the world is the difference in me having 1,600 slot machines or 1,700 slot machines when they can have 2,500?”
Why Tribal Casinos Pay Lower Taxes
One problem private or commercial casinos run into compared to tribal casinos is the Indian Gambling Regulation Act. The IGRA stipulates that states can collect taxes from tribal casinos, but only enough to cover the cost of regulatory oversight. By law, the state cannot charge exorbitant tax rates. Only if the state offers a tribal casino concessions — such as monopolies over certain games — can the state tax Indian casinos at a higher tax rate.
No such law exists for private casino operators. In fact, states generally legalize and regulate the commercial industrial sector with tax revenues in mind. Those taxes are used for public education or scholarship funds. If the state only taxes at the cost of regulation, then it has no money for the General Fund.
Tax Caps on Promotional Cash
States like Louisiana can draft laws which make commercial casinos more competive. Several of Tilman Fertitta’s other ideas have merit, in that regard. Ideas for tax caps on promotional money, time limits on slot machine jackpots, and limitations on the number of slots in a casino make sense.
For instance, Fertitta also called for a tax cap on promotional play. Some US states tax the promotional dollars that casinos offer as incentives to players. Other states do not tax the money, because it is not money that casinos actually pocket. Louisiana taxes promotional money, but Fertitta wants only a certain amount of the incentives taxed, so casinos can offer more aggressive promotions. Such promotions are proven to work in cultivating a new customer base.
Slot Machine Jackpot Verification
Louisiana’s pause on slot machines that pay out big jackpots does not make sense, according to the Texas executive. Citing his knowledge of Nevada and Mississippi gaming laws on slot machines, Fertitta said that Louisiana could stand to increase the size jackpot which triggers a pause in play (for a quick audit). Louisiana’s slot machine laws are outdated and represent a time with less inflation.
Describing the verification process in Louisiana, Fertitta said, “A slot machine that is inactive for at least 10 minutes to allow for verification after a $10,000 jackpot is won. Mississippi and Nevada don’t require that verification until a $100,000 jackpot is won.”
He also said that paperwork is too unwieldy. Business people in every sector complain of regulations, not so much because they have employee requirements, but because they waste so much time on paperwork. Thus, the Golden Nugget Lake Charles owner’s complaints about paperwork were a traditional businessman’s concern about wasteful red tape.
Vendor Paperwork Is Out of Control
Fertitta said the purchasing process for vendors should be simplified. He said vendors worth more than $200,000 have to fill out 21 pages of paperwork. Not only does it take time for the transmission of useless information, but it makes vendors distrustful of the process. Background checks take much less time and are less invasive.
The casino executive said of the vendors put off by the massive amount of questions, “It just scares them. They feel like it’s an invasion of privacy. You can do a simple background check on one page.”
Whether Fertitta Entertainment’s ideas will be considered by the bulk of Louisiana lawmakers is unknown, but the Lake Charles casino industry is becoming a major hub for Louisiana’s gaming sector. The proximity to Houston, Texas makes Lake Charles a major enclave. It currently has 9 different casino operations, including the Golden Nugget Lake Charles.
