Colorado Gaming Commission Rejects Casinos’ Tax-Break Plea

Local communities feared further cuts in gaming tax revenues but has the can just been kicked further down the road?

There are fears for Colorado’s second ‘gold rush’ after the state gaming authority rejected a proposed tax break for casinos.

Gaming breathed new life into some of Colorado’s old gold mining towns in the 1990s, but now casino representatives are warning that permanent closures could result unless there is a fiscal stimulus.

With casinos closed since March 16 due to the coronavirus, the Colorado Gaming Association sought a raise of the gaming income thresholds that trigger progressively higher tax rates.

Community Voices Win Out In Tax-Break Hearing

At a Gaming Tax hearing held by video conference, however, all five commissioners for Colorado’s regulatory body, the Limited Gaming Control Commission, rejected the proposal, citing “very compelling” testimony from those counties and towns that primarily benefit from gaming taxes.

Representatives of those communities had argued that their already-stretched budgets could not handle a significant cut in tax revenues from the casino business.

The Denver Business Journal reported Gilpin County Commissioner Gail Watson as testifying that 82 percent of county revenue comes from casinos in Black Hawk and Central City – two of Colorado’s three approved gaming areas. With no alternative sources of taxation revenue, such as roads, landfill sites, or banks, she argued that any casino tax break would entail budget cuts elsewhere that would affect county jail services and law enforcement patrols.

“…it’s going to be a real hit to the public safety,” Watson said. “…That’s what it comes down to.”
Gilpin County has already had to close its community center and other facilities because of lost tax revenue during the pandemic shutdown. Cripple Creek’s tax income from its casinos is down 70 percent.

The Pain Goes On When Colorado Casinos Re-Open

Arguing for the tax threshold adjustment – a temporary measure until better times return – the Gaming Association said that the state’s casinos had made no money for more than two months and would still face earning restrictions when they re-opened, due to social distancing requirements. The number of slot machines in use is likely to be reduced as is the number of players allowed around table games.

Daniel Holmes, a gaming specialist with accountants RubinBrown LLP, told the hearing that he estimated casinos had lost $99 million in revenue since they were closed, a deficit which had in turn cost Colorado $17 million in tax.

Filling those holes when casinos re-open, he predicted, will not be helped by the three gaming centers being a 45-minute drive from Denver and Colorado Springs.

The Association did not put a figure on what the proposed tax break would mean for the casinos, such is the uncertainty surrounding their re-opening. Its legal counsel Mark Grueskin told the hearing that pressure from some lenders was mounting, despite the casinos being unable to trade since March. “Casinos may or may not be here, depending on how long this lasts,” he warned.

Without Tax Boost, Colorado’s Casinos And Communities Struggle Alike

Some give-and-take between gaming and government has already taken place, with Black Hawk and Cripple Creek waiving gaming-device fees during the shutdown. Grueskin argued that these compromises must go further, or everyone could lose. The less money casinos have to spend on hiring and marketing and wooing back customers already cagey after the pandemic, the less tax revenue Colorado communities derive from the casino industry.

“We do not believe that a gaming industry limping back into opening is in the best interest of anybody who’s affected,” he said. “No one benefits from a meager or lackluster reopening. The question is, will there be resources that allow the industry to reopen in a meaningful way?”

About the Author

Jeffrey Prest

A sportswriter for more than 20 years, Jeffrey Prest’s beat has ranged from English Premier League soccer and American sports to fly fishing (less drama but you never need a press pass). A spare-time gambler for almost as long (sports, horses, and poker) these two main strands of his life finally get to entwine.