Montana video gambling tax revenue falls 18 percent with smoking ban, recession

Montana’s video gambling revenue falls 18 percent

HELENA, Mont. — Montana video gambling tax receipts fell by nearly 18 percent in the final three months of 2009, with the new indoor smoking ban adding to the effects of the recession.

Gross video gambling taxes will be about $12.5 million for October-December 2009, down by about $2.7 million, or 17.8 percent from the previous three months, said Rick Ask, administrator of the Gambling Control Division of the state Justice Department.

The taxes for the final quarter of 2009 are down by 16.8 percent, or $2.5 million, from the same time in 2008.

Casinos pay a 15 percent tax on the profits from video gambling machines.

Industry officials expected the drop in profits, and thus taxes, because the statewide smoking ban took effect on Oct. 1.

“Those numbers would certainly match what we’ve been hearing from the field,” said Mark Staples, a Helena attorney who represents the Montana Tavern Association. “The downturn has been ranging from 15 percent to 20 percent in most licensees that have any significant gaming property.”

Neil Peterson, executive director of the Gaming Industry Association of Montana, said he also expected about a 17 percent drop.

“In addition to the smoking ban and the economy, we had a very cold December,” he said. “So with the combination of the three, you’re definitely going to get that kind of a result. It’s definitely going to impact business.”

Peterson said he has looked at what’s happened in other states with a smoking ban and expects business will gradually come back up over the course of six months or a year.

“It won’t come back to where it was before, but it will be close,” he said.

Staples said it’s difficult to say how much of the decline can be attributed to the smoking ban and how much to the recession, but he believes most of it is due to the smoking ban because the recession had already hit the state.

“But obviously the recession has certainly played a factor and is probably hampering a quicker recovery” from the effects of the smoking ban, Staples said.