COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION



FISCAL NOTE



L.R. No.: 0965-01

Bill No.: SB 285

Subject: Economic Development; Gambling; Boards, Commissions, Committees and Councils.

Type: Original

Date: February 25, 2003



FISCAL SUMMARY



ESTIMATED NET EFFECT ON GENERAL REVENUE FUND
FUND AFFECTED FY 2004 FY 2005 FY 2006
Total Estimated

Net Effect on

General Revenue

Fund

 $0 $0 $0



ESTIMATED NET EFFECT ON OTHER STATE FUNDS
FUND AFFECTED FY 2004 FY 2005 FY 2006
Gaming Proceeds for Education $35,731,000 to $51,482,000 $42,877,000 to $61,778,000 $42,877,000 to $61,778,000
Gaming Commission $2,035,000 to $5,755,000 $2,443,000 to $6,906,000 $2,443,000 to $6,906,000
Total Estimated

Net Effect on Other

State Funds

 $37,766,000 TO $57,237,000 $45,320,000 TO $68,684,000 $45,320,000 TO $68,684,000



Numbers within parentheses: ( ) indicate costs or losses.

This fiscal note contains 6 pages.









ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED FY 2004 FY 2005 FY 2006
None
Total Estimated

Net Effect on All

Federal Funds

 $0 $0 $0



ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED FY 2004 FY 2005 FY 2006
Local Government $6,055,000 to $11,475,000 $7,207,000 to $13,770,000 $7,207,000 to $13,770,000




FISCAL ANALYSIS



ASSUMPTION



Officials from the Department of Public Safety - Missouri Highway Patrol assume this proposal would not fiscally impact their agency.



Officials from the Office of Administration - Budget and Planning (BAP) state the proposed legislation should not result in additional costs or savings to their agency.



Officials from the Missouri Gaming Commission (GAM) state that an increase in gaming taxes and admission fees stem from the assumption that removing the loss limit will increase gaming revenue and customer visits to Missouri casinos. GAM believes that gaming revenue and customer visits will increase due to following three factors:



  1. Removing the loss limit will eliminate the need for boarding cards, which track the loss limit. GAM estimates that by eliminating the boarding card requirement, customer volume will

ASSUMPTION (continued)



increase by about 12%. Based on an average win per customer of $60, gaming revenue will increase approximately $172 million.



  1. Removing the loss limit will increase efficiency at the front gate, table games and slot machines. Currently, when a customer arrives at the casino, they must stop at ticketing to obtain a boarding card, which monitors the loss limit. In addition, each time a customer buys in at a table, play stops while the loss limit controls are initiated (swiping the card to check buy-in status). Likewise, at the slot machines play is often interrupted due to loss limit controls. All these factors combine to reduce gaming revenue and drive customers to other more convenient gaming markets. GAM estimates that by eliminating the inefficiencies caused by the loss limit controls, gaming revenue will increase by 2.8% or approximately $35 million.


  2. Finally, removing the loss limit will attract high-end customers to Missouri casinos. These are gamers who typically buy-in well above the $500 level. Removing the loss limit would make

Missouri a potential destination market for the out of town high-end customers. GAM estimates that an additional 339,000 high-end customers will visit Missouri casinos at an average win per customer of $400, thus increasing gaming revenue by about $136 million.



In summary, GAM assumes that removing the $500 loss limit will result in additional gaming taxes of roughly $68,600,000 ((172 million + 35 million + 136 million) x 20% tax rate) as well as an increase in admission fees of roughly $13,812,000. The breakout of GAM's estimate of increased taxes and fees between the state and the home dock cities and counties follows;



FY 2004 FY 2005 FY 2006

State Revenue

Gaming Taxes for Education $51,482,000 $61,778,000 $61,778,000

Admission Fees to MGC Fund $ 5,755,000 $ 6,906,000 $ 6,906,000

Total $57,237,000 $68,684,000 $68,684,000



Home Dock Revenue

Gaming Taxes $ 5,720,000 $ 6,864,000 $ 6,864,000

Admission Fees $ 5,755,000 $ 6,906,000 $ 6,906,000

Total $11,475,000 $13,770,000 $13,770,000







ASSUMPTION (continued)



GAM states the estimated impact on the repeal of the $500 loss limit was revised in the Summer of 2002 down to the estimates above.



Oversight reviewed the effect of the repeal of loss limits on the state of Iowa and found that Iowa's win per patron increased by approximately $7.50 when its loss limit was repealed. According to the Gaming Commission, the Adjusted Gross Receipts (AGR) per patron, or win per patron in FY 2002 was $53.71. Oversight assumes this proposal would increase the win per patron in Missouri to

$61.21 ($53.71 + $7.50). Assuming a 5% increase in the number of admissions, Oversight estimates the state impact would be an increase in the gaming tax of $42,877,000 and an increase in the admission fee revenue of $2,443,000. The corresponding local increase is estimated to be an increase in gaming tax of $4,764,000 and an increase in admissions fee revenue of $2,443,000 annually. The FY 2002 win per patron in Iowa was $49.04 while in calendar 2001 in Illinois it was $94.85. For fiscal note purposes, Oversight will range the potential fiscal impact of this proposal from Oversight's estimates to the Gaming Commission's estimates.







FISCAL IMPACT - State Government FY 2004

(10 Mo.)

 FY 2005 FY 2006
GAMING PROCEEDS FOR EDUCATION FUND
Income - Gaming tax proceeds from repeal of $500 loss limit $35,731,000 to $51,482,000 $42,877,000 to $61,778,000 $42,877,000 to $61,778,000
ESTIMATED NET EFFECT TO THE GAMING PROCEEDS FOR EDUCATION FUND



$35,731,000 to $51,482,000

$42,877,000 to $61,778,000

$42,877,000 to $61,778,000
GAMING COMMISSION FUND
Income - Increased admissions from repeal of the $500 loss limit $2,035,000 to $5,755,000 $2,443,000 to $6,906,000 $2,443,000 to $6,906,000
ESTIMATED NET EFFECT TO THE GAMING COMMISSION FUND $2,035,000 to $5,755,000 $2,443,000 to $6,906,000 $2,443,000 to $6,906,000








FISCAL IMPACT - Local Government FY 2004

(10 Mo.)

 FY 2005 FY 2006
HOME DOCK CITIES AND COUNTIES
Income - gaming tax from repeal of $500 loss limit $3,970,000 to $5,720,000 $4,764,000 to $6,864,000 $4,764,000 to $6,864,000
Income - admission fee increase from repeal of $500 loss limit. $2,035,000 to $5,755,000 $2,443,000 to $6,906,000 $2,443,000 to $6,906,000
ESTIMATED NET EFFECT TO HOME DOCK CITIES AND COUNTIES



$6,005,000 to $11,475,000

$7,207,000 to $13,770,000

$7,207,000 to $13,770,000




FISCAL IMPACT - Small Business



No direct fiscal impact to small businesses would be expected as a result of this proposal.













DESCRIPTION



This proposal repeals the authority of the Gaming Commission to enforce a $500 maximum loss per person per gambling excursion.



This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements or rental space.



SOURCES OF INFORMATION



Missouri Gaming Commission

Office of Administration

Budget and Planning

Missouri Highway Patrol







Mickey Wilson, CPA

Director

February 25, 2003