Governor tears up ‘markers’ tax plan

CARSON CITY — Gov. Jim Gibbons backed off Friday from his plan to require casinos to pay gaming taxes more quickly on “markers,” or credit extended to players.

Taxes on markers currently are paid when the casino collects for the credit that has been extended to patrons.

The governor had estimated that the state could secure an additional $31 million by requiring immediate payment of the 6.75 percent tax.

In light of the continued decline in the economic condition of the gaming industry, Gibbons’ communications director Daniel Burns said, the governor will not submit the marker proposal to legislators for their approval.

“We are in the process of looking for other ways to deal with that shortfall,” Burns said. “We’re sure we’ll be able to find something. There was a little bit of leeway built into the budget.”

Nevada Resort Association President Bill Bible compared the marker plan to requiring individuals to pay taxes on their 2009 income on their 2008 tax forms.

Bible also said the proposal would have been counterproductive because casinos probably would have reduced their lending of credit and that could have led to a drop in total play. With less play, the state would have received less in gaming taxes, Bible added.

“That would have been the unintended consequence,” Bible said. “I am not sure the governor’s budget people understood that.”

During hearings, state Budget Director Andrew Clinger justified the advance collection of taxes on markers in part because 96 percent of the credit extended to players is ultimately paid off.

But Bible, a former state budget director, said the 4 percent figure represents what the industry writes off in unpaid markers.

He said casinos sometimes make deals with players under which they pay back less than what they owe.

Still he said most markers are paid and the state eventually gets that tax revenue.

Credit is an inducement for further business, Bible said. If a player who owes $100 is given credit and wins $200, then the marker will be paid back and the player will have reason to continue to play.

Contact Capital Bureau Chief Ed Vogel at evogel@reviewjournal.com or 775-687-3901. Contact reporter Molly Ball at mball @reviewjournal.com or 702-387-2919.