DETROIT, April 15, 2011 /PRNewswire/ -- The Detroit casino operators are united in disappointment at being singled out for a tax increase. Detroit's gaming industry is already the highest taxed industry in the state. It has made enormous commitments in capital investment and job creation and has paid billions of dollars in vital tax revenues for the City of Detroit and the State of Michigan.
Unlike most industries, the casino industry is taxed twice -- first on gaming revenues, and again on what remains after payment of all operating expenses. To suggest our widely reported gaming revenue numbers are the same as our profits is inaccurate and misleading.
Like the City and other large employers in Detroit, we too have experienced rising costs associated with running these large casino hotel resorts, in addition to rising wages and unprecedented increased costs to provide benefits.
The gaming industry in Detroit has invested more than $2 billion to build our first class entertainment complexes; we employ and provide benefits for approximately 9,000 people. Detroit's casinos have also provided enormous opportunities through the purchase each year of hundreds of millions of dollars in goods and services from local vendors.
To make these investments, each of the casino companies had to take on high levels of debt. Any tax increases will reduce our ability to repay our debt, which could lead to lay-offs and further weaken an already challenged market, greatly reducing our ability to reinvest in our properties.
This proposal couldn't come at a worse time. Detroit's local businesses must remain competitive as casinos open in Ohio and there is constant pressure to expand gaming elsewhere in Michigan. Limiting our ability to reinvest may result in the City losing far more than anything gained by the proposed increased rate.
As to the competitive nature of our tax rate, Detroit casinos are paying much more than landbased casinos in other major gaming jurisdictions. The Nevada gaming tax rate is 6.75%; New Jersey's rate is 9.25%; Mississippi's rate is 11.2%. States imposing higher tax rates typically are markets where initial investments are much lower. For example, the casino currently under construction in Toledo is expected to cost $300 Million vs. Detroit's $700 Million average per casino, and, unlike the Detroit casinos, the Toledo casino will not be subjected to commercial or tribal casino competition. We are currently paying an effective 24.5% gaming tax rate, taking into account the additional fees we must pay to the City and State.
We kept our promises to the City of Detroit and the people of Michigan to invest in first class casino hotel resorts, create thousands of high paying jobs with great benefits, employ thousands of Detroit residents and purchase goods and services locally.
We continue to fulfill each of these commitments based upon the promise that we would be able to operate in a stable business environment.
We trust that the City of Detroit will keep its promises too.
SOURCE Detroit Casino Operators