As Mississippi struggles with budget cuts for education and other programs, residents are asking how the state spends the millions in tax money it collects from casinos every year.
Last year, Mississippi’s 28 casinos reported $2.1 billion in gross casino revenue after they paid winners. Unlike most businesses, which pay taxes on profits, casinos pay this 12 percent tax on winnings before they deduct the cost of wages and other expenses of doing business.
House Bill 1630 was passed by the state Legislature in 2015, and it changed the way casino revenue is split, said Kathy Waterbury, spokeswoman for the Mississippi Department of Revenue.
How it is now divided:
▪ 8 percent of the 12 percent tax goes to the state and all but $3 million is transferred to the general fund
▪ Up to 4 percent of the tax goes to the municipality where the casino is located. From there it is split in several ways. Biloxi, for instance, collects 3.2 percent of the casino tax on the city’s eight casinos plus a fee on each slot machine, with 40 percent deposited into the city’s general fund, 20 percent going to city public safety for police and fire departments, and 10 percent to county public safety. City schools get 20 percent and county schools get 10 percent.
▪ From the $3 million set aside in the state allocation in 2016, $2,375,000 was designated for the bond sinking fund to pay for transportation projects across the state. An additional $500,000 a month went to the Gulfport Aquarium Construction Fund, $41,663 a month to the Catfish Row Museum Construction Fund in Vicksburg, and $83,334 a month to Bass Cultural Arts Center Fund in Greenville.
▪ For 2017, $2.5 million of the bond sinking fund each month will go for transportation and $500,000 a month to the Gulfport Aquarium Construction Fund.
▪ Beginning in 2018, all $3 million a month is designated for the bond sinking fund.
As always, gaming tax revenue feeds a large amount of money into the state and local coffers.
Larry Gregory, executive director of Mississippi Gaming and Hospitality Assn.
The local tax structure compensates the local communities that supply services for the casino industry and the numbers add up. From Aug. 1, 1992, when the Isle of Capri opened in Biloxi, through May 2015, the latest numbers on the Biloxi website, the city has earned $395 million in casino taxes. Biloxi schools got $107 million and Harrison County schools $54 million from Biloxi casinos during that time.
These number are just for the tax earned on winnings inside the casino, and don’t take into account the multitude of other taxes paid by casinos. The 2017 annual report from the Mississippi Gaming and Hospitality Association shows the casino industry in Mississippi paid $957 million in taxes last year to the federal, state and local governments. Since 1992, Mississippi casinos have paid $24 billion in tax revenues, according to the report.
Michael Bruffey, deputy director of MGHA, edited the report and totaled the property sales tax, employee tax, corporate tax, tidelands leases and other taxes paid by casinos. In the case of Biloxi, which collects casino tax, property tax and sales tax from the casinos, “It’s a huge percentage of their overall budget,” he said.
People mistakenly believe that casino revenue in Mississippi was earmarked for education. Bruffey said the dollars that go to education are paid at the local level.
“As always, gaming tax revenue feeds a large amount of money into the state and local coffers,” said Larry Gregory, executive director of MGHA. “We are proud that these dollars are being used for a variety of needs, such as education, transportation and public safety programs.”
Mississippi has the third-lowest casino tax rate in the country after Nevada and New Jersey, which also have a free market system that doesn’t limit the number of casino licenses.
Casino tax facts 2016 :
Casinos in Mississippi paid $957 million in taxes in 2016. That amounts to:
▪ $339 million in federal taxes
▪ $360 million in state and local taxes
▪ $136 million to state general fund
▪ $36 million to bond sinking fund
▪ $86 million to local communities
▪ $25.8 million for city public safety
▪ $25.8 million to city and county schools
Mississippi Gaming and Hospitality Assn.
By the numbers 25 years
Since 1992, when the first casino opened in South Mississippi, the state’s casinos have contributed:
▪ $8.8 billion in federal taxes
▪ $6.5 billion is state taxes
▪ $9 billion in local taxes
▪ $24 billion total
▪ $637.5 million for local education
▪ $150 million in Tidelands lease payments
▪ $22 billion in wages and benefits
Mississippi Gaming and Hospitality Assn.
To date through 2015
▪ $107 million to Biloxi schools and
▪ $54 million to county schools
▪ $161 million total
▪ $2 billion in total taxes