Revenue Sharing and Native American Casinos in Wisconsin
By William Thompson, Ph.D. and Robert Schmidt, Ph.D.
The authors of this report seek to find a proper and appropriate level of revenues that Native American casinos could share with the State of Wisconsin and its local governments. The authors found this analysis to be difficult because of the general denial of freedom of information included in the Wisconsin Native American gaming compacts. Nonetheless, by looking at revenues in other casino jurisdictions, the authors reasonably estimate that the Wisconsin casinos collectively have gaming revenues of $1,134,798,000 per year. We estimate that the casinos have 22,665,960 player-visits per year. From their revenues, the tribal casinos are currently giving the State of Wisconsin $24,686,799 per year. This represents just over 2% of the revenue.
We find tribes in other states giving governments much more than this amount. Commercial casinos also pay taxes greatly in excess of this number. Indeed, in most jurisdictions, casino operations with these revenues would be giving governments well over $100 million a year.
We also explore business taxes and property taxes in Wisconsin and conclude that a similar-sized business would be paying state and local business and property taxes approaching $90 million per year. These taxes offset the costs of actual services businesses receive, including the right to offer a business activity with limited competition (due to licensing restrictions and franchise requirements). The Native American casinos enjoy a franchise to conduct gaming operations that other groups in the state are not permitted to conduct.
We recommend that the revenue-sharing amounts be adjusted in new compacts to be negotiated in 2003 and 2004. We conclude that the casinos should share with the State of Wisconsin revenues of approximately $90 million per year. Mindful of legal difficulties surrounding taxation of Native American enterprises, we suggest that the amount be levied as a four-dollar door charge against players entering the facilities. We support the notion of Native American gaming in Wisconsin as an economic development tool for tribal peoples. However, tribes should also pay the appropriate costs of services received from the state and for burdens imposed on the community. While creating economic benefits, all businesses receive services from the community and also impose burdens on the community. Like other businesses, Native American casinos should pay the cost of these burdens and services.