An analysis conducted for the state’s gambling industry concludes four of the state’s casinos eventually would close if lawmakers approve Governor Terry Branstad’s proposed double-digit hike in the state tax on casinos.
The Iowa Gaming Association’s Wes Ehrecke says this report backs up what casino operators have been saying since Branstad first floated the idea in late January.
“We’re not crying wolf that this would have a serious impact on the industry,” Ehrecke says. “And it would jeopardize the jobs and the charitable contributions and the purchases from Iowa vendors.”
The Gaming Association asked the man who served as Branstad’s chief economist when Branstad previously served as governor to review the financial records of the 17 state-licensed casinos.
Ehrecke says that review found the tax hike would make it difficult for some casinos to repay their loans. “We have loan covenants that we have to meet,” Ehrecke says. “This kind of an increase in taxes would just jeopardize businesses that have invested millions based upon a certain (tax) rate.”
The casinos currently pay a state tax of between 22 and 24 percent. Branstad has suggested it should be raised to 36 percent, but key Republicans and Democrats say there’s little support in the legislature for a casino tax hike.