The effects of casino gambling on state tax revenue
A theoretical model of state tax structure implies that revenue enhancement due to the introduction of casino gambling is less likely in states where incomes taxes do not exist and where casino tax rates are lower than the corresponding tax rates on sales taxable and excise taxable goods. Further, it is clear that casino gambling is likely to adversely impact lottery tax revenues earmarked for education. Due to the cross-price effects of gambling, tax revenues will likely decline in states that introduce nontaxable casino gambling on Indian reservations. In the longer term, as casino gambling proliferates increasing competition among states, there will be negative revenue consequences due to fewer tourism and employment dollars.
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