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Analysis of the Potential Impact of the Players' Winning Withholding On the Gaming Industry

University of Nevada, Las Vegas

To increase tax revenue, the Clinton administration has proposed a 28% new tax withholding on big winnings from slot machines, keno, and bingo. Using the theories of expected game value and utility and the results of a survey, this study analyzes the potential impact of the proposed withholding on the gaming industry. The analysis shows that the withholding, if imposed, will depress gaming demand and lower casino revenues and profits. Eventually the government may hurt itself by collecting less corporate income tax from the industry.

Key Words: Key words: gaming tax withholding • expected value • utility • player's reaction • casino revenue and profits.

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