Proposals to significantly expand the types of gaming activity allowed in New Mexico would see a fall in the amount of tax revenue falling into the state’s coffers, according to new research.
New measures designed to help the New Mexico’s gaming sector recover from the effects of the pandemic lockdowns would harm the state’s finances, claims a new report.
Analysis from the New Mexico legislative committee says the Gaming Recovery Act’s proposed expansion of commercial gaming would actually backfire on the state.
The GRA is supported by a consortium of racetracks and racinos, but would require negotiations with and approval by the tribes, with no guarantee of success.
The Act would allow commercial casinos in New Mexico to offer online gaming, sports-betting and table games and in return would eliminate the tribal revenue-share agreement.
Such measures would significantly increase New Mexico’s position in the Wedge Index. The state is currently tied in 18th place with a mere 8 points and adding the new suite of products would move the state at the very least to the edges of the top 10.
But first the GRA would have to pass the legislature.
The tax analysis shows that is no gimme. As it stands, tribes pay between 2% and 10% of adjusted annual gross win to the state as part of the compact signed in 2015. The compact runs until 2035.
In 2019, revenue for the state from tribal casinos totalled $78.4m. This year that has slowed to a trickle – just $152,000 in the last quarter.
In the current 12-month period that is now forecast to remain at near zero in the first quarter and just 70% of pre-pandemic revenues by the end of the financial year.
Still, the committee found that state revenues would likely be lowered by the bill.
“The gain in taxes from expanded gaming for the five existing racetrack casinos is unlikely to exceed the nearly $80 million in annual tribal revenue sharing payments,” the committee wrote.
As things stand only four tribal casinos offer retail-only sports-betting in New Mexico.
They would be reluctant to agree to online gaming and betting across the state for fear of seeing footfall and traffic drop at their retail sportsbooks.
Representatives from one of the racino consortium, the Sunland racetrack situated on the border with Texas, said that in the face of the economic downturn caused by the pandemic, the racino faced the prospect of declining revenues and staff layoffs.
Sunland added that only the expansion proposed in the GRA would enable them to remain viable.