KU Statehouse Wire Service
After gaming operator Ross White realized the gambling business made it easy for operators to evade paying taxes, he decided the state needed to ensure clean gaming operations.
Gaming) is a cash business,” White said in favor of House Bill 2762 before the House Taxation Committee on Tuesday. “There is a substantial portion of individuals that do not report accurate tax. People want to be paid cash or under the table.”
Currently, the state collects sales tax from casinos and other gaming institutions based on reported revenue. White said many operators do not report all of their cash revenue, so they avoid paying taxes.
House Bill 2762 proposes that Kansas no longer collect sales tax from gaming institutions. Instead, the bill would mandate an annual license known as a tax stamp on all electronic entertainment devices used in the gaming industry. The stamp would cost $35 per machine per year. Failure to license a machine would result in an annual $75 fine for every unlicensed machine. It would include all electronic machines at casinos and coin-operated table games such as billiards, according to revisor of statutes Scott Wells.
White said having tax evaders in the gaming market affects the way legal operators can conduct business.
“When an operator doesn’t pay tax on income, it allows them to offer a better commission split to a location, giving them an advantage over a responsible vending operator,” he said in his written testimony. “This perpetuates itself over time, allowing legitimate operators less access to markets.”
According to the Kansas Department of Revenue fiscal note, the bill would not only make up for lost tax revenue, but would also increase state income. The bill would generate $595,000 in 2019 in additional revenue, $490,000 in 2020 and $450,000 in 2021 and 2022.
The bill reflects similar bills in Oklahoma and Nebraska. According to White, Oklahoma annually taxes $75 for each of its approximately 55,000 machines, generating about $4 million in revenue. It is estimated that Kansas has about 20,000 mechanical amusement devices in service.
White said the state could also implement this system for non-gaming machines such as laundromats, generating additional state revenue.
“Oklahoma (has) expanded (its) tax stamp program to include other types of vending machines such as snack and soda machines,” he said.
No opponents were present at Tuesday’s hearing.
House Bill 2762 awaits further discussion.
Kevin Gray is a University of Kansas senior from Denver studying journalism and linguistics.
Bill would require tax stamp on electronic entertainment devices