It Was a Great Experience Saving Nevada’s Strong Anti-SLAPP Law

A screenshot of my testimony before the Nevada Assembly Judiciary Committee on April 24, 2015 in opposition of SB444.

In April, I discovered that Nevada’s powerful anti-SLAPP law, passed during the previous legislative session, was under attack. I immediately went on the defensive.

The bill was SB444. The Nevada Senate passed it by a 21-0 margin.  It happened without any debate. Nevada Sen. Tick Segerblom told political journalist Jon Ralston that Democrats were “asleep at the wheel.” This left the Nevada Assembly as the last line of defense.

Why Nevada’s Anti-SLAPP Law Matters

Anti-SLAPP laws are designed to protect citizens from abusive lawsuits aimed solely to silence critics. If you read my work, you know that I have covered some controversial topics.  This includes exposing online gambling scams and companies that steal my copyrighted work.  I’ve been threatened by attorneys over it. One example of that is here. That is not the only time.

After the 2013 version of Nevada’s anti-SLAPP law went into effect, I was able to confidently tell an attorney that threatened me that I lived in Nevada. This lawyer was trying to use me as leverage in an attempt to intimidate a colleague. I provided a link to Nevada’s powerful anti-SLAPP law in my response to the legal threat and told the attorney to stop contacting me.  It was a polite middle finger. I never heard from him again.

Under the law I fought to save, I don’t have to worry about someone filing a frivolous lawsuit against me in an attempt to punish me for my opinion or stating facts.  If a Nevada resident’s speech is protected by the First Amendment, a court should toss cases filed by anyone that tries to sue for defamation. If a case is ruled to be a SLAPP, the plaintiff would be forced to pay court costs, as well as monetary damages up to $10,000. A successful anti-SLAPP defendant in Nevada can also file a separate action to recover additional compensatory damages, punitive damages, and attorney’s fees and costs of bringing this separate action. That seems like quite a deterrent to me.

You may not think that these lawsuits are a big problem, but there are numerous people and companies out there that do such a thing on a regular basis. Most states have little or no protection from these types of vexatious lawsuits.

Yelp explained why anti-SLAPP laws are important to its business model. The company and its content contributors have been forced to defend lawsuits based on reviews posted on Yelp. This scenario could happen to any website that allows comments, regardless of whether the Communications Decency Act applies. Most states have no laws that punish plaintiffs in frivolous defamation lawsuits. Nevada is one of the few that does.  This type of protection is imperative to media companies and individuals that wish to exercise their First Amendment rights.

Phone Calls and Emails Went Out Immediately

When I heard that Nevada’s anti-SLAPP law was in trouble, I started contacting Nevadans that I knew would be interested.  I received a response from most of those that I contacted. It helped generate support for the cause.  Several of the people that I contacted testified against SB444 in person.  Others submitted public comment.

Road Trip to Carson City

I decided to go to Carson City and speak in person to lawmakers.  I testified in front of the Assembly Judiciary Committee on my second day in Carson City. While the camera view suggests otherwise, the room was packed.

Admittedly, I was incredibly nervous before going up to the podium. That disappeared when my turn came to speak. I nailed it.

I spoke about why the anti-SLAPP law is important to my business and to the gaming industry.  I used examples of my journalism to show why my work should be protected from frivolous lawsuits.

I told the committee that a change in Nevada’s anti-SLAPP law could force me to relocate my business to Texas, my first choice among other states with a real anti-SLAPP law. I also explained that tech businesses would no longer consider Nevada to be a friendly environment, even with its tax advantages, as the lack of legal protections would offset it.

The Assembly Judiciary Committee did not act on the bill at the time.  On the last day of business before the bill would have died, it passed a watered-down version to the full Assembly.  I was not happy about it, but it seemed like a reasonable compromise.

Washington State Supreme Court Struck Down Similar Bill

This turned out to be a blessing in disguise.  The Washington State Supreme Court struck down a nearly identical law two weeks later.  The court took issue with the “clear and convincing” evidence standard in the Washington law.  Nevada’s anti-SLAPP law had the same language. If the bill had died in committee, the potentially faulty language could have been impossible to correct during the session, leaving the law vulnerable to a court challenge.

The Nevada Legislature was able to change the language before the session expired on June 1.  It took a conference on the last day to pull it off.

What I Learned From the Experience

I learned that if there is a bad bill out there that affects your freedom or business, you can do something about it.  It does not matter how powerful your opposition is.  Everyone has a chance to speak their mind and state lawmakers will listen, especially when there is massive opposition among the citizenry.

If you have allies out there, get them aligned.  Several of the people I talked to were unaware of the bill’s existence at the time.  Once they knew about it, they were happy to get involved.

The numbers mattered. Public comment was 213-3 against. There were 17 voices heard in opposition before the committee, with only outside counsel for Wynn Resorts supporting it.  I feel these numbers were a contributing factor as to why we prevailed in getting the bad language in SB444 removed.  With that said, attacking the other side on a personal level was not an appropriate action. I tried to distance myself from that tactic.

I also learned that the Nevada lawmakers that I interacted with were genuinely interested in the bill and my opinion.  Many asked great questions at the committee hearing that showed their familiarity and concerns with the bill.

First Amendment supporters were able to take on a large gaming corporation in Nevada and win.  It was not just press agencies and members. The Motion Picture Association, the Sierra Club, First Amendment attorneys, and about a half-dozen concerned citizens spoke out in opposition to SB444.

We Won’t Be Asleep at the Wheel Next Time

The Nevada Legislature only meets every two years.  I will be scouring the bills in 2017 to make sure nothing like this has been filed.  If it is there, I will once again go to Carson City and testify as to why Nevada’s anti-SLAPP law is so important to the people of our state, my company, and our ability to attract tech companies.   Hopefully we have a federal anti-SLAPP law by then.

The SPEAK FREE Act was recently introduced in Congress. For now, the only effective state anti-SLAPP laws on the books are in Texas, Nevada, California, and Oregon.  Hopefully the Washington Legislature fixes that law that was struck down.

Residents of other states have little recourse if someone attempts to stifle their free speech through litigation other than spend tens or hundreds of thousands of dollars defending themselves or cave in to the threats.  That is unfortunate for those active in politics or on consumer review sites.

Some states have anti-SLAPP laws that only cover political speech or cases filed in state court, but not federal court. That is better than nothing, but still leaves room for improvement.  I am willing to go to Washington D.C. to testify in favor of a federal anti-SLAPP law.  Contact me at johnmehaffeylv@gmail.com if you are interested in making that happen.

Clearing Up Nevada Anti-SLAPP Situation On SB444

There seems to be a lot of misinformation floating around about the Nevada anti-SLAPP bill under consideration by the state legislature. The bill seems to have originated out of Wynn Resorts during the current legislative session.  What I feel like was a terrible bill (SB444) has been substantially amended.

SB444 cleared the Assembly Judiciary Committee on Friday.  It is awaiting a vote in both the Assembly and Senate.  It must go back to the Senate for a vote because it was amended.

The language opposed to by Yelp, quoted in columns by Bloomberg and Business Insider, is no longer included in SB444.  The language I vehemently objected to, and testified against before the Assembly Judiciary Committee last month, was removed from the bill.

SB444 now includes just two changes.  I consider both to be minor compared to the original version.  Discovery would be permitted under this bill in situations where:

Upon a showing by a party that information necessary to meet or oppose the burden set forth in subsection  (b)  is  in  the  possession  of  another  party or  a  third  party  and  is  not  reasonably  available without discovery, the court shall allow limited specified discovery for the purpose of ascertaining such information. 

The other change allows the judge in an anti-SLAPP motion 20 judicial days, as opposed to the current 7 days, to rule on the case.

It also allows the court to extend deadlines, as it deems necessary:

The court may modify briefing and hearing schedules or other deadlines set forth in  this Section upon a finding that doing so serves the interests of justice.

The bill’s amendment submission goes on to state:

Note: All other provisions of the original bill are deleted.

It is possible that this language could be edited by either house in the Nevada Legislature.  To the best of my knowledge, there is no discussion to do so.

This is the amendment as recorded in the Nevada Legislature’s database.

Harrah’s Lake Tahoe Exceeds Expectations

I had business at the state legislature in Carson City this week. I logged into my Total Rewards account while looking for rooms and discovered free nights at Harvey’s and Harrah’s at Tahoe, which is actually in what is called Stateline, NV. The west side of both properties is the California state line.

The free nights still required me to pay the resort fee as my Total Rewards tier is Gold. That $20 per night plus tax was well worth it.

It was definitely offseason. The town was dead. Vast expanses of tables were closed and there were few people in the streets or playing slots. It is a slow time before summer tourist season but after the ski resorts closed for the year. I guess that explains why I qualified for free nights as I doubt any play I have given Caesars properties justified it.

The room was extremely clean. Housekeeping gets five stars. The amenities for the room were in perfect condition. The bed was comfortable. The room came with a separate seating area and an office desk with a comfortable chair. The room was about 50 percent bigger than an average hotel room but is the norm for Harrah’s Tahoe.

One unique feature of the room is that it has two bathrooms. One had a tub with a shower and the other was just a shower stall. The stall’s shower head was on the far right of the shower and didn’t seem to work well from that position. It was pulled out of the wall a bit, perhaps from people trying to figure out how to center it. I didn’t use it for that reason, but will admit my inability to figure out how to make it work could purely be human error.

Every person I talked to that works for the casino was great. The drink service had perfect timing and was friendly. The slot attendants were on the ball when called. I played Ultimate Texas Hold’em for a few hours and had a new dealer about every 20 minutes. Each did a great job with game speed and accuracy. All were friendly, but one really stood out. I wish I could recall her name to give special credit there.

The food court was average at best. It had a Fatburger, as well as independent pizza and Asian outlets. I stayed with Fatburger. The other options didn’t appeal to me. I also ate a few meals at the oyster bar at Hard Rock Casino.  While I call the Harrah’s Tahoe food court average, the other three casinos in town offer nothing comparable.

In all, the casual food options in Stateline are just poor. Maybe people prefer higher end dining in the resort town. I didn’t try any of them as I was alone and didn’t feel like doing that by myself.

One strange feature is the buffet’s location. It is on the top floor of the hotel. It is only open for dinner during the week. It offers brunch on weekends.

Harrah’s Tahoe was exceptional, but there is no way to describe the surrounding area. You have to see it for yourself. The massive lake in the valley is like nothing I have ever seen. The mountains reminded me of when I live in the Black Hills in South Dakota.

If you have never been to Tahoe then you are missing out. If you decide to go, I highly recommend Harrah’s. Make sure to reserve the room through your Total Rewards card login, if you have one. It may not show as an offer but the discount can appear while you search rates.

I totally failed at getting pictures of the property.  You will just have to go see it for yourself.

Nevada Anti-SLAPP Law Repeal Passed Senate – Time to Fight

The Nevada senate voted 21-0 to repeal much of Nevada’s anti-SLAPP law.  Unfortunately, none of the Nevada news outlets have reported this.

Currently, Nevada’s anti-SLAPP law deters frivolous defamation lawsuits.  It immunes those that speak or write the truth or give an opinion on a topic of public concern from lawsuits.

A SLAPP is a Strategic Lawsuit Against Public Participation.  Opponents have been known to file these types of lawsuits to silence critics.  These can be expensive to defend.  Too often, the person with the deepest pockets wins, regardless of the merits of the case, because the defendant cannot afford the legal fees to stand up for their rights.

As the law passed in 2013 is written now, a defendant that has a SLAPP suit filed against them can request a special hearing.  If the judge agrees that the lawsuit is a SLAPP, it is immediately tossed.  The plaintiff owes the defendant attorney’s fees and up to $10,000 as decided by the judge.  The victim of the SLAPP suit can then file a suit seeking punitive damages.

SB 444 would remove the recovery of attorney’s fees, the potential monetary relief of up to $10,000 that goes to the defendant, and the explicit ability to bring separate action for punitive damages.  It also removes language that immunes those that speak the truth and their opinions on matters of public concern from these types of lawsuits.

If you live in Nevada, the time to speak up about protecting our free speech is now.  This is where you can find your state lawmakers. You can comment directly on SB 444 here.

Governor Sandoval signed the anti-SLAPP bill into law two years ago.  Make sure to contact him to remind him of that in the hopes that he vetoes SB 444 if it makes it to his desk.

It is hard to think there is any positive motive or agenda behind this repeal.  An easy conclusion to draw is that someone is unhappy that their defamation lawsuit machine was put out of business by it.  We shouldn’t be allowing those types of motives repeal great laws that protect free speech and the citizens of Nevada.

Marc Randazza was behind the push in 2013 to pass an anti-SLAPP in Nevada. He had this to say on Twitter last night:

Pokertube and 180Vita Continue to Use Content Without Permission, Including Mine

Those of us in poker media know about 180Vita, founded by Jamie Nevin, all too well.  The company is the previous owner of Pokerupdate.com, a site that once had a reputation for copying content word-for-word from other sources without permission or attribution while under 180Vita’s umbrella.  The PokerUpdate site was sold last year and is no longer associated with 180Vita.

Companies that produce poker videos have voiced displeasure towards Pokertube, owned by 180Vita, for hosting its content without permission.  Its “unrivalled” live coverage of poker events drew some ire last summer.

On Sunday, I published an article about a Las Vegas poker room closing.  Two days later, Pokertube did the same.  They attributed a rumor to me and then went on to copy my article almost word-for-word without using quotes or further attribution.  A Copyscape search confirms this.

Pokertube also copy/pasted a chart listing the last 12 poker rooms in Las Vegas to close, again presenting my work as its own.

I have included screenshots of the Pokertube article at the bottom of this post with a link to my article that was used.

My past criticism not welcomed by 180Vita

180Vita did not take my criticism well in the past.  In 2013, I got sick of its content theft and wrote an article about it.  Instead of deleting the content and apologizing, 180Vita sent a lawyer after me, claiming that I had some personal vendetta against the company.  180Vita only deleted the copied content after I posted at 2+2 that it was still live five days after the date on the cease-and-desist letter.

They continued to threaten legal action when I refused to cooperate.  They even demanded that I sign an apology and publicly recant the articles, as well as agreeing not to write about them anymore. I refused.

I did not have time for their behavior.  I agreed that if they changed their ways I would remove the content.  I regret that decision, and apologize to the poker community for it, but if 180Vita filed its promised lawsuit, it would have been a massive waste of my time to defend.  I had better things to do.

I felt like the behavior of copying content would cease and something good could come out of it if I gave them a chance.  They seemed very sincere about fixing the problem and I believed them.  I don’t feel like my goal was accomplished since here I am again writing about the same topic 18 months later.

Nevada Anti-SLAPP law enacted

Nevada’s powerful Anti-SLAPP law went into effect in October 2013, about 10 weeks after the date on 180Vita’s cease-and-desist letter.  This article I wrote at the time should explain why that matters.  The cliffs are that people that file frivolous defamation lawsuits against Nevadans after October 1, 2013 are severely punished before the case is ever heard.

Any legal threats pertaining to this post will be ignored, but I will happily post it here for the industry to critique, should I receive one.

Even after all this, I still tried to handle situation privately

Since 180Vita threatened me, I have gone to them twice privately about issues surrounding that company’s unauthorized use of work involving me to avoid having to write an article like this.  I simply wanted to keep the peace.

The company removed the offending work both times.  I suppose it is good that they were quick to remove the content, but all that does is give them a freeroll.  I have grown tired of it.

Their actions lead me to believe that their previous legal threat was nothing more than a way to continue using work like mine, while at the same time discouraging people from exposing them.

The fact the behavior has not stopped certainly backs up my theory.  To the best of my knowledge, 180Vita has never shown any remorse over threatening me or using my work without permission, more evidence that backs up my opinion.

Check out this Twitter exchange

This Twitter exchange is an example of how Pokertube/180Vita handles a public demand of content removal:

In my opinion, the responses to the content removal demand accurately reflect the values and attitude of 180Vita, parent company of Pokertube.com and Pokervip.com.

I always try to work out issues privately first

Sometimes writers publish something while tired and don’t do enough to differentiate their work.  Other times, a bad article from a rogue freelancer may get past an editor.

I feel like everyone deserves a free pass on this at some point.  We all make mistakes.  The friendly email I send when I discover my work being used without permission is almost always met with some level of remorse and an apology.

180Vita is well past this being a one-time mistake and I have let this go on for too long.

What is the big deal?

Some people that are not writers may not understand why this is such a big deal.  Writers make money by providing content to sites.  This can be news, editorials, poker room reviews, or anything else that gets published.  If another site steals it, the original work’s value is diminished.

This is why copyright laws exist.  Without the ability to protect one’s work from unauthorized use, there would be little incentive to create, which would substantially lower the quality of published work out there.  If my work loses half of its value because I allow it to be used by other sites, I will be forced to find other work.

Comparing the articles

Here is the link to the original article.  Compare it to these screenshots of the body of the Pokertube article below.  Note that the differences between the two articles mostly pertain to grammatical errors inserted into the Pokertube version.

 

SCOSSA High-Low Craps Available on the Apple App Store

I wrote about Scossa a few years ago and it is a popular post on my blog.  It is no longer available in casinos, but the game inventor turned it into an app.  I thought the readers looking for Scossa would enjoy this press release on the game.

You can download the app here.

Dallas, Texas, January 20, 2015 –Available today, SCOSSA® High-Low Craps is a new, free-to-play casino dice game that preserves the excitement and speed of play of craps while embracing the simplicity of roulette. Casino action at its best!

The app is geared towards novice to intermediate players, but also appeals to more experienced gamblers. If you have ever played Roulette or Craps, you’ll love this game. Even if you haven’t, SCOSSA® is easy to learn, fun to play and allows you to win big. If you are heading to a Casino to play craps, SCOSSA® is a great way to learn the odds and develop a betting strategy. Simply place your bets, roll the dice, and instantly know whether you lost or won. Sound familiar? It is really quite simple! In fact, some players have commented that it is “like playing Roulette with Dice.”

Like Roulette, you can place straight number bets, split bets or range bets. Similar to craps, you can place hard way bets, or the NEW split-hard way bets, then Roll, Swipe or Shake the device to roll the dice to determine the outcome.  Added to the excitement, bet on Triple 7’s…roll three consecutive 7’s and the payout is 200 to 1!  Other features are a display showing your last five rolls – great for developing a betting strategy; and social media so you can refer friends, watch a video ad, or post your success for FREE chips.

“Just make your bets and throw the dice. In other words, the game has the simplicity of roulette but is played with dice just like craps. Compared to craps, the odds are a lot better…” said Michael Shackleford from the Wizard of Odds, best known for professional analysis of the mathematics of casino games.

SCOSSA® High-Low Craps is available for free download worldwide on the Apple App Store.  Please visit www.ScossaDiceGame.com for more information about SCOSSA® High-Low Craps.  The game is developed by Brill Entertainment, LLC in Dallas, TX founded in 2010.

Politically Correct Police Slam Borgata Restaurant for Honoring MLK with Favorite Meal

I try to stay out of politically correct debates, but this one really rubbed me the wrong way.  A group of people that are not from the South have completely misunderstood a southern tradition.

In what is one of the most baffling stories I have read in a while, a handful of poker players slammed a Borgata restaurant for honoring Dr. Martin Luther King on his holiday by serving one of his favorite meals as a special.  The person that originally tweeted the menu even used the hashtag #isitracist.

Anyone that grew up in the South like me (I’m born and raised just outside of Atlanta) just cringed at this for multiple reasons.

First, it is customary to honor a person in the South with a favorite meal.  It can be on a birthday or to celebrate another life event.

Food is a tradition in the South, and Southerners don’t eat salads and gluten-free crap.  Southerners with deep roots eat comfort food.  It is regional and not specific to any race, contrary to what some of these noise makers seem to think.

Maybe there is some sort of misconception about comfort food in other parts of the country, but it certainly isn’t that way where Dr. King was raised and is now honored with a memorial.

I grew up eating exactly what was put on MLK’s birthday menu at Borgata.  It was a staple in our southern household. Southern diners serve exactly that type of meal, whether it is in an urban, suburban, or rural area, regardless of the demographics of its clientèle.

Honoring Dr. King with his favorite meal, the one served by Borgata on Monday, is also a tradition in the South.  Some restaurants outside of the comfort food niche would also advertise it as their daily special on January 15th, his actual birthday, to honor him. The observed holiday later became the third Monday in January.

For whatever reason, some poker players feel that Borgata has done something wrong by participating in this longstanding tradition.  If there was any doubt, a simple Google search would have proven the meal served is associated with Dr. King and his holiday.

The politically correct police got this one wrong.  It appears that these people have a stereotype about comfort food and are ignorant of the culture in the South.  They should be embarrassed of their actions for shaming an establishment that brought a tradition of the South into Atlantic City, one that honored a man so great that he deserves his own holiday.

This post was simply meant to educate.  I’m not trying to call anyone out.  That is why I did not use any names of the people involved in this.  I feel that the people that are offended by how a Borgata restaurant honored Dr. King have stereotypes about the South that are false, which led them to draw an improper conclusion.

There are certainly many issues in the South, but none of them have to do with its food and traditions of honor that surround it.

Response from Senator Harry Reid to My RAWA Inquiry

I wrote Sen. Harry Reid, Sen. Dean Heller, and Rep. Joe Heck about my opposition to the Restoration of America’s Wire Act (RAWA).  Sen. Reid’s response is discouraging, especially considering that Nevada has already regulated online poker and jobs like mine depend on the industry.  I have yet to receive a reply from Sen. Heller or Rep. Heck.

Response from Senator Harry Reid:

——————————————————-

Dear Mr. Mehaffey:

Thank you for contacting me regarding online gaming. I appreciate hearing from you.

As a former gaming regulator, I believe that maintaining the integrity and fairness of the gaming industry – both in brick and mortar casinos and on the Internet – requires strong and effective regulation. Unfortunately, the current state of affairs is the worst possible situation for consumers, regulators, and law enforcement officials. For more than a decade, illegal online websites offering Internet poker and other types of gambling have grown into a multi-billion dollar market. Yet, none of these sites are regulated by responsible U.S. regulators, and none of them have an incentive to comply with basic consumer protections and gambling regulations.

Whether one supports or opposes regulated online gambling, the current U.S. laws on this topic are outdated. The 2011 Department of Justice’s (DOJ) reinterpretation of the Wire Act has opened the door to permitting states to conduct all types of non-sporting, online gambling. Without strong regulations in place to govern this gambling, consumers inevitably will end up being hurt.

On March 26, 2014, Senator Lindsay Graham (R-SC) introduced the Restoration of America’s Wire Act (S. 2159). This legislation would prohibit online gaming. S. 2159 was referred to the Senate Committee on the Judiciary. Should this or related legislation reach the full Senate for consideration, I will remain mindful of your concerns regarding the impact of online gaming on our nation’s vulnerable populations.

Again, thank you for taking the time to share your thoughts with me. I look forward to hearing from you in the near future.

My best wishes to you.

Sincerely,
HARRY REID
United States Senator

 

Where I Have Been Writing Lately

I have written several blog posts in the past few weeks after writing just one in the first eight months of the year.  That is because the bulk of my news and casino reviews writing now appears on a variety of sites.

My most recent big project is writing information about resorts on the Las Vegas Strip and downtown for WorldCasinoIndex.com.  That section is completed and I am now working on resorts just off the Strip.  The information includes casino game information, hotel rates, restaurants and nightclubs.

My main news site continues to be USPoker.com and its sister sites.  I mostly write about the U.S. online poker movement with a few Las Vegas stories now and then.  I write some Las Vegas and NFL sports betting information at 4Flush.com.  I also write some content about the offshore online poker industry for SafestPokerSites.com.

I own a bunch of domains.  I am seriously considering developing a Las Vegas poker site.  That niche seems to be seriously lacking right now.  It might be hard to make some money off of that segment but it would be more like a hobby and service.

There is a lot of demand for this type of information.  While I hardly get to play anymore, I have all of the information I need to develop that type of site and make it the highest of quality.  What I am lacking is the time to work on it right now.

I already own Deadwoodpoker.com and it has never made a cent. That site needs updating badly.  I guess that gives me an excuse to take a trip to South Dakota in the coming months.

I plan on writing more on this blog.  I hated seeing it become so dated.  Expect more information about Las Vegas observations, poker, and maybe an occasional rant.

In the meantime, the only gambling I have been doing lately is on some full pay video poker machines on Fremont Street.  The theoretical rate is equal to working a minimum wage job.  The difference is that McDonald’s employees do not receive free drinks just for showing up to work.

If you have any ideas for a blog topic then feel free to leave a comment.  I am always looking for new topics to write about and learn.

 

How Nevada Should Raise $800 Million a Year Without the Margins Tax

There is no denying that education funding in Nevada is woefully inadequate. It is time to fix that.  Some groups have proposed a 2% tax on margins to raise $800 million per year.  It is not the solution.

The margins tax initiative would force companies to pay 2% of one of the following:

  • 70% of gross revenue
  • Gross revenue minus cost of goods sold
  • Gross revenue minus cost of employee compensation

This means that there is a minor deduction.  Most businesses do not run higher than 30% on either product or labor costs, so for simplicity sake, I will just use the 70% of gross revenue number.

This makes the true tax rate 1.4% of total receipts, regardless of actual profit.  A company could have made a large investment that made it unprofitable, but it will still pay 1.4% of its gross revenue to Nevada.  There could have been a catastrophic event in that year for a company, but it will still pay the margins tax in full.  The enormous increase in insurance costs affecting all businesses right now is not deductible, nor is rent, interest, depreciation, expansion, or anything else not directly tied to the cost of the product or the labor to produce it.

This Creates a Sales Tax on Groceries

Walmart’s profit margin is about 3%.  Its competitors profit at about half that rate.  Grocery stores run margins of about 1%. The margins tax will wipe out the entire profits of these businesses.  It is naive to think that these companies will operate in the red for the good of Nevada education.  They are going to raise prices to offset the new taxes.

The margins tax will be passed on as a cleverly disguised sales tax.  This will affect the poor disproportionately.  There are far better solutions to raising this money.

How Nevada Should Raise $800 Million a Year Without Margins Tax

There are so many segments of the Nevada economy that are not paying their fair share in taxes.  It is time to fix that.  Some will require residents to pick up some of the burden, but most of it will be at the expense of tourism and mining industries.

Raise the Gaming Tax Rate 

Nevada casinos make less of their income on a percentage basis from gaming than ever before due to the diversification of the Nevada tourism industry.  The numbers are returning to prerecession levels, meaning that casinos are actually generating more revenue now more than ever when taking amenities into consideration.

Nevada unrestricted gaming licenses won $11.1 billion in 2013.  That generated about $750 million in taxes at the 6.75% rate, which is the lowest in the country.  Only two other states (SD and NJ) are even below 10%.  Most are 20% and higher.

The casinos will fight any increase in gaming tax rates.  They will come up with a million excuses as to why it will hurt their business, but there is one fact that refutes their entire argument. Virtually every one of them is paying more in other jurisdictions and doing just fine.  Unlike those other states, they are not paying income taxes on nongaming income in Nevada, making their effective tax rate even lower.

The new Massachusetts gaming market has a 25% rate.  Three Nevada operators fought to enter that state.

Macau has an average tax rate of 39%.  That is still lower than some states. Pennsylvania is the number two gaming market in the country.  It taxes slot revenue at 55%.

The casinos can afford a 1% increase in gaming tax rates in Nevada.  That would raise $100 million.

Here is a list of all state gaming tax rates.

Tax Resort Amenities

More people are visiting to Las Vegas without gambling at all.  The state needs to get a bigger chunk of the money spent by these tourists that goes virtually untaxed.  A $2.50 increase per room in the hotel/motel tax would generate $81 million from the 125,000 Las Vegas area rooms, assuming a 90% occupancy rate.  This is about identical to what the margins tax would be, it is just more transparent.  Throw the rest of the state in there and that number easily exceeds $100 million.

Tax Restricted Gaming Licenses Similar to Resorts

Restricted gaming licenses are taverns and grocery stores that do not offer full services but have video poker and slots.  The maximum number of machines in a restricted gaming establishment is 15.  There is a tax and licensing fee of about $730 per machine each year.  A tavern with 15 devices pays about $11,000 per year in taxes. Some taverns make that in a day.

Let’s not pretend that these taverns are anything more than small video gambling establishments.  Tax them at the standard rate paid by unrestricted licenses, based on monthly win:

  • 3.5% of the first $50,000 during the month, plus
  • 4.5% of the next $84,000 plus
  • 6.75% of revenue exceeding $134,000

Tax Mining More

Nevada is the largest gold producer in the country.  There is only a 5% mining tax in the state.  That raised $236 million in the last fiscal year.  A 7% tax rate would put it in line with other major mining states.  We just found another $100 million.

A ballot initiative to remove the 5% cap on mining taxes will be voted on by Nevadans in November.  It would authorize the legislature to raise the mining tax.

Brothels

It is not often that a legal business comes along and begs to pay taxes, but that is what is happening in Nevada.  It seems that most politicians want to ignore that legalized prostitution even exists.  It is not going anywhere.  A majority of Nevadans either support it, feel it is a local issue, or simply do not care.

The live entertainment tax does not currently apply to brothels.  Setting the 5% LET tier on the industry would generate $365 million, based on numbers provided by the brothel owners in 2011.  Taxing it just 2% would bring in $146 million.

Cliffs

  • Raise gaming taxes 1%
  • Add $2.50 per night state tax on hotel rooms
  • Raise mining taxes 2%
  • Stop ignoring brothels, which are begging to pay taxes