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F I S C A L I M P A C T R E P O R T

SPONSOR Altamirano

ORIGINAL DATE

LAST UPDATED

2/7/07

HB

SHORT TITLE Reduce Racetrack Gaming Tax Rate

SB 636

ANALYST Schardin

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

FY09

(960.0)

(1,600.0) Recurring General Fund

(Parenthesis ( ) Indicate Revenue Decreases)

SOURCES OF INFORMATION

LFC Files

Relates to SB 185

Conflicts with SB 247, HB593, HB 886

Responses Received From

Department of Finance and Administration (DFA)

Gaming Control Board (GCB)

SUMMARY

Synopsis of Bill

Senate Bill 636 creates reduced gaming excise tax rate for a racetrack with casino net win of less

than $14 million in the preceding calendar year. The only one of New Mexico’s five racetrack

casinos that currently meets that description is Ruidoso Downs.

While under current law all racetrack casinos pay gaming excise tax equal to 26 percent of net

win, the bill would allow Ruidoso downs to pay 10 percent of net win on the first $10 million of

net win in each calendar year, and 26 percent on all net win above $10 million in a calendar year.

The effective date of these provisions will be July 1, 2007.

FISCAL IMPLICATIONS

Ruidoso Downs is the only one of New Mexico’s five racetrack casinos that had net win under

$14 million in calendar year 2006. That casino’s net win is expected to remain below $14 million

Senate Bill 636 – Page

2

until at least calendar year 2011, and possibly longer if the close proximity of Zia Park in Hobbs

continues to hurt business at Ruidoso Downs.

LFC estimates net win at Ruidoso Downs to be about $11,586.8 thousand in CY07, $12,102.3

thousand in CY08, and $12,640.6 thousand in CY09. Because the bill will reduce the tax rate on

the first $10 million of net win each year, the bill will reduce revenue by $1.6 million per

calendar year.

The bill’s effective date of January 1, 2008 will mean a $1.6 million revenue reduction spread

over about the first 10 months of calendar year 2008. Six of these months are in FY08 and four

are in FY09. The FY08 revenue impact is estimated as $960 thousand ($1.6 million X 6/10). The

fiscal impact will total $1.6 million in all following fiscal years.

SIGNIFICANT ISSUES

LFC analysis of gaming excise tax data indicates that Ruidoso Downs is the only one of the

state’s racetrack casinos that is experiencing a loss of net win since the opening of Zia Park in

Hobbs. Ruidoso Downs is also located in close proximity to the Mescalero Apache Inn of the

Mountain Gods, a tribal gaming facility.

During the 2005 Legislative Session, Senate Bill 837 increased the gaming excise tax rate on

racetrack casinos from 25 to 26 percent.

RELATIONSHIP

Senate Bill 636 relates to Senate Bill 185, which provides a proportional distribution of gaming

excise tax collections to all municipalities in which racetrack casinos are located.

The bill conflicts with Senate Bill 247, House Bill 593 and House Bill 886. Senate Bill 247 and

House Bill 593 amend the same section to distribute 4 percent of gaming excise tax collections

from Sunland Park racetrack casino to the municipality of Sunland Park. House Bill 886 amends

the same section to distribute 4 percent of gaming excise collections from all five racetrack

casinos to the municipalities in which they are located.

SS/csd