Will Las Vegas Ever Be the Same?
The state of Nevada relies on Vegas tourism, but sin city now battles one-third unemployment with casinos shuttered and resorts furloughing en masse. The governor needs tax revenue, so he’s taking a gamble of his own by reopening casinos on June 4th despite growing coronavirus cases.
There’s a state tax on casinos because gambling has ‘negative externality;’ potential for social harm. You don’t want too many betting shops, but it would be overkill to ban them outright. This governor wants the strip back because he knows it creates jobs, and most gamesters fold when faced with a bad hand. It’s a balancing act to get this tax right.
The legalization of sports betting and the coronavirus boost to online gaming has some investors worried about new social dangers, though. It would be a good excuse for bigger taxation on casino profits just as state funds are running low, so markets are bearish on these recession-prone casinos — despite them offering free parking after reopening.
The great thing about the stock market is that it’s not a casino. If you think tax hikes are unlikely, you can own the casino. If you think it’s all going handheld and arcades are done for over the long-term, you can short the casino. It’s your bet!