By Greg Haas, KLAS, November 7, 2024
Station Casinos executives said on Thursday that a “no taxes on tips” policy from the federal government could put an additional $200 million into the Las Vegas economy.
Casinos would share in any increase in disposable income that such a change might bring. Former President Donald Trump — now on his way back to the White House for a second term — was first to make taxes on tips a campaign issue when he mentioned it during a June rally in Las Vegas.
Wages have gone up considerably at casinos after unions secured new contracts on the Strip. And Station Casinos has been quick to point out that casino workers are customers, too. And often closer to where they live rather than where they work.
When investors on the Red Rock Resorts third-quarter earnings call asked Tuesday about tax policies that might change, executives clearly had thought about it. Red Rock is the publicly traded holding company that owns part of Station Casinos.
“No tax on tips I think would be a positive for our business,” Station Casinos CEO Frank Fertitta III said.
“Yeah, we’ve looked at some economic analysis … you know, I don’t know if anything’s been published on it,” Red Rock Resorts director Lorenzo Fertitta said. “We think it could add somewhere in the neighborhood of about $200 million a year to the local economy here which obviously we would benefit from.”
Stephen L. Cootey, executive vice president, CFO and treasurer for Red Rock Resorts, added, “Yeah, I think it would save the company about $200-$300 million in payroll tax as well.”
If that impact translates to other companies, the business impact would be far greater.
Casinos even see a boost around a presidential election.
“When we looked at previous elections, there’s definitely an impact, if you will, during an election year and quite honestly during an Olympics year as well,” according to Red Rock Resorts President Scott Kreeger. In previous years, it has extended into December, he said.
There’s no guarantee “No Taxes on Tips” will happen. Democrats agreed with it in principle, but they have rallied around the Tipped Income Protection and Standards (TIPS) Act introduced in September by U.S. Rep. Steven Horsford (D-Nev.). The Culinary Union backs that plan, which includes changes to the minimum wage, eliminating the “subminimum wage” used to pay tipped workers. That change already exists in Nevada.
Red Rock Resorts posted earnings of $182.7 million on $468 million in third-quarter revenues. Cootey described it as the best third quarter in the company’s history.