Casino to absorb new 6% sales tax. What sort of hit will the casino take
How would this affect the casino top and bottom line.
The unknown is when would the players cash in their chips.
Would the tax be refund by the government when the chips are cashed in.
If the gov. do not refund the tax then if the player has a break even game the casino will be out of pocket by 6%.
If the player wins then the gov. would be out of pocket by 6%. This seems unlikely.
Strange things happen here, so what sort of hit will the casino take on this.
Quote: Deck007I presume the tax will be collected at the chips buy-in instance.
How would this affect the casino top and bottom line.
The unknown is when would the players cash in their chips.
Would the tax be refund by the government when the chips are cashed in.
If the gov. do not refund the tax then if the player has a break even game the casino will be out of pocket by 6%.
If the player wins then the gov. would be out of pocket by 6%. This seems unlikely.
Strange things happen here, so what sort of hit will the casino take on this.
Is there a link to what you are referring to?
Quote: kewljIs there a link to what you are referring to?
No.
The Gov. is implementing the 6% sales tax and the casino says they will absorb this tax. That is all the information available.
Quote: Deck007No.
The Gov. is implementing the 6% sales tax and the casino says they will absorb this tax. That is all the information available.
Yeah.. on food and merchandise maybe.
There's no sales tax on buying chips at the table.
Quote: sc15Yeah.. on food and merchandise maybe.
There's no sales tax on buying chips at the table.
No.
On buying in the casino chips at the table or cage.
F & B sales tax for sure.
Is this a hypothetical situation (as it's posted in 'Math'), happening outside the US, or just some obscure bit of litigation that isn't showing up anywhere?
Edit for clarity: Not showing up anywhere on the internet.
Quote: VenthusI feel like half this thread is missing or something.
Is this a hypothetical situation (as it's posted in 'Math'), happening outside the US, or just some obscure bit of litigation that isn't showing up anywhere?
No hypothetical situation. It is happening in Malaysia.
The question is for mathematician or accountant
Simple answer:
Casino loses 6% of their hold. (eg. If their blackjack hold is 10%, it becomes 4%, with the other 6% going to the tax, since the hold is the % of buy ins that the casino wins).
Quote: sc15Oh ok, no surprise since that's a crappy third world country.
Simple answer:
Casino loses 6% of their hold. (eg. If their blackjack hold is 10%, it becomes 4%, with the other 6% going to the tax, since the hold is the % of buy ins that the casino wins).
Assuming what you said is true this would put the casino out of business. They would get 40% only of their previous revenue and be a loss making entity.
Yet the casino is quite sanguine about this tax. Maybe some other experts want to chime in here.
Quote: Deck007Assuming what you said is true this would put the casino out of business. They would get 40% only of their previous revenue and be a loss making entity.
This makes two assumptions - first, that it's going to be a permanent deal, and second, that the prices aren't already inflated.
Haven't you ever seen a business have a "We Pay The Sales Tax" sale?
This is equivalent to dropping prices by 5.7%. I have a feeling bars and restaurants can handle this. Where the biggest hit might be is in the other stores, assuming Malaysian casinos have them.
Quote: Deck007No hypothetical situation. It is happening in Malaysia.
The question is for mathematician or accountant
In order to understand it and assess it, we would need the circumstances clearly defined.
I haven't heard that yet.
I'm going to assume that the government is looking to take 6% of hold as tax.
That would be: customer buys in for $200, leaves the table with $100, hold is $100, tax is $6.
The real sting isn't the tax in this case, but that a government agent is going to come and repeatedly audit the casino looking for irregularities (and possibly accept bribes to overlook irregularities), and impose penalties because of table accounting problems.
Note that this isn't a sales tax, as far as I can tell - to my mind, that would mean that for every $10 wager, the government takes 6% (60c). That makes games like roulette, baccarat, and blackjack have too low of a house edge to be on offer. The only game left would be Big 6.
Effects to the player will likely be that table minimums increase, possibly rules get a little worse, and the pit scolds you a lot for ratholing (because there is now a tax impact for misreporting the cash-out).
Quote: DieterIn order to understand it and assess it, we would need the circumstances clearly defined.
I haven't heard that yet.
I'm going to assume that the government is looking to take 6% of hold as tax.
That would be: customer buys in for $200, leaves the table with $100, hold is $100, tax is $6.
The real sting isn't the tax in this case, but that a government agent is going to come and repeatedly audit the casino looking for irregularities (and possibly accept bribes to overlook irregularities), and impose penalties because of table accounting problems.
Note that this isn't a sales tax, as far as I can tell - to my mind, that would mean that for every $10 wager, the government takes 6% (60c). That makes games like roulette, baccarat, and blackjack have too low of a house edge to be on offer. The only game left would be Big 6.
Effects to the player will likely be that table minimums increase, possibly rules get a little worse, and the pit scolds you a lot for ratholing (because there is now a tax impact for misreporting the cash-out).
Wrong, the OP described it it's a tax on buy in.
So if you buy in for $1K, leave with $2K, the casino owes a $60 tax, and loses $1060 on the deal.
If you buy in for $10K, play 1 hand, push, and cash out, the casino owes a $600 tax on that buy in.
Now, this being malaysia, I doubt casinos there report their revenue honestly.
Quote: sc15
Now, this being malaysia, I doubt casinos there report their revenue honestly.
Perhaps you should check. Looks to me like the only casino in Malaysia is owned by Genting. As a large multinational public corporation, I doubt they'd risk the domino effect that'd come from mis-reporting revenues.
Quote: rdw4potusPerhaps you should check. Looks to me like the only casino in Malaysia is owned by Genting. As a large multinational public corporation, I doubt they'd risk the domino effect that'd come from mis-reporting revenues.
Cuz you know, a public company has never committed fraud before.
And the people running the casino are probably malaysians.
Quote: sc15Cuz you know, a public company has never committed fraud before.
And the people running the casino are probably malaysians.
I suppose either of those things is possible. But both are highly unlikely.
Quote: sc15Wrong, the OP described it it's a tax on buy in.
Wrong, the OP stated a presumption that it was a tax on buy in.
To me, that makes about as much sense as taking a cut off of all bank deposits, while making it illegal to not post the full amount to the account.
I am hoping that some mathematician may not be in the same stature as the Wizard can tell me how this tax would affect the company's P & L statement.
What impact it will have on the top and bottom line of the P & L statement.
I assume the tax is imposed/triggered at the buy-in time and refund of tax for the remaining chips will be excised when the player cash in their chips.
Quote: Deck007Folks let us leave aside what make sense or not.
I am hoping that some mathematician may not be in the same stature as the Wizard can tell me how this tax would affect the company's P & L statement.
What impact it will have on the top and bottom line of the P & L statement.
I assume the tax is imposed/triggered at the buy-in time and refund of tax for the remaining chips will be excised when the player cash in their chips.
It will not affect the bottom line at all if they don't want it to. If they are paying 3-2 on blackjacks, they switch to 6-5. If they are using a pay table on a carnival game that has a house edge of 4.5% they change the pay table to one that has a house edge of 6.5%. Everything gets passed on to the consumer.
ZCore13
Quote: Zcore13It will not affect the bottom line at all if they don't want it to. If they are paying 3-2 on blackjacks, they switch to 6-5. If they are using a pay table on a carnival game that has a house edge of 4.5% they change the pay table to one that has a house edge of 6.5%. Everything gets passed on to the consumer.
ZCore13
No. There is no such thing as a 6-5 BJ here.
You cannot just change the HE from 4.5% to 6.5%.
Just like slot. You cannot just change the HE from 10% to 16%. Nobody will play.
Quote: Deck007No. There is no such thing as a 6-5 BJ here.
You cannot just change the HE from 4.5% to 6.5%.
Just like slot. You cannot just change the HE from 10% to 16%. Nobody will play.
Nobody will play? There's no competition...
Quote: Deck007True to some extend. Singapore casinos and Thailand casinos are a short hop away by plane or road.
Quote: Deck007I assume the tax is imposed/triggered at the buy-in time and refund of tax for the remaining chips will be excised when the player cash in their chips.
That's a tax on hold. Hold is the difference between buy in and cash out.
It makes no difference if you collect 6% tax on buy in and refund it on cash out, or if you apply it to the calculated hold (total buy-in for time period) - (total cash out for time period) - it's the same amount, and the same tax.
How it will affect the P&L: Assuming everything else stays the same, there should be a new line under taxes (which I think will say "hold tax") which will be 6% of the (documented) hold.
Quote: DieterThat's a tax on hold. Hold is the difference between buy in and cash out.
It makes no difference if you collect 6% tax on buy in and refund it on cash out, or if you apply it to the calculated hold (total buy-in for time period) - (total cash out for time period) - it's the same amount, and the same tax.
How it will affect the P&L: Assuming everything else stays the same, there should be a new line under taxes (which I think will say "hold tax") which will be 6% of the (documented) hold.
Or, as it's commonly referred to in the US, "gross gaming revenue" or "gross casino win"
Las Vegas Sands Corp. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except share and per share data)
(Unaudited)
Three Months Ended
September 30,
------------
2014
------------
Revenues:
Casino $ 2,897,084
Rooms 386,867
Food and beverage 185,821
Mall 150,728
Convention, retail
and other 128,458
------------
3,748,958
Less - promotional
allowances (215,836)
------------
3,533,122
------------
Operating expenses:
Resort operations 2,256,479
Corporate 42,704
Pre-opening (2,414)
Development 3,043
amortization 251,002
Amortization of
leasehold
interests in land 10,086
Loss on disposal
of assets 801
------------
2,561,701
------------
Operating income 971,421
Other income
(expense):
Interest income 5,609
Interest expense,
net of amounts
capitalized (66,779)
Other income
(expense) 95
Loss on
modification or
early retirement
of debt (1,978)
------------
Income before income
taxes 908,368
Income tax expense (47,869)
------------
Net income 860,499
So if the 6% sales tax is imposed on 3,748,958 it will amount to 224,937
This will reduce the Net income from 860,499 to 639,562 i.e. a drop of 26%.
I'm I right. Review by some Experts here please.
26% drop is quite a hit. So how come Genting is quite sanguine about this.
Quote: sc15Since you haven't provided a solid source including all the details of this new tax, I'm going to go with, you don't know all the details and what the real impact is, and that the assumptions being made here are wrong.
Could you specify what are these "Assumptions"
Quote: Deck007So if the 6% sales tax is imposed on 3,748,958 it will amount to 224,937
But that would be a tax on overall revenue, not gaming revenue. This is inconsistent with what you've previously presumed.
If it were on gaming revenue, it would be 2,897,084 / 173825.
Net income is 860,499 to 686674, drop of 20%.
Without knowing the specifics, we don't know if there are other taxes that get offset by this.... like income taxes, property taxes, etc.
Quote: Deck007Could you specify what are these "Assumptions"
Can you specify what exactly is being taxed?
Quote: Deck007Could you specify what are these "Assumptions"
First of all, I think you have your facts wrong because you're calling it a sales tax.
A tax on gross gaming revenue is NOT a sales tax.
Quote: DieterBut that would be a tax on overall revenue, not gaming revenue. This is inconsistent with what you've previously presumed.
If it were on gaming revenue, it would be 2,897,084 / 173825.
Net income is 860,499 to 686674, drop of 20%.
Without knowing the specifics, we don't know if there are other taxes that get offset by this.... like income taxes, property taxes, etc.
No I just mention gaming revenue before. And I agree on the gaming side the hit will be 20%.
Let us leave out other non gaming items now as not to complicate the issues.
They will likely pass the sales tax on the non gaming items on to the customers like most business.
Quote: sc15First of all, I think you have your facts wrong because you're calling it a sales tax.
A tax on gross gaming revenue is NOT a sales tax.
Please it is not me. The gov. is calling it sales tax, Genting is calling it sales tax.
Quote: Deck007Please it is not me. The gov. is calling it sales tax, Genting is calling it sales tax.
Is there a newspaper article?
Maybe a government website that announces this?
While Facebook isn't an authoritative reference on this, if it's a GST, it almost certainly doesn't apply to gaming revenue. It should only apply to hotel, restaurant, spa, and shopping purchases.
Their analysts suggested a 10-12% hit.
http://winstocks.blogspot.sg/2015/01/genm-4715-genting-malaysia-mixed-signals.html
http://www.asiagamblingbrief.com/intelligence/latest-headlines/2857-malaysia-seen-trimming-gaming-taxes-to-offset-gst
http://www.theborneopost.com/2014/09/30/upcoming-gst-budget-2015-could-impact-gaming-players/
https://forum.lowyat.net/topic/3247661/all
https://brokingrfs.cimb.com/zn59oXCPXhtu5kElPGZU3rm9C9kFWfKCSC72AU-70ih85DiSG1icEdp26MJLs_NTzc0kAZy5Ul01.pdf
After lengthy negotiations with the government, the formula for the calculation of GST has been agreed upon. GST of 6% will be calculated on gross gaming revenue (GGR) less gaming tax (of 25%). GENM’s reported gaming revenue is based on GGR less commissions to junkets but before gaming taxes. As GENM does not reveal GGR or junket commissions, we are unable to calculate the precise impact. However, GENM provided indicative guidance on the negative impact of GST on its EBITDA, as management is still finalising its own internal estimates. It estimates that FY15 EBITDA will be negatively affected by RM200m-300m, equivalent to c.3-4% pts of its Malaysian gaming EBITDA margin, which it will try to mitigate by managing operational costs.
Divide the earth into three worlds if you like, but Malaysia is a beautiful country populated with warm hard working people.Quote: sc15Oh ok, no surprise since that's a crappy third world country.
Quote: JimRockfordDivide the earth into three worlds if you like, but Malaysia is a beautiful country populated with warm hard working people.
Yep. And this casino is huge, beautiful, and 20 miles outside of one of the more advanced cities in the world.
Quote: Deck007equivalent to c.3-4% pts of its Malaysian gaming EBITDA margin
I'm going to trust that their expectations of how much of a hit it will be are reasonably close.
