Pasquale Rotella’s taxing statement: EDC’s return in 2014 is in jeopardy

By John Katsilometes

Thursday, April 25, 2013 | 2:17 p.m.

The future of the Electric Daisy Carnival in Las Vegas might well hinge on tax reform for the state of Nevada being debated at the State Legislature in Carson City.

Specifically, the Live Entertainment Tax. EDC is exempt from that tax today but might not be after this year’s EDC event at Las Vegas Motor Speedway.

Insomniac Events founder and CEO Pasquale Rotella, whose company stages the three-day festival of electronic dance music and such peripheral attractions as carnival rides and vending booths at LVMS, issued the following statement today:

“Insomniac loves doing business in Las Vegas, and right now our primary focus is producing the best show for the fans who will attend Electric Daisy Carnival on June 21, 22 and 23. While we would love to bring another festival to Nevada, we are tabling any further discussions until the state Legislature settles the Live Entertainment Tax issue.”

The tax referenced by Rotella is the 10-percent surcharge leveled on many forms of live, ticketed entertainment in Nevada. But what constitutes “live entertainment” has been a hazy issue since the tax was enacted in 2005.

As the law reads, a 10-percent tax is issued by the state when there is a live performance being staged in a venue with a minimum occupancy of 200 and maximum occupancy of 7,499. The merchandise, food and beverage handle also is taxed. If the venue is 7,500 capacity or larger, a flat admission fee of 5 percent is charged.

Most of the revenue generated from LET is from resort productions staged in showrooms and smaller lounge acts. But there are innumerable exemptions to the tax, among them such outdoor mass-gathering music festivals as EDC.

Other exemptions include performances at trade shows, music played by strolling musicians in a public place, live entertainment in a restaurant that is “ambient” and not a central performance, NASCAR events at LVMS, baseball games and performances at events where all money raised goes to a tax-exempt nonprofit organization.

Being discussed among state lawmakers during the current Legislative session in Carson City is a way to reform Nevada’s tax structure to eliminate the types of LET exemptions that apply to EDC. One proposal being discussed is to replace LET with a more simplified, and broad-ranging, admission tax for all forms of live entertainment.

If such a plan were put in place, EDC would be taxed in a way it has not been since moving to LVMS from the L.A. Coliseum in 2011.

The three-day festival has proven a massive draw in Las Vegas, the busiest weekend for hotel-room occupancy of the year (surpassing even Super Bowl weekend). A total of $207 million in revenue for Clark County was generated at the 2012 festival, which attracted 320,000 fans.

A three-day pass to this year’s festival (not including handling fees already applied) is $300, and Insomniac is accepting only those three-day purchases. A 10-percent tax on 320,000 tickets sold at that price would, conceivably, raise about $9.5 million in new revenue for the state -- if EDC were held, of course.

Talk of adding a second weekend to the anticipated 2014 festival surfaced over the past week when MGM Grand President Scott Sibella, a new member of the Las Vegas Events Board of Directors, said resort and tourism officials had been in discussions with Rotella about expanding EDC’s presence in Vegas to two weekends about a month apart next year.

But as Rotella’s statement reads, even a single EDC weekend in 2014 is not a certainty.

Follow John Katsilometes on Twitter at Twitter.com/JohnnyKats. Also, follow “Kats With the Dish” at Twitter.com/KatsWiththeDish.