Jon Ralston predicts a union’s bid to raise taxes will teach big gamers a lesson

By Jon Ralston

Wednesday, Oct. 10, 2007 | 7:14 a.m.

In some versions of the boy who cried wolf, the carefree, even arrogant lad is punished by being taunted and frightened. In other iterations of the tale, he is eaten.

As the boys with Las Vegas Boulevard South addresses suddenly find a wolf at their door, their cries are about to fall on the deaf ears of a hungry populace that has heard one too many tales of woe. If you want to know why the gaming industry should be so worried about the teachers union proposing a tax increase on the most profitable casinos, turn the clock back 30 years and listen to the boys crying wolf.

Atlantic City will kill us, the squeals began, so don't tax us. Other agents of doom cascaded through the years with the concomitant cries of despair - tribal casinos ; gaming in the states, especially California; Internet gaming ; and then overseas gaming. But as the cries subsided and dollar signs filled their eyes, the boys, slowly but surely, began to lose their credibility.

And, almost imperceptibly but incrementally, the atmospherics changed. Growth was robust and the economy purred. But as the gamers prospered, including in many other venues, the infrastructure buckled. Schools, roads, health care - they all suffered - and the cries sounded more and more hollow as the needs grew more and more acute.

Sooner or later, someone with money was going to replace the relentless but ineffectual Joe Neal, who as a state senator crusaded for increases in gaming taxes, and actually pose a threat to the gamers' financial and political supremacy. That day arrived this week with the announcement that the teachers union wants to add 3 percentage points to the tax rate for the largest casinos (those making $1 million a month) and will try to qualify a ballot initiative.

The ensuing trajectory is predictable, but the flight will be spectacular to watch. The media will froth, seeing a chance to needle the company that has long run this ultimate company town. Politicians will be put on the spot, torn between their loyalty to the state's longtime political dynasty and the evolutionary dynamics of a protean community. And other interest groups will be drawn into the fray, quietly feeling schadenfreude at the gamers' travails but careful to see now that the tax guns are unholstered that none is pointed at them.

Indeed, the state' highest elected official and best-known business group already have lined up with the gamers.

"Gov. Gibbons does not support raising taxes," spokeswoman Melissa Subbotin said. "Subsequently, he does not support this initiative."

Chimed in Las Vegas Chamber of Commerce spokeswoman Veronica Meter: "This is really an attempt by the union to do what it hasn't been able to do through the legislative process - get more money without accountability."

Let's tally up the sides so far then: Big Gaming, Big Business and their governor versus everyone else. Early line: 10-to-1 in favor of everyone else and an increased gaming tax.

It's going to happen, and the gamers, at least some of them, have known that for some time. But what will make this so spectacular to watch is how much the tax will be raised and what the consequences, political and economic, will be.

The gamers almost surely will have to put forth a competing initiative and try to see that it passes because the one with the most votes becomes law - albeit not until 2010 because it has to pass twice.

It's also fitting that because there are multiple boys in the industry who have cried wolf that there would be more than one lupine adversary. Attorney Kermitt Waters also is preparing an initiative , which he expects to be ready within two weeks or so, that will raise gaming taxes four, five, maybe 10 times what the teachers propose while simultaneously erasing property taxes for homeowners. Waters has a much broader agenda, too - he wants to fund education, higher and lower, while providing cash for road funding and more judges.

The teachers' initiative would raise $250 million or more annually; Waters' could potentially take a couple of billion from the gamers. Who's crying now?

The wolf-crying boys will soon transmogrify themselves into another kind of animal to try to minimize the damage. But as the Chicken Littles begin to do their dance during the next year and beyond, they may find that they are just as easily devoured by an electorate made more ravenous by the teachers, Waters and who knows who else.