To increase tax revenue, the Clinton administration has proposed a 28% new
tax withholding on big winnings from slot machines, keno, and bingo. Using the
theories of expected game value and utility and the results of a survey, this study
analyzes the potential impact of the proposed withholding on the gaming industry.
The analysis shows that the withholding, if imposed, will depress gaming demand
and lower casino revenues and profits. Eventually the government may hurt itself by
collecting less corporate income tax from the industry.
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