Officials of professional sports teams based in Las Vegas say a proposal to add a live entertainment tax to tickets for pro sports games could deter other leagues from joining the market.
Senate Bill 367, introduced by Sen. Dina Neal, D-North Las Vegas, would add a 9 percent live entertainment tax (LET) to tickets for games played by the Raiders, Golden Knights and Las Vegas Aces. The bill would also amend the threshold for nonprofit events exempt from the tax from 7,500 tickets to 5,000.
Pro sports franchises have been exempt from the tax since 2015 when it was updated. The tax is levied on events with more than 200 seats or attendees, such as concerts or shows held at hotel-casinos and arenas.
Citing the economic impact the pandemic has had on the state, specifically live entertainment, Neal said now is a good time to include professional sports under the live entertainment tax umbrella.
“The reason I’m tampering with the LET is because when I saw the economic forecast and I saw that number, I was like, ‘We’re at ground zero,’” Neal said during a meeting Tuesday of the Senate Revenue and Economic Development Committee. “The best time to make revenue change is when you’re at ground zero.”
In fiscal year 2020, the live entertainment tax generated $131 million in tax revenue in Nevada, compared to FY 2021’s projection of $6.2 million, or a 93 percent dip. FY 2022 is forecast to generate $64.4 million, according to a handout presented during Tuesday’s hearing.
An even playing field?
Neal said she didn’t see why professional sports teams should not be taxed the same as other large events.
“Gaming pays it, so why not the major sports teams that were operating in the state?” Neal questioned. She also said the legislature could exempt amateur sports or minor league teams, such as the Las Vegas Lights, from paying the tax.
Raiders President Marc Badain said the fact that pro sports teams were exempt from the live entertainment tax was a factor in the Raiders relocating to Las Vegas last year.
“Before committing to Las Vegas we discussed the lack of Nevada’s ticket tax on professional sports teams as a specifically negotiated part of the financing structure that brought the team to Las Vegas,” Badain said.
Sen. Moises Denis, D-Las Vegas, said he understood Neal’s desire to make an even playing field, but noted the gaming sector is a long standing industry in the state while major professional sports in Las Vegas is still in its infancy.
“We still don’t have an NBA team, we still don’t have an MLS (Major League Soccer) team and we have to compete against other cities,” Denis said. “My concern is that we’re kind of young in this particular type of expansion into our economy and I’m just wondering if this would be a disincentive to attract other teams.”
Badain agreed that the tax could deter other major pro sports teams from looking at Las Vegas as a possible home.
“We would love to see the day the NBA decides to join the WNBA’s Aces or when MLS joins the NFL and NHL here in Las Vegas,” Badain said. “Imposing the LET on Nevada-based teams would be viewed as a negative for leagues and teams comparing markets when they contemplate relocation or expansion.”
Other tax revenue
Badain noted that items sold at Raiders games, UNLV football games and concerts generate tax revenue.
“Every hot dog, soda, T-shirt sold at these events generate tax revenue,” Badain told senators. “Every hotel room occupied by visitors (for) these events generate room tax revenue. Thousands of jobs are created because of this stadium.”
The Legislature in 2016 approved $750 million in public money to go toward the construction of what is now Allegiant Stadium, which was a major incentive to draw the Raiders from Oakland to Las Vegas. That money is being generated by a 0.88 percent room tax on Clark County hotel rooms.
Chip Seigel, chief legal officer for the Golden Knights, said the tax would hurt the team’s bottom line, noting 70 percent of the Golden Knights’ revenue is from ticket sales.
Not only would it impact the Knights’ organization, it would also hurt Las Vegas locals, according to Seigel, as he said they make up the majority of the team’s ticket holders.
“This tax will ultimately hurt these local fans,” Seigel said. “These are not tourists generally going to the games, these are locals.”
Major League Baseball Commissioner Rob Manfred declined to comment Thursday on the proposed tax.