ATLANTA — Lobbyists representing Georgia’s coin-operated amusement machines (COAM) businesses are objecting to calls for raising the state tax on the industry.
A Georgia Senate bill calling for increasing the share of COAM income that goes to the state from the current 10% to 30% did not survive last week’s Crossover Day deadline for bills to pass at least one legislative chamber. But an alternative COAM measure that cleared the state House of Representatives on Crossover Day is now before the Senate, and the tax hike could be amended onto it.
Sen. Bill Cowsert, R-Athens, chairman of the Senate Regulated Industries and Utilities Committee, presented charts showing that $120 million in COAM revenue went to the state last year to support the HOPE Scholarships and pre-kindergarten programs, far less than the tax revenue for education generated by the Georgia Lottery.
Raising the tax on COAMs to 30% would have produced $360 million for education, the charts showed.
HOPE has suffered from a funding shortfall since 2011, when the General Assembly voted in a cost-cutting move to stop covering the full cost of tuition for most students. The percentage of coverage HOPE provides has fallen as low as 76%, Cowsert said.
While Gov. Brian Kemp’s Fiscal 2023 budget proposal would increase HOPE coverage to 90% of tuition, the program still would be left with a $100 million shortfall, Cowsert said.
Other states tax their gaming machines at much higher rates than Georgia. Pennsylvania’s tax is at 52%, South Dakota’s is 50%, Illinois’ is 34% and Louisiana’s is 32.5%, according to one of the charts.
“If we were to get closer in line with other states, we might be able to close the [HOPE] shortfall,” Cowsert said.
But Les Schneider, a lobbyist representing the Georgia Amusement & Music Operators Association, said the figures on the charts did not account for the fees Georgia charges the licensees who own the machines and owners of the retail businesses where the machines are located.
“We pay more than any other COAM operation in the United States of America,” he said.
“Any attempt to raise the tax would be very detrimental, particularly to the small operators,” added Edward Lindsey, representing Norcross-based COAM supplier Lucky Bucks. “You will diminish capital investment in this state.”
The lobbyists supported the alternative bill that passed the House, which would leave the tax at 10% and offer COAM game winners non-cash redeemable gift cards.
Rep. Alan Powell, R-Hartwell, the House bill’s chief sponsor, said gift cards would discourage store owners from paying cash to prize winners, which is illegal in Georgia.
“This takes away any rationale for a merchant to pay out cash money,” he said.
Sheila Humberstone, representing the Georgia Association of Convenience Stores, called gift cards “the great equalizer” between store owners who cheat and those who are honest.
“Our members are at a competitive disadvantage when the convenience store across the street pays out cash,” she said.
The Senate committee is expected to vote on the House bill next week.