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Non-Tech : Littlefield Corporation (LTFD) -- Ignore unavailable to you. Want to Upgrade?

To: Ed Pettee who wrote (5694)	12/18/1997 9:49:00 AM
From: Robert L. Akers	Respond to of 10368

31000 is also the number given me by Robert Kecseg, who added that half those machines are held by 50 entities. The current licence fee is $4000 per biennium. The number of machines is growing by 30% annually. Currently, S.C. is taking in over $60M in license fees. The legislative proposal that seems to hold middle ground would do away with the license fees and replace them with a 20% tax on gross profit (intake - payout). With gross profits currently averaging $19-20K per machine per year, the revenue stream to S.C. per machine will approximately double, and with continued volume growth would approach $150M a year. The extra $2K per machine diverted to taxes would, of course, come off the bottom line, which the company has stated is currently in the range $5-7K. An 80% payout requirement would appear on its face to further cut into the margin, but I rather imagine the cut would be less than the difference in payout ratios would indicate, as many players would simply play longer with the money they have. One wild card in the math is to what extent all the hoopla over VGMs will alter people's inclination to play the games. A countervailing factor would be the perception that money spent on the games would support the state budget. As much as people scream about taxes, I think the perception (in Texas, for instance) that money lost on the lottery is paid to fund desirable public works (e.g., schools) contributes to some people's willingness to play. A switch from license fees to a gross revenues tax might engender this same attitude toward VGMs in S.C. Not that this is anywhere near the predominating motivator, but guilt assuasion can count big in the psychology of the game. Gosh, I hadn't intended to ramble. Sorry. Larry