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In the following podcast, David Lennhoff, a Senior Director at Altus Group, and David Brooks, a Manager at Altus Group, discuss the latest real property tax trends and tips for casinos and gaming companies.

 

Casinos are a lucrative and very competitive industry. In 2014, national gross gaming revenues reached their highest level in history.  However, it is projected that casinos are likely to struggle over the next 5 years, as a growing number of casino operators compete for a share of a stagnant gambling market.  Industry revenue for the non-hotel casino market is anticipated to grow only 0.6 percent per year to 2020.

This industry projection creates challenges for casino owners when it comes to real property taxes, and gaining sound valuation assessments from states and jurisdictions.

For example, the valuation of casino real property involves separate tangible and intangible elements, which creates the potential for wide disparities between the assessor’s and the property owner’s appraisals.

Although some jurisdictions differ in whether the current use or the highest and best use should serve as the basis for the assessed value, the reality is that assessments are often based on the leased fee, while others use the fee simple approach.

For casinos, this ultimately means that the value must exclude the management contract or license.  This results in the appraiser answering the question, “For how much would the subject real property have sold on the date of appraisal, absent the management contract or license to game?”  Often assessors answer the wrong question.

There are three approaches when it comes to assessing a casino’s property value, which are the cost, sales comparison and income capitalization methodologies.  This podcast provides a detailed summary of each approach, and explains how each offers challenges when it comes to appraisers answering questions correctly.

Altus Group can provide guidance and insights to help casino property owners minimize their real property tax burden throughout the U.S.

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Last updated on September 4th, 2019 at 05:15 pm

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