Red Rock Says No Tax on Tips Could Add $200M to Las Vegas Economy

Red Rock Resorts (NASDAQ: RRR) executives believe the no tax on tips policy floated during the 2024 presidential campaign could juice the Las Vegas economy by as much as $200 million.

That idea was originally floated by President-elect Donald Trump and later embraced by his Democratic opponent, Vice President Kamala Harris. The proposal may have been catalyst behind Trump winning Nevada, becoming the first Republican presidential candidate to do so in two decades. He won the state by 3.1%, or nearly 47,000 votes, according to NBC News data.

We’ve looked at some economic analysis, not — I don’t know if anything has really been published on it,” said Red Rock Vice Chairman Lorenzo Fertitta on the company’s third-quarter earnings conference call last Thursday. “We think it could add somewhere in the neighborhood of about $200 million a year to the local economy here, which obviously we would benefit from.”

The Culinary Union, which represents hospitality workers, backed Harris in the election and has thrown its support behind scrapping taxes on tips.

Eliminating Taxed Tips Could Be Boon for Red Rock

Some experts believe implementing elimination of taxes on tips could be difficult to the point that the policy doesn’t come to fruition. They cite issues such as many tipped workers being in low income brackets where they’re not subject to much federal income tax to start with and the loss of revenue at a time of high deficits as among the reasons why the idea could stall.

The $200 million figured mentioned by Fertitta could have wide-ranging implications for the Las Vegas economy and would almost certainly extend beyond gaming. It could also benefit Red Rock rivals such as Boyd Gaming (NYSE: BYD) and Golden Entertainment (NASDAQ: GDEN), both of which operate gaming venues that, like Red Rock’s, are popular with Las Vegas locals.

“No tax on tips, I think would be a positive for our business,” said Red Rock President Scott Kreeger on the conference call.

Another Small Benefit for Red Rock, Others

Should the no tax on tips policy come to fruition, it could afford Red Rock incremental benefits in other areas. Prior to the election, some analysts speculated the casino operator could save as much as $3 million per year in payroll expenses if tip taxes are scrapped.

On the conference call, CFO Stephen Cootey echoed that sentiment, noting Red Rock could save $2 million to $3 million in annual payroll expenses if taxes on tips are erased.

If that forecast is accurate, it’s possible rivals such as Boyd and Golden could also realize payroll expense benefits.