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Our friends at First Rain highlighted a Nevada poll showing 60% of Nevada voters approve a 3% tax increase to 13% of room revenues. The room tax issue will be on the ballot in a non-binding referendum. The referendum will likely apply pressure to legislators to actually enact a tax hike. This is consistent with our populism theme. As state budgets continue to deteriorate, look for legislators to attempt to hit up their favorite punching bags: the casinos; for the children, of course. Nevada, Illinois, and New Jersey remain in rough shape fiscally.

As can be seen in the chart, the impact to the Nevada gaming companies looks manageable. However, with 40,000 hotel rooms in the state, MGM would be hit the hardest, reducing 2009 EPS by about 7%.

MGM would be the hardest hit