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Why Wynn Resorts saves a lot of tax on casino profits

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Tax exemption

Wynn Resorts (WYNN) received a second five-year exemption from Macau’s 12% complementary tax on casino gaming profits through December 31, 2015.

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The above chart shows that Wynn Resorts was exempted from the payment of ~$107.3 million, $87.1 million, and $82.7 million in such taxes for the years ended December 31, 2013, 2012, and 2011, respectively. For 2014 year-to-date, Wynn Resorts was exempted from the payment of such taxes totaling $80.4 million.

However, Wynn Resorts’ nongaming profits remain subject to the Macau complementary tax, and casino winnings remain subject to the Macau special gaming tax and other levies, together totaling 39%, in accordance with its concession agreement with the Macau government.

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MGM Resorts (MGM) is presently exempted from the Macau 12% complementary tax on gaming profits. In October 2013, Las Vegas Sands (LVS) received a five-year income tax exemption in Macau that exempts the company from paying corporate income tax on profits generated by gaming operations. Las Vegas Sands will continue to benefit from this tax exemption through the end of 2018.

In order to avoid the risk of investing in an individual casino company, exchange-traded funds (or ETFs) like Consumer Discretionary Select Sector Standard and Poors depositary receipt (or SPDR) fund (XLY) and VanEck Vectors Gaming (BJK) help investors gain diversified exposure to casino companies.

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