News

May 15, 2013

Insomniac Shows its Strength and Money, Fights Against Tax at Public Hearing

More articles by »
Written by: Keith Wozniak

The first public meeting was held on Tuesday in Las Vegas about the Live Entertainment Tax and Insomniac brought out the big numbers in opposition of it. There are a number of events exempt from the tax, including Electric Daisy Carnival and they’re all fighting it. It’s something that will have an impact on customers because the tax would be levied on the ticket or the admission. It would be collected by the business but paid by the fans. The simple term is that ticket prices will go up.

This was first mentioned towards the end of April when headlines everywhere stated that EDC 2014 was in jeopardy.

One may think, how can Insomniac battle against this tax like they are? Simple answer: the weekend of EDC has the highest weekend occupancy rates of the year in Las Vegas hotels. No other event fills hotels like ravers from around the world do as they descend upon Las Vegas. That’s an impressive number. Insomniac did not guarantee a future either stating, “it’s unlikely to be the kind of event held in perpetuity.” Read through for more on that.

Insomniac was not the only company to dispute this tax at first public hearings. The Las Vegas Motor Speedway stated their case about events that are exempt. The Reno Rodeo Association and Reno Rodeo Foundation presented proposed amendment about the LET and status of a tax exemption as a non profit. Life is Beautiful Festival, the Motion Picture Association and others as well had information present to be against the tax. Sadly though there was only two emails disagreeing with the tax. This is where we all come in to play and will need to voice our concerns.

In some slideshow presentations Insomniac called the new admissions tax bad for music fans and the state of Nevada. One of the points below mentions that large outdoor venues are desperate for large outdoor events and they’ll have choices to take the event elsewhere.

Would the state call their bluff? It’ll be interesting. The numbers provided by Insomniac are amazing based on how much money all of the “headliners” spend when in Las Vegas for the event.

Here’s the key points that were in the slideshow:

ECONOMIC IMPACT ON LAS VEGAS & NEVADA:

Impact on Clark County:

  • 2012 :: $207,048,000
  • 2011 :: $136,403,000

Impact on Nevada:

  • 2012 :: $207,516,000
  • 2011 :: $136,729,000

Jobs created:

  • 2012 :: 2,018
  • 2011 :: 1,400

Residence of EDC 2012 Attendees:

  • 59.9% California
  • 34.1% Other States or Countries
  • 6% Nevada

Total Direct Expenditures:

  • $90.0 MILLION by Non-Locals
  • $22.56 MILLION by Insomniac
  • $2.78 MILLION by Locals

Average Daily Spending Per Person:

  • $334 Non-Locals ($63.52 transportation, $25.42 retail, $34.16 entertainment, $55.84 gambling, $62.20 food, $92.88 accommodations)
  • $252.60 Locals ($55.90 transportation, $24.84 retail, $22.2o entertainment, $36.71 gambling, $66.70 food, $46.24 accommodations)

TOTAL IMPACT TO DATE: $344,246,000

ECONOMIC DEVELOPMENT

  • EDC generated over $344M for Nevada to date
  • Fan impact
  • Tickets sold in 50 states and 46 countries, only 6% of guests are Nevada residents
  • Spend on hotels, gaming, food and transportation
  • Highest Hotel/Motel Occupancy Rate in 2011 (LVCVA)
  • Created 3,418 jobs in 2 years

  • Donated almost $200,000 to local charities

FESTIVAL PRODUCERS HAVE CHOICES

  • Current tax status helped attract EDC
  • Large outdoor venue owners seek large events
  • Financial impact on fans has a major impact on our choices
  • Ticket tax comes out of our guests’ pockets
  • We reinvest ticket income into event to make more spectacular events
  • If this change is made, then NV is second highest LET in the nation, along with Arkansas

MUSIC FANS HAVE CHOICES

  • Music festivals growing worldwide, highly competitive
  • Ticket price is a factor
  • 8% tax on EDC 2013 ticket = $23.92, plus 8% on admissions to EDC week events (concerts, shows, etc.)
  • Who pays? Young adult music fans, some 1st-time visitors
  • Fans already pay NV taxes, average fan spend $334/day– Accommodation (Taxed in NV)
    – Food (Taxed in NV)
    – Gaming (Taxed in NV)
    – Entertainment (Taxed in NV)
    – Retail (Taxed in NV)
    – Transportation (Taxed in NV)

The goal for Assembly Speaker Marilyn Kirkpatrick, D-North Las Vegas, is to take away the exemptions and generate more money and everyone else says do that and we’ll threaten to take business elsewhere. Do companies making millions of dollars deserve exemptions? That’s a great topic that will be debated forever.

Frequently Asked Questions Regarding the Electric Daisy Carnival (EDC) and the Live Entertainment Tax (LET)

Is EDC exempt from the LET because the event is held at the Las Vegas Motor Speedway?

No. The Las Vegas Motor Speedway is not exempt from the LET. The NASCAR race is exempt in one section of the law, and EDC is exempt under a different section for “outdoor concerts.”

If you remove the exemption from the LET, will the artists and promoters of EDC start paying taxes?

No. The LET is a tax that is levied on the ticket or the admission. Very similar to sales tax, it is COLLECTED by the business, but it is PAID by the fans. EDC wants to keep tickets affordable. The unique fan base of EDC is willing to travel. Simple economics and elasticity of demand dictate that any promoter will seek a venue where they can sell the most tickets.

Does the EDC get $1 million per year from the Las Vegas Convention and Visitors Authority or Las Vegas Events? No. The EDC has contracted with Las Vegas Events to help promote many of the attractions Las Vegas has to offer in conjunction with EDC. The amount is $250,000 annually. None of the money has been received.

What is the status of the EDC? Will there be another event?

EDC is a music festival, like Woodstock. There is a unique fan base that enjoys this kind of entertainment. Like Woodstock, it’s unlikely to be the kind of event held in perpetuity. Promoters of music festivals are seeking to promote events that satisfy the demand these fans have now. So many different factors enter into the decision to produce an event and the competitive environment is fierce. Southern Nevada benefits a great deal from these kinds of festivals and hopefully, will remain a competitive venue so long as there is demand to attend them.

Does EDC cost taxpayer to produce by using police, fire, and emergency services.

No. All police, fire, traffic control and emergency services are paid for by the producers of EDC. EDC maintains the highest standard of care on all fronts.

What is the overall impact of EDC on the Southern Nevada economy?

According to a report by Beacon Economics, the three-day festival increased economic output in Clark County by $207 million. It supported the equivalent of 2,018 full-time jobs, bringing in $84 million in labor income for workers in Clark County. The event also generated an estimated $13.1 million in sales, gaming, room, fuel, and other state and local taxes.

Besides the money the fans spend, the producer rents equipment, pays for security, hires doctors, rents cars and RVs, buys food and beverages, and buys insurance. These are substantial—and taxable—expenditures.

Where did EDC come from?

EDC relocated from the L.A. Memorial Coliseum and Exposition Park in southern California. The festival started in 1997. Many economic development factors figured into the decision to relocate and no admissions tax or live entertainment tax was certainly one of them.

Are there First Amendment Freedom of Speech or Equal Protection Clause issues with LET?

This is a difficult question to answer. There are a number of court decisions that protect “speech” from taxes that are levied narrowly. Currently, the LET is spread among a wide enough base of taxpayers, there is likely no Constitutional issue. Policy makers should be mindful, however, if they intend to narrow the base of the LET.

What event boasts the highest rate of occupancy among Las Vegas hotels and motels?

According to Smith Travel Research and the Las Vegas Convention and Visitor’s Authority, the weekend of EDC has the highest weekend occupancy rates of the year. Occupancy is 98.3% county wide. Prior to EDC, that same weekend did not rank in the top ten for occupancy.

We all know Insomniac is not going to want to leave Las Vegas even though they’ll threaten to. Where else are they going to be able to sell 345,000 tickets and make it easy and affordable for people to fly in for up to a week? The saga continues.



About the Author

Keith Wozniak
Founder of this web site, I have also has been involved with raves since 1999 as a raver, flyer guy, owned a promotion company throwing small and large events and also ran one of the first Dancesafe chapters. I've done it all and have never thought the scene was dead. Also writes for SchulzArmy.com




 
 

 

Celebrating 20 Years With The Electric Daisy Carnival

Insomniac hosted the iconic Electric Daisy Carnival at the Las Vegas Speedway last month. The gigantic event was one for the books as it once again sold out, celebrating their 20th Anniversary. With a massive lineup of 200+ DJ...
by Keith Wozniak

 
 

EDC Orlando 2016 Official Teaser

Insomniac returns to Tinker Field on November 4 & 5, 2016, for yet another fantastic weekend of sunshine, good vibes, spectacular art, performers, carnival rides and the best beats around. Last year was a truly magical eve...
by Keith Wozniak

 
 

Dreamstate San Francisco 2016: Event Review

This past weekend was one for the history books as San Francisco hosted the second Dreamstate, presented by Insomniac Events. For two days, the Bill Graham Civic Center Auditorium was filled with trance loving fans and 16 of th...
by Keith Wozniak

 

 

EDC Orlando 2015: Event Review

With this being my first trip to the Orlando installment of Electric Daisy Carnival I was extremely excited to see what all the hype was about. I have attended numerous EDC Las Vegas festivals and I was sure this great Insomnia...
by Keith Wozniak

 
 

Photos: Escape Psycho Circus 2015

On Saturday I made sure to arrive early enough at the NOS Event Center while the sun was still up so that I could check out Escape Psycho Circus attraction which was inspired by American Horror Story.  I was able to catch a g...
by Keith Wozniak

 
 

Escape Psycho Circus 2015: My Favorite Moments

The NOS Events Center transformed into a devilish and chilling atmosphere for Insomniac’s Escape: Psycho Circus during the Halloween weekend. The 2-day festival was by far one of the best celebrations in the SoCal ar...
by Ashley Miller