Heading to Nevada to catch your favorite entertainer this year? Better book a ticket for summer. Beginning in October 2015, tickets to live entertainment may be subject to a new 9% tax on admissions. All events held in venues capable of holding 15,000 or more concertgoers are subject to the new tax.
The tax is clearly a response to the growing popularity of Nevada as a go to destination for festivals and large scale concerts, with such events as the Electric Daisy Carnival rave, the iHeartRadio music festival and the Route 91 Harvest country festival.
How big are these events? Festivals can run the gamut from quirky to mainstream, featuring some of the hottest names in the music business. The iHeartRadio music festival, for example, has been held in Nevada each September since 2011 by iHeartRadio and has hosted everyone from Queen to Taylor Swift and Nicky Minaj to Miranda Lambert. Last year, acts included Coldplay, Ariana Grande, Iggy Azalea and One Direction. Headliners for the main stage for the 2015 will be announced this summer but those committed to the Village stage already include Hozier, Tove Lo, Trey Songz, Walk The Moon, Nick Jonas, George Ezra, Tori Kelly, Echosmith, James Bay, The Struts, Zella Day, and Shawn Mendes.
The new tax is an about face for a state that typically prides itself on being tax friendly. However, lawmakers claim that it’s not about raising more taxes but making the existing system more simple. Under the old system, vendors and ticket sellers had to make subjective calls about whether a tax might apply. With the new ticket tax, Gaming Control Board Member Terry Johnson estimates that around 80% of disputes related to what constitutes “entertainment” are easily resolved. Nevada Resort Association President Virginia Valentine agrees, saying that the old law created far too much ambiguity.
The casino industry in Nevada has generally supported the new tax but festival organizers have not been so enthusiastic. Pasquale Rotella, who produces the Electric Daisy Carnival (EDC), an electronic dance music festival, called the measure “extremely detrimental” and has hinted that it might be a reason for the festival to seek out other venues. The 2015 EDC event will feature such acts as Calvin Harris, FatBoy Slim and Moby.
It’s not just for profit venues that will get hit. The new tax makes it clear that it applies to organizations which claim tax exempt, or 501(c)(3), status. That includes the popular Burning Man festival: Burning Man Project, which considers the festival its “largest and most important ‘program’” is now tax exempt. This year the week-long event, which began in 1986, will cost ticket holders $390. The new tax means that those same folks will add about $35 per ticket to attend the same event next year (assuming no other boost in ticket prices). That might make festival goers cringe but will make legislators smile: based on 2014 numbers, the extra tax will bring in more than $2.3 million for Burning Man tickets alone.
While events hosted by tax-exempt organizations are largely subject to tax, depending on the size of the event, some other exclusions do apply, including “entertainment provided by a patron or patrons” (whew, karaoke has been saved!) and an “uncompensated, spontaneous performance.” College sporting events are also generally exempt from the tax, as are certain regularly scheduled NASCAR races. You can read the bill (SB266) as enrolled here (downloads as a pdf).
Will the tax be enough to keep festival goers away in 2016? It’s hard to say. The popularity of the events is undisputed – and the location is part of the appeal. It’s clear that the tax is high enough to have folks talking, though. “Nine percent is a huge tax,” said Gary Bongiovanni, president and editor-in-chief of the concert industry trade publication Pollstar.