The whoot whoot whoot of Pac-Man and periodic plunk of quarters into other games poured a whopping $17.7 million into the coin boxes of Maryland arcade owners in the first three months of this year.
Coin-operated games surpassed night clubs and movies as the state's most popular entertainment for the first time, reported Maryland Comptroller Louis Goldstein, who collected a record $813,000 in taxes on coin operated amusements.
From Asteroids to XXX-movie machines, coin games are the fastest growing source of amusement tax revenues says Goldstein, whose figures offer the best gauge of the virulence of Pac-Man fever.
At the standard 25 cents a game, the $17.7 million is the equivalent of every one of Maryland's 4.8 million residents playing one video game a week, dropping an average of $3.50 each into the coin slots during the first quarter of the year.
In contrast,. Maryland residents spent $16.75 million in night clubs and $10.25 million on movies during the three months, Goldstein pointed out
Local governments are moving quickly to cash in on the electronic expenditures by raising their coin game taxes, which are collected by the comptroller and returned to local governments. The District of Columbia and Virginia levy a flat 5 percent tax on coin games, but Maryland cities and counties can set their own tax rate, up to a state ceiling of 10 percent.
New Carrollton on March l bumped its coin games tax rate from 6 percent to 10 percent, the comptroller's office said. Greenbelt's rate jumps from 4 1/2 percent to the limit effective today, and the College Park council is shooting for the hyperspace of amusement levies with its own 10 percent tax rate.
Montgomery County gamesters fed $1.6 million into their machines during the the three months, and almost $120,000 of that flowed into the coffers of local governments. In Prince Georges, where tax rates are lower, $2.6 million in quarters yielded $84,000 in taxes, the comptroller reported.
With the 10 percent tax rate already in effect in Baltimore County, Baltimore City Mayor Donald Schaefer has tried twice to raise the city's tax of 1 percent, but has been thwarted by a well-oiled coaliton of bar owners and other game keepers.
Neither nonsexist advocates of Ms Pac-Man, insatiable Centipedes players or devotees of Donkey-Kong worry much about the amusement tax, because the rate rarely affects the price of the games. While Pac-Persons can gobble dots, ghosts and energizers, most game machines only eat quarters.
Arcades often substitute tokens for coins, but raising their price above 25 cents is difficult because the business is so competitive.
As a result, the tax blasts a hole in the astronomical profits of the games, which can score $400 to $500 a week in revenues from a machine costing $1,000 to $3,000.
There are suspicions, however, that game owners are playing some games of their own with the tax collectors. Arcade owners legitimately can earn investment tax credits on games they buy and qualify for rapid depreciation that protects their income as effectively as Asteroids II shields. Since coin games are an all-cash business, owners can skim off income without reporting it to the tax collectors as easily as Donkey Kong players dodge obstacles while scaling the Empire State Building.