This study shows that whether a tax is heavy for local casinos in terms of economy-wide efficiency hinges on how much of the tax can be passed on to tourists. The division of the tax burden between casinos and tourists is affected by the relative elasticity of demand versus supply and tourists’ income factors. We find that gaming tax incidence is robust across different market structures. An uncompetitive casino industry may be more favorable for tax efficiency than its competitive counterpart. Policy choice between tax rates is observed to rest on the economic incidence of a statutory tax. We provide the economic rationale behind why a high tax is imposed inMacaoand a lenient tax is adopted inLas Vegas.