The commercial casino gambling sector in the US has annual revenues in excess of $40bn and generates nearly $10bn per annum in direct gaming tax revenue. Tourism is of key importance to the sector with visitors attracted from across the world to the most important gambling centers. The sector is just as important for the numerous gaming reservation venues situated in several US states. In recent years, a number of states have relaxed gambling laws with the explicit purpose of encouraging tourism development. Outside the US, gambling is the dominant source of tourism for the Chinese territory of Macau, whilst a number of other countries such as Australia and the UK have sought to exploit the growth of gambling tourism by relaxing laws relating to the casino industry. Notably, the Gambling Act of 2005 allowed the introduction into the UK of a much greater number of high stake jackpot machines, liberalized the laws on advertising and membership, and made legal the creation of larger scale casinos than hitherto allowed. The significance of public taxation for tourism has been well established but there is often a tension between government and industry in how this is raised. Although one important aspect of the debate relates to the use of taxation to control the extent and costs of problem gambling, much of the argument reflects the more general tension between governments’ desire to maximize public revenue and industry concerns about the effect of high taxation rates on profits and growth. Further, the choice regarding the optimal approach to taxing gambling machines has been the subject of intense lobbying and political debate. In this paper, we demonstrate how a closer examination of the choices over the type of taxation rather may be helpful in resolving this tension. We propose general lessons for the future based on a model of public taxation as well as empirical evidence drawn from the UK. The general case presented is made in the context of the established literature on the significance of public taxation for tourism and the importance in many jurisdictions of gambling machine revenues for the tourism industry. We also consider the argument, however, within the wider health perspective related to the prevalence of casino gambling.