After a July tax bill that was higher than monthly revenue, GreeneTrack casino in Eutaw closed for business over the weekend.
GreeneTrack, the state’s second oldest dog track and only minority owned, non-Native American casino, was rocked in June by an Alabama Supreme Court opinion enforcing a 13-year-old tax assessment claiming the track owed more than $106 million in taxes and fees. The opinion also essentially implemented a new tax structure for electronic bingo casinos in the state, which stacked state taxes – for which the casinos had historically been exempt – on top of gaming taxes.
“We couldn’t continue to operate at a loss,” said GreeneTrack CEO Nat Winn. “I’m not sure what the future holds for us – a lot of that depends on how evenly the Revenue Department treats everyone.”
Winn pointed out that GreeneTrack is also the state’s only employee-owned casino – a shift in ownership made by former CEO Paul Bryant Jr., son of legendary former University of Alabama football coach Paul “Bear” Bryant, to ensure the casino benefitted the economically depressed area.
The Alabama Department of Revenue now has an interesting decision that will determine the future of gaming in Greene County, and around the state.
If the Department chooses to move forward with the tax collection and tax rules allowed by the Alabama Supreme Court – and if it enforced those laws on all electronic bingo casinos in Alabama – it would essentially force all non-Native American electronic bingo casinos to close. (Excluding VictoryLand, which has a constitutional amendment worded differently than other casinos around the state.)
However, the Department could determine that the stacked taxes were unfair and choose instead to collect only gaming taxes against the casinos. The ALSC opinion, after all, only grants the Revenue Department the authority to collect the taxes; it doesn’t instruct the Department to do so.
Such a decision would allow casinos to remain operational, but it also would cost the state at least $70 million – and potentially hundreds of millions if imposed equally on other electronic bingo casinos – because it would eliminate the additional taxes GreeneTrack owes.
What the Revenue Department will do is a mystery, one that the Department apparently doesn’t plan to answer publicly.
APR asked the Revenue Department if it planned to follow through with collection of the GreeneTrack back taxes and move forward with taxing other electronic bingo casinos at similar rates. Revenue Department communications director Frank Miles said the department was prevented from commenting on taxpayer specific information.
When asked if the Revenue Department would now determine taxes on electronic bingo casinos without allowing for the traditional sales and use exemption – the method for which the ALSC arrived at GreeneTrack’s tax rate – Miles said the Department would have no further comment.
“It’s pretty crazy that you have businesses operating right now and they don’t know for sure if they will be upside down on taxes because the Revenue Department won’t simply tell them,” said an attorney who has worked closely with electronic bingo casinos in Greene County for the past decade. The attorney asked not to be named because his clients had not authorized him to speak publicly.
However, two sources within the local Greene County government told APR that officials from the Revenue Department have already visited the casinos in Greene County and informed owners that a tax law change likely was coming because of the Alabama Supreme Court decision.
That decision reversed years of precedent and broke numerous legal norms. First, the ALSC justices disregarded a 1975 gaming act that established the tax exemption for dog tracks, and it disregarded subsequent legislation that made clear the exemption was meant to include all activity at the tracks.
The ALSC also overturned two circuit court decisions, including one from a judge that the ALSC selected to hear the case. It also overturned a decision by the Alabama Tax Tribunal, which ruled that GreeneTrack was exempt from the imposed taxes.
Finally, and perhaps most shockingly to attorneys around the state, the high court ignored long established precedent and basic law by taking up matters in its opinion that had never been heard at a lower court, were never introduced in appeals and were not considered matters before the court.
In addition to stacking the taxes, the ALSC also altered the way casino revenue was determined. In addition to dollar-for-dollar taxes, it also imposed taxes on casino credits. That means if a customer made a $1 bet and won $10, but then proceeded to bet the entire $10 credit, the casino owes taxes on $11, despite the fact only $1 was deposited and it never had an opportunity to count the $10 loss.
The decision has devastated GreeneTrack and the surrounding community that depend on the casino for tax dollars and decent jobs. It has also left businesses around the state wary of potential tax issues in the future, since the plain text of Alabama’s tax laws – and the guidance from those employed by taxpayers to oversee it – can’t be relied upon.