All electronic bingo casinos in Greene County will be taxed at the same rates, according to a spokesperson for the Alabama Department of Revenue.
The question of whether some bingo casinos in the county were being taxed at a different rate arose in the wake of an Alabama Supreme Court decision regarding taxes owed by GreeneTrack.
The ALSC, despite a number of procedural issues and conflicting precedent, determined that GreeneTrack was not exempt from sales and use taxes on electronic bingo revenue. It also ruled that the casino would have to be taxed on credits played by customers and not simply on total revenue.
Following that decision, GreeneTrack CEO Nat Winn said his monthly tax bill for last July skyrocketed and was more than his total revenue for the month. Shortly thereafter, Winn announced he would cease electronic bingo operations and would instead install historical horse racing machines, which have been deemed legal by the Alabama Attorney General’s Office.
APR attempted numerous times to ascertain if GreeneTrack – the state’s only minority owned racetrack/casino – was being taxed differently than other electronic bingo operators in Greene County, and around the state. However, Alabama Department of Revenue officials repeatedly declined to comment on the question prior to Tuesday.
Winn declined to comment about electronic bingo tax rates but did confirm to APR that GreeneTrack now operates only historical horse racing games. GreeneTrack, The Birmingham Race Course, Mobile Greyhound Park and VictoryLand are currently the only locations in the state authorized to operate the historical horse racing games, because they each hold a pari-mutuel license with the state.
The comments from Miller, along with the ALSC opinion, raise questions of how other Greene County electronic bingo casinos remain in operation. In fact, it raises tax questions for any entity operating an electronic bingo machine outside of Macon County, which has a uniquely worded constitutional amendment that alters the tax structure for games in that county.
The ALSC opinion was particularly brutal for electronic bingo operators, because it removed a key tax exemption that made the games profitable and also imposed a new tax calculation that significantly increased the taxes paid on the games.
Essentially, the court ruled that GreeneTrack – and all other electronic bingo establishments in the county – were not covered by the 1975 tax act that exempted the casino from paying sales and use taxes. That act imposed a 4-percent tax on gaming revenue “in lieu of all other taxes.”
In addition, the court said electronic bingo operators should be taxed for credits played. Basically, that means that if a player puts a dollar in a machine and wins $10, but doesn’t collect the winnings and instead allows it to be used as credits and ultimately loses that $10, the casino should be taxed on $11. The argument, of course, is that the player could have taken the $10 and left, so the credits should be taxed as real money. The problem, however, is that if the player cashed out, the casino would count the $10 loss.
Under the ALSC formula – the formula the state is apparently now using to collect taxes on electronic bingo – the loss is never factored in. So, while the casino made only $1 on the transaction, it paid taxes on $11.
The ALSC decision was widely criticized in legal circles for breaking long-standing precedent and taking up issues that were never introduced in a lower court.