Carson Nugget GM: Taxing casino complimentary meals a 'slight'

The Nevada Tax Commission has upheld its decision to tax casinos' complimentary meals to gamblers and employees.

And for Carson Nugget General Manager Star Anderson, it's a big hit to the industry.

"It's an adjustment to our budget that we're going to have to take a hard look at," she said, and it creates "another challenge in an already tough time."

Anderson said complimentary meals are a big draw for her clients, and she called the sales tax ruling a "slight" against the way casinos do business.

The Las Vegas Sun reported that the commission on Monday rejected an appeal by Boyd Gaming Corp. The company has 12 casinos in Clark County and wanted a refund of taxes paid.

The 6-1 decision will mean hundreds of millions of dollars in refunds being sought by casinos statewide will stay with the state, though an appeal to the Nevada Supreme Court is likely.

Every casino in the state has a similar appeal before the tax commission.

The commission decided that sales tax would be based on the retail price of the meal.

Boyd attorney John Bartlett argued that complimentary meals were not taxable because no money changes hands, that without a sale, there can be no tax.

"Every casino has a player club," Bartlett said. "It's part of the marketing program."

He asked the commission to order a full refund of the tax, plus interest. There was no immediate estimate on how much the Boyd company sought.

But Deputy Attorney General Blake Doerr, who represents the tax department, told the commission there is no requirement for money to change hands for it to be considered a sale.

"The patron must gamble to be eligible for a comp," Doerr argued. Casinos use the full retail price of the meals in figuring comps in their accounting practices. And union contracts call for free meals for workers in many of the casinos.

Doerr said employee meals are bargained for - "the employee agrees to work and employer agrees to provide meals."

In 2008, the Nevada Supreme Court ruled the tax department could not apply the tax to complimentary meals at the Sparks Nugget, but the state could levy the tax if the casino meal was for "consideration."

The tax department argued there is a "consideration" in the cases at issue since the customer must play slots or table games to be eligible for the free meal. "Still we do not foreclose the possibility that complimentary meals such as the ones at issue in this case may be subject to sales tax where consideration is properly demonstrated," the court said.

The commission Monday upheld the decision of Administrative Law Judge Dena Smith, who ruled that employee and complimentary meals to patrons were retail sales and subject to sales tax.