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Victory for Ledyard in slot machine tax case
By Greg SmithPublication: TheDay.com
Published 07/15/2013
Non-tribally owned slots can be taxed, federal appellate court decides
An appeals court has rejected claims by the Mashantucket Pequot Tribe that the slot machines they lease from non-tribal businesses are exempt from local personal property taxes.
In what the town of Ledyard is calling “a precedent-setting decision in favor of state and local governments,” the U.S. Court of Appeals for the Second Circuit reversed a previous decision and ruled Monday that two non-tribal businesses must pay personal property taxes on property they own but lease for gaming activities to the Mashantucket Pequot Tribe.
The case dates back to 2005 when New Jersey-based Atlantic City Coin & Slot Co. refused to pay town personal property taxes on slot machines leased to the tribe, claiming the taxes would interfere with Mashantucket Pequot tribal sovereignty. In 2008, WMS Gaming, another slot machine company, joined the suit.
Last year, a federal judge in Bridgeport ruled in favor of the tribe, granting the tribe’s motion for a summary judgment that had cited Indian Trader Statutes, the Indian Gaming and Regulatory Act, and a U.S. Supreme Court case called Mountain Apache Tribe v. Bracker, which weighs federal, tribal and state interests.
The appeals court ruled Monday that the district court erred and that none of the arguments bar a state from taxing a non-tribal entity.
“With this decision, the Town of Ledyard will be able to collect taxes that are critically important to providing government services, including those that result from being a host community for the Foxwoods casino,” said Ledyard Mayor John Rodolico in a statement.
“This case was just the tip of the iceberg, and our tax revenues would have taken a huge hit if we had not persevered throughout this eight-year legal battle to achieve this victory,” he said.
A spokesman for the Mashantucket Pequot Tribe was not immediately available to comment Monday night.
Ledyard Council Chair Linda Davis, in a written statement, said, “This was a very complex case, and the Town is gratified the Second Circuit addressed all of the key issues so there will be no future uncertainty that we can collect these taxes.”
The town spent more than $900,000 on legal fees in the case.
Rodolico thanked former Attorney General Richard Blumenthal and his successor, George Jepsen, for working with lawyers from Perkins Coie, who have represented Ledyard for more than 20 years on Indian law issues and donated considerable time to the effort.
“The result of this case is a victory for the taxpayer, for fairness and equity in taxation, and for ensuring the Town has a consistent revenue stream for the years to come,” Rodolico said.
http://www.theday.com/article/20130715/NWS01/130719792/1018
In precedent, Connecticut wins right from NY court to tax Indian tribe's slot machine vendors
NEW YORK — A lawyer who argued successfully to prevent an Indian tribe in Connecticut from blocking collection of local and state property taxes on slot machines at the largest casino in the Western Hemisphere said the ruling Monday by a federal appeals court sets a good precedent for other Indian-run casinos across the country.
The 2nd U.S. Circuit Court of Appeals in Manhattan ruled Monday against the Mashantucket Pequot Tribe, which operates the Foxwoods Resort Casino. The decision overturned a lower-court judge who had earlier ruled for the tribe over the town of Ledyard and the state of Connecticut.
The appeals court noted the town maintains roads throughout the Indian reservation and provides emergency services. It said it also educates tribal children at a cost of at least $236,000 annually. The 2nd Circuit called it a close case but said the tribe's interests in sovereignty and economic development don't trump the interests of the state and town.
"The town and state have more at stake than the tribe," the appeals court wrote. "The economic effect of the tax on the tribe is negligible; its economic value to the town is not."
"We are very pleased," said attorney Benjamin S. Sharp, who argued for the imposition of the tax. "It is a significant decision."
Sharp said that the lawsuit brought by the tribe pertained to only two slot machine companies that generated about $20,000 in property tax income annually. But he added that there were seven more slot machine distributors and the tribe had suggested that the principle the lower court had applied in banning the taxes could be applied to anyone who maintained property on tribal lands.
"That would total hundreds of thousands of dollars a year," the lawyer said. And he said it was likely that similar property tax challenges would be brought on other tribal lands across the nation if the 2nd Circuit had not acted as it did.
A lawyer for the tribe did not immediately respond to a request for comment.
In its decision, a three-member panel of the 2nd Circuit said the ability of a state to apply generally-applicable taxes to non-Indians performing otherwise taxable functions on an Indian reservation were well established.
It noted that the $20,000 in annual property tax revenue generated by the two slot machine companies was less than two tenths of 1 percent of the $15.2 million the companies anticipate each year in revenues from their dealings with the tribe.
"Even if the tribe were forced to reimburse the vendors, $20,000 per year would not pose a substantial threat to the revenue the tribe derives from the vendors' games," the 2nd Circuit said. "The tax's economic effect on the tribe is less than minimal."
The court noted that a ruling favorable to the tribe would invite other non-Indian owners of personal property on the reservation to bring similar lawsuits, costing the town hundreds of thousands of dollars annually in litigation costs.
"The town would need to take careful account of the use to which property owned by non-Indians on the reservation was put," the 2nd Circuit said. "This additional level of analysis would further frustrate the town's revenue collection and would render the state's tax more difficult and expensive to administer."
http://www.therepublic.com/view/story/b98d6b801fc04cd68da438d60480e3d8/US--Slot-Machines-Indian-Casino-Taxes
Also:
NY court rejects Conn. Indian casino tax lawsuit
Read more: http://www.lasvegassun.com/news/2013/jul/15/us-slot-machines-indian-casino-taxes/#ixzz2ZDhkH6Y2
The 2nd U.S. Circuit Court of Appeals in Manhattan ruled Monday against the Mashantucket Pequot Tribe, which operates the Foxwoods Resort Casino. The decision overturned a lower-court judge who had earlier ruled for the tribe over the town of Ledyard and the state of Connecticut.
The appeals court noted the town maintains roads throughout the Indian reservation and provides emergency services. It said it also educates tribal children at a cost of at least $236,000 annually. The 2nd Circuit called it a close case but said the tribe's interests in sovereignty and economic development don't trump the interests of the state and town.
"The town and state have more at stake than the tribe," the appeals court wrote. "The economic effect of the tax on the tribe is negligible; its economic value to the town is not."
"We are very pleased," said attorney Benjamin S. Sharp, who argued for the imposition of the tax. "It is a significant decision."
Sharp said that the lawsuit brought by the tribe pertained to only two slot machine companies that generated about $20,000 in property tax income annually. But he added that there were seven more slot machine distributors and the tribe had suggested that the principle the lower court had applied in banning the taxes could be applied to anyone who maintained property on tribal lands.
"That would total hundreds of thousands of dollars a year," the lawyer said. And he said it was likely that similar property tax challenges would be brought on other tribal lands across the nation if the 2nd Circuit had not acted as it did.
A lawyer for the tribe did not immediately respond to a request for comment.
In its decision, a three-member panel of the 2nd Circuit said the ability of a state to apply generally-applicable taxes to non-Indians performing otherwise taxable functions on an Indian reservation were well established.
It noted that the $20,000 in annual property tax revenue generated by the two slot machine companies was less than two tenths of 1 percent of the $15.2 million the companies anticipate each year in revenues from their dealings with the tribe.
"Even if the tribe were forced to reimburse the vendors, $20,000 per year would not pose a substantial threat to the revenue the tribe derives from the vendors' games," the 2nd Circuit said. "The tax's economic effect on the tribe is less than minimal."
The court noted that a ruling favorable to the tribe would invite other non-Indian owners of personal property on the reservation to bring similar lawsuits, costing the town hundreds of thousands of dollars annually in litigation costs.
"The town would need to take careful account of the use to which property owned by non-Indians on the reservation was put," the 2nd Circuit said. "This additional level of analysis would further frustrate the town's revenue collection and would render the state's tax more difficult and expensive to administer."
http://www.therepublic.com/view/story/b98d6b801fc04cd68da438d60480e3d8/US--Slot-Machines-Indian-Casino-Taxes
Also:
NY court rejects Conn. Indian casino tax lawsuit
Read more: http://www.lasvegassun.com/news/2013/jul/15/us-slot-machines-indian-casino-taxes/#ixzz2ZDhkH6Y2
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