- Associated Press - Thursday, December 18, 2014

PIERRE, S.D. (AP) - Gambling boosters lauded this week’s South Dakota Supreme Court decision that Deadwood casinos will no longer have to pay gambling taxes on promotional programs that give patrons free credits to play slot machines, saying Thursday that it’ll save operators big money.

The high court in a decision dated Wednesday overturned a lower court’s ruling that casinos must pay tax on “free play” as part of their gambling revenues. Three casinos argued that operations that give free promotions shouldn’t have to pay taxes when a customer uses those to play on machines.

First Gold Hotel owner Mike Gustafson, one of the main backers of the lawsuit, said the decision would save operators who use promotional programs several thousand dollars a month in taxes.

“Those credits were ringing up the meters,” which drove up tax bills, Gustafson said.

Deadwood Gaming Association Executive Director Mike Rodman said the decision evens Deadwood’s footing with gambling hotspots such as Nevada that don’t tax free play programs. He noted, though, that casinos won’t get a refund on taxes they have already paid.

“It will be a big deal for the industry,” he said.

But the decision may not be an all-out win for the casinos.

Larry Eliason, the executive secretary for the state Commission on Gaming, said state attorneys are evaluating whether the Supreme Court’s decision would make winnings from promotional play not deductible from revenue, which would increase casino tax bills. Eliason also said the legal process won’t be over until the circuit court enters its judgment in accordance with the Supreme Court’s decision.

“There’s no question that we’re going to comply with the Supreme Court’s decision,” Eliason said. “The question we’re working through is what do we need to do to comply?”

Gustafson said barring the deduction would create a “point of contention,” but said he’s waiting on clarification of the court’s decision. Gustafson’s attorney didn’t respond to multiple requests for comment.


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