District Judge Todd Russell in Carson City ruled from the bench after a 90-minute hearing, determining that language used by Nevadans for a Fair 9 percent Gambling Revenue Tax didn’t adequately explain what the measure would do.
Conservative Las Vegas businessman Monte Miller, the sponsor of the effort, said he will refile a new petition with the secretary of state’s office and begin the signature gathering process anew. Miller said about “500 or so” signatures had already been obtained, and that the court’s ruling would not be an insurmountable setback.
The initiative sought to raise the top tier of gambling taxes to 9 percent, up from 6.75 percent, for casinos that make more than $250,000 a month in gambling revenue.
The Nevada Resort Association, an industry group made up of the state’s most powerful casino companies, sued to block the measure.
NRA lawyer Matt Griffin argued the initiative wording was confusing and inaccurate, and arguments during Wednesday’s hearing focused on the use of “un” versus “non,” and “gross revenues” as opposed to “gross gambling revenue.”
Gross gambling revenue is the amount casinos take in from slot machines and other wagers, while gross revenue includes other income as well, such as from entertainment, restaurants and hotel rooms.
The initiative used “gross revenue” in its description of effect, language Miller’s attorney Maggie McLetchie said was taken straight from state statute that deals with casino law.
But Griffin said the wording amounted to “a billion dollar mistake” if the intent was to only collect higher taxes on income from gambling.
Griffin further argued the description erroneously referred “unrestricted” license holders — casinos that have more than 15 slot machines — when the correct term under the law is “nonrestricted.”
McLetchie countered that for the general public there was no distinction.
“In plain English there is no difference between ‘un’ and ‘non,’” she said.
Griffin also said that the measure didn’t adequately explain “who is being taxed” or who would pay it. The judge agreed, noting the initiative could be interpreted to mean casino machine manufacturers and distributors would also be subject to the provisions.
Russell said while the NRA’s objections may seem minor when taken individually, they raised legitimate legal concerns when considered collectively.
Proponents need to gather more than 72,000 by mid-November to send the casino tax hike to the 2013 Legislature for consideration. If it advances to that point and lawmakers failed to approve it or take action within 40 days, it would go to voters on the 2014 ballot.
Miller is also behind a separate initiative to amend Nevada’s Constitution to raise the cap on net proceeds that mining companies pay on minerals.
That measure would increase the tax cap to 9 percent of net proceeds, up from the current 5 percent and is in signature gathering process.