CARSON CITY, Nev. (AP) - Gov. Jim Gibbons wants to continue the
state's legal battle with Nevada casinos over $142 million or more in taxes paid by the resorts on free or "comped" meals - even though it has been a losing fight so far.

Gibbons administration officials think new legal arguments could be used to keep the taxes casinos have paid on the complimentary meals provided to some customers and employees - money the companies want back following a court ruling against the levies.

The Nevada Supreme Court ruled March 27 that at least one casino company was owed a rebate for taxes it paid on such meals. That was
followed by the high court's July 17 refusal to reconsider its earlier decision.

Also, during Nevada's recent special legislative session a bill to bolster the state's legal case for collecting the taxes was killed by Senate Republicans after casino lobbyists opposed it.

Now it's up to Attorney General Catherine Cortez Masto to decide whether to continue the legal fight. The attorney general is reviewing the state's legal options and hopes to make a decision before September, spokeswoman Nicole Moon said.

"The governor believes the Legislature intended to tax these transactions, and as they have always been taxed in the past," Gibbons spokesman Ben Kieckhefer said Wednesday. "At a time when
the state is struggling fiscally, it's important to maximize the revenues we have."

Carson City attorney John Bartlett, who represented the Sparks Nugget which won the March 27 court ruling and now represents dozens of other casino companies seeking refunds, said the state will lose if it continues the tax battle.

Bartlett said that even if an argument that comped meals are taxable "sales" withstands legal scrutiny, the state Tax Commission would have to approve a new regulation that couldn't be applied retroactively.

Most casinos have stopped paying taxes on comped meals and have
asked for rebates, but they are willing to work out a deal with the
state so they are given tax credits, Bartlett said.

Of the $142 million in refunds and interest sought by casino companies, about $37 million would come from the state general fund, $41 million would come from K-12 schools, and the rest would come from local governments, Kieckhefer said.

(Copyright 2008 by The Associated Press. All Rights Reserved.)