Budget Shortfall Feared From Tax Exemption

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The state could face budget shortfalls if some casino owners manage to kill a bid to slap an entertainment tax on dancing to recorded music, a Nevada gambling regulator said Thursday.

Dennis Neilander, chairman of the state Gaming Control Board, said legislation enacting the new live entertainment tax is open to interpretation as to whether dancing to recorded music should be covered.

Neilander said that under the old casino entertainment levy, dancing to recorded music was taxed at the 10 percent rate - but new entertainment tax language is ambiguous.

Some casino operators have sought language to exempt them from charging the tax to customers dancing in clubs to recorded music, he said, adding that estimates used for the current state budget assumed the revenue would continue to be collected at such clubs.

One gambling company seeking the exemption is MGM Mirage, which submitted an Oct. 17 letter to Neilander touching on the issue.

The letter, from Las Vegas attorney Bob Faiss, says tax exemptions should go to casino lounges and bars where "the attraction consists of the food or refreshments sold and the ambiance provided.

"A part of the ambiance is the presentation of recorded music that is facilitated by a person," the letter said. "Such persons act merely as facilitators of the recorded music, determining - by the push of a button or the turn of a dial on electronic equipment - which music is the most appropriate to maintain the desired ambiance for the facility throughout the evening."

But the question remains to be resolved before the new live entertainment tax takes effect Jan. 1.

Neilander briefed the state Gaming Commission on the development of the regulations implementing the levy, one of the most controversial elements of $836 million in tax increases approved by the Legislature.

Whatever definitions are used to implement the entertainment tax, they will have to be the same for gambling establishments and other facilities that will be regulated separately by the Department of Taxation.