Kansas appeals court sides with casino in tax case

Boot Hill Casino in Dodge City, Kan., does not have to pay a compensating use tax on lottery facility games, according to a decision by the Kansas Court of Appeals today.

Three casinos in Kansas, including Boot Hill, Kansas Star in Mulvane, Kan., and the Hollywood Casino at Kansas Speedway in Kansas City, Kan., are state-owned and operated. They have different private facility managers.

“A compensating use tax may not be imposed on a lottery gaming facility manager because the State of Kansas is the ultimate consumer of the electronic gaming machines and the lottery gaming facility manager has no incident of ownership in the electronic gaming machines,” the court of appeals ruled today.

The Kansas Department of Revenue had appealed the ruling from the Kansas Board of Tax Appeals.

Boot Hill Casino and Resort argued that since it was only the manager, where it uses and operates the electronic gaming machines owned by the Kansas Lottery and state of Kansas, that it should not have to pay the compensating use tax on the machines. Since there was no ownership of the gaming machines by Boot Hill, BOTA agreed that the compensating use tax did not apply, and the court of appeals affirmed the decision today.

According to court documents, the Boot Hill management company paid a use tax of $801,588.05 when it bought the electronic gaming machines for the Kansas Lottery from five out-of-state vendors.

Boot Hill paid the tax under protest and applied to KDOR for a refund, which was denied.

“The Kansas Lottery is the ultimate consumer, not BHCMC,” (Boot Hill), the appeals court opinion stated today. “BHCMC is not subject to the compensating use tax.”

The decision today did not discuss any details, such as how funds would be refunded to the Boot Hill casino.

To view today’s court decision, visit www.kscourts.org/Cases-and-Opinions/opinions/CtApp/2015/20151231/112911.pdf.

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