Wednesday, March 15, 2017

“Casinos & Money Laundering: An Industry Scorecard” article summary

Jeffrey Silver (Of Counsel, Las Vegas) was quoted extensively in an article titled “Casinos & Money Laundering: An Industry Scorecard” in the March 2017 edition of Global Gaming Business Magazine.  The article discusses the global Financial Action Task Force report which applauded the stateside industry for its increased focus on raising awareness and improving compliance of the 2007 Bank Secrecy Act. Jeff discussed the fact that reports are “investigated in a real-time, online basis,” and that “the price of compliance is eternal vigilance.” To read the full article, click here.

You may contact Jeff Silver in our Las Vegas office at 702-550-4482. 

Thursday, October 20, 2016

Let’s Be Blunt: Recreational Marijuana Will Bring New Regulatory Challenges to Gaming Licensees in Nevada

By Jennifer Gaynor, Kate Lowenhar-Fisher, Greg Gemignani, and Jeff Silver

As Nevada voters are bombarded with messaging both for and against the legalization of recreational marijuana leading up to the vote on “Question 2” on the November state ballot, Nevada’s gaming industry watches with what we imagine must be a mix of interest and trepidation.

On the one hand, there is the promise of increased tourism to Nevada should Question 2, Nevada’s recreational marijuana initiative, pass in November. For example, sources (including NSDUH, Marijuana Policy Group, RCG Economics, Travel Nevada, and Las Vegas Convention and Visitors Authority) estimate that “the passage of Question 2 and the responsible implementation of recreational use marijuana” could bring an estimated 6,800,719 potential adult-use Nevada tourists aged 21 and up in 2018.[1]

Anything that increases visitor volume is a boost for gaming and hospitality revenues.

On the other hand, if recreational marijuana becomes legal, the state’s gaming licensees will also see a related uptick in regulatory scrutiny.

Nevada’s gaming regulators, the Nevada Gaming Control Board (“Board”) and Nevada Gaming Commission (“Commission”), have already drawn a line in the sand when it comes to Nevada’s gaming licensees having any involvement with the medical marijuana business. In a May 2014 Notice to Licensees, Board Member Terry Johnson warned that “…the Board does not believe investment or any other involvement in a medical marijuana facility or establishment by a person who has received a gaming approval or has applied for a gaming approval is consistent with the effective regulation of gaming.” The Board solidified its position in its July 2014 hearing with the pronouncement that a person could not be in the gaming business if his or her spouse was in the medical marijuana business. And in August 2015, Board Member Terry Johnson further cautioned that the Board would include in its scrutiny “persons such as landlords too that might be involved in the gaming context and concurrently in the medical marijuana context.” (Click here to read our “Landlords, Beware! Medical Marijuana and Gaming: How Close Is Too Close?” article from November 2015.)

Fast-forward to Fall 2016. More than twenty medical marijuana dispensaries are operational across Nevada, including at least a couple of locations in very close proximity to the Strip. Recreational marijuana is on the ballot for the November election. But marijuana is still an illegal Schedule 1 controlled substance under federal law. And the operation of a gaming facility still requires a privileged state license, which is worth far more to Nevada gaming operators than any uptick in tourist revenues from the lure of recreational marijuana.

It seems fairly clear that Nevada’s gaming operators will need to steer clear of investment in or ownership of recreational marijuana businesses, as they have with medical marijuana businesses. Similarly, they would be wise to avoid leasing property, especially that within the footprint of their gaming facilities, to anyone in the recreational marijuana business. But with a potential huge expansion in marijuana use in the state, especially among the “green” tourists, gaming operators will want to consider their plans for how to deal with customers who came not just for good gaming, entertainment, food and shopping, but also for the recreational marijuana experience.

Just a few questions to consider: How will this impact the operation of the day clubs and night clubs located on gaming resort premises? What about customers who want to partake of marijuana on the casino floor or in their hotel rooms? What will gaming licensees be expected to provide as far as security and enforcement regarding the possession and/or use of recreational marijuana on their premises? Will they be expected to monitor or deter the delivery of recreational marijuana to customers who are staying at their resorts? What about trade shows or conventions related to medical marijuana on their premises? What kind of due diligence must casinos conduct on their tenants and vendors? How will this affect problem gambling policies and procedures? The list of issues that will need to be addressed by gaming licensees is lengthy.

The State’s concerns about recreational marijuana are clear, as evidenced by the gaming regulator’s stance on medical marijuana and the public opposition to Question 2 by Nevada’s Governor, Brian Sandoval. The big question, therefore, is if Question 2 passes, how can Nevada’s casino-resorts reap the benefits of recreational marijuana tourism without running afoul of the gaming regulators? This dilemma will be faced by gaming industry executives who are actively marketing to attract millennials, knowing that this age group will likely become the largest customer for recreational marijuana use.

The answer: Following the gaming regulators’ lead is often the most prudent choice. Nevada’s gaming regulators do not have any obligation to change their current stance on marijuana involvement by licensees. Therefore, should Question 2 pass in November, gaming licensees would be wise to follow the regulatory process closely and review and revise their policies and contracts in preparation. Our Nevada gaming team is closely tracking developments in this area and can help gaming licensees to navigate through these perilous waters if and when recreational marijuana becomes a reality in Nevada.

Tuesday, August 23, 2016

Fantasy Sports Bill Proposed for Nevada

By Kate Lowenhar-Fisher, Jennifer Gaynor, Greg Gemignani, and Jeff Silver

On August 23, 2016, the two largest daily fantasy sports (“DFS”) operators, DraftKings and Fan Duel, will be presenting their proposed Nevada daily fantasy sports legislation (the “Proposed Bill”) to the Nevada Gaming Policy Committee in Las Vegas. If enacted, the Proposed Bill would create a new class of licensee for fantasy sports operators offering pay-to-play-and-win contests in Nevada. Like other forms of gaming license, the new Operator of Fantasy Sports (“OFS”) license would be granted by the Nevada Gaming Commission (“Commission”).

Unlike other forms of gaming license, the Commission would (i) be compelled to grant a license to any OFS applicant with a completed application along with a $500 application fee, (ii) be precluded from issuing regulations applicable to contests, contest operations, or betting platforms, (iii) not have discretionary licensing powers related to OFS operations, and (iv) be limited to imposing a maximum $1000 fine for any enforcement or disciplinary action. Additionally, there is no provision in the Proposed Bill for Nevada regulators to investigate OFS applicants, nor is there a requirement that applicants must be found suitable as is required for other gaming licenses granted by the Commission. The license fee for an OFS license is set at $10,000 with no other applicable taxes. Finally, the Proposed Bill would deem fantasy sports to not be a sports pool, a gambling game, or a lottery under Nevada statutes.

The Proposed Bill is a response to an Industry Notice issued by the Nevada State Gaming Control Board that reflected the opinion of the Attorney General of Nevada that DFS was a form of sports pool wagering permitted in Nevada so long as it was offered by a licensed sports pool operator. As a sports wagering product, Nevada regulators believed DFS regulation was permissible despite the general prohibition in the federal Professional and Amateur Sports Protection Act (“PASPA”) on regulating any contest based directly or indirectly on the performance of athletes because Nevada has a broad exemption under PASPA to regulate sports pool activities. Since the two largest DFS operators lacked a sports pool operator’s license, they stopped offering DFS contests to Nevada residents.

If enacted, the Proposed Bill would pave the way for DFS operators to offer DFS contests to Nevada residents. The Proposed Bill does not exempt current gaming licensees from suitability requirements or regulatory requirements regarding suitable operations based on their interaction or involvement with DFS or an OFS licensee. The Proposed Bill is solely a Nevada bill and has no impact on the laws of other states or federal law. Whether current Nevada gaming licensees will participate in interstate DFS or be involved with an OFS licensee involved with interstate DFS is not clear because at least 10 states have Attorney General Opinions identifying DFS as an illegal form of gambling and two federal prosecutors’ offices have confirmed that there are ongoing investigations regarding the legality of DFS in interstate commerce under federal law.

The proposed legislation is one of the topics that will be addressed at the Nevada Gaming Policy Committee’s meeting on August 23, 2016. No action will be taken by the Policy Committee in this meeting regarding the legislation, which is on the agenda only for discussion. The Policy Committee is tasked by Nevada Governor Sandoval with preparing recommendations on issues including daily fantasy sports for consideration by the Commission, the Nevada Gaming Control Board, and the Nevada Legislature.

The full text of the Proposed Bill may be found at:

Thursday, March 24, 2016

Nevada Examines its Regulatory Approach to Daily Fantasy Sports

By Jennifer Gaynor, Greg Gemignani, Kate Lowenhar-Fisher, and Jeff Silver

The nationwide controversy over daily fantasy sports (DFS) and how it is regulated has led Nevada Governor Brian Sandoval to convene the Nevada Gaming Policy Committee for the first time since 2012.

Sandoval wants the Policy Committee to devise recommendations that will “allow Nevada to continue to lead the nation and the world in developing and maintaining the best policies and practices involving the regulation of the gaming industry.” This discussion, which is meant to lead to innovation in how Nevada will deal with the quickly changing world of interactive and skill-based gaming in addition to DFS offerings, is vital to understanding how Nevada can remain the leader in the gaming industry and tap into the huge interest in DFS-style offerings by today’s market.

The state kicked off the nationwide discussion over whether DFS should be regulated as gaming last October, when the Nevada Attorney General’s office issued an opinion that DFS offerings were sports wagering, leading Nevada’s gaming regulators to announce that Nevada gaming licenses would be required for DFS websites to offer their product to Nevada customers. Several other states’ Attorneys General followed suit, forcing the issue to the top of almost every state’s list of hot legal topics.

Sandoval has asked the Policy Committee to “gather information and provide recommendations on what is the best policy for Nevada’s gaming future” as it regards DFS, among other issues. As the world’ gold-standard gaming regulator, Nevada often assumes a leadership role on gaming issues.

The Policy Committee is chaired by Sandoval and includes among its 12 members representatives from Nevada’s gaming regulators (Tony Alamo, Chairman of the Nevada Gaming Commission, and A.G. Burnett, Chairman of the Nevada Gaming Control Board), Nevada legislators, and members of the public and the gaming industry (including Jim Murren, CEO/Board Chairman of MGM, and Keith Smith, President of Boyd Gaming Corporation).

The Committee’s initial meeting on March 7 served mainly as a forum for experts in the gaming industry and leaders of the DFS movement to share relevant research and information. Presenters included Chairmen Alamo and Burnett, representatives of the American Gaming Association (AGA), the Nevada Resort Association (NRA), the Association of Gaming Equipment Manufacturers (AGEM), the CEOs of DraftKings and FanDuel, and academic and legal gaming experts, including Dickinson Wright Attorney Greg Gemignani, who is a long-time professor in gaming law at the UNLV Boyd School of Law.

The DFS discussion dominated the day, and several themes became apparent throughout the meeting. First, almost all agreed that DFS can be “good” – in that it has sparked clear nationwide and even worldwide interest – and that it needs to be incorporated in Nevada in some fashion to allow our gaming industry to remain competitive. Everyone at the hearing also agreed that DFS offerings must be transparent and regulated to protect both consumers and the reputation of the gaming industry.

Where the consensus began to break down was in how such regulation should be structured. Several voiced concerns that Nevada’s regulations need to be adjusted to keep pace with innovation and to allow for a greater number of content providers to contribute. Others noted that the black market for sports wagering far outpaces the legal market and put forth an argument that can be summed up as “citizens are going to find a way to wager on sports, illegally or legally, so we may as well craft regulations to protect them when they do so.”

Nevada’s gaming licensees’ concerns centered on concepts of fairness. In particular, licensees want the opportunity to take part in the booming DFS industry but are concerned that even if DFS offerings were to be legalized in some form in Nevada, they could still put their gaming licenses in jeopardy by partnering with DFS companies if the DFS offerings violate federal law or the laws of other states where they are being offered.

The DFS operators, while agreeing that they are open to some form of regulation, argued that what they offer is not well suited to what they termed Nevada’s “onerous” regulations for gaming licensees. They are requesting Nevada to create a “new box” for DFS offerings to be regulated.

The Committee determined that it will meet three more times during 2016: in May to discuss interactive and skill gaming issues, in August to focus on DFS, and then again in the fall to deliberate and craft its findings and recommendations. These recommendations will be delivered to the Governor, the Nevada Gaming Commission, and the Nevada Gaming Control Board just in time to craft legislation for the 2017 Nevada Legislature to consider.

To read the complete article, please click here.

Tuesday, January 5, 2016

Alaska Presses D.C. Court of Appeals to Reject Trust Acquisitions in Alaska

By Patrick Sullivan

The question of whether Alaska Natives may place land in the same federal trust status as Indian tribes in the lower 48 states was widely thought to have been resolved but is now before the Court of Appeals for the District of Columbia Circuit. The issue in Alaska v. Akiachak Native Community, et al. is whether the Alaska Native Claims Settlement Act (“ANCSA”), signed into law by President Richard M. Nixon in 1971, withdrew the Secretary of the Interior’s authority to place Alaskan land in trust under Section 5 of the Indian Reorganization Act of 1934 (“IRA”).

The Secretary of the Interior has had the authority to place land into federal trust status for Indians since 1934 and to proclaim those lands to be Indian reservations. Subsequent amendments made the IRA applicable to Alaskan lands, and the Secretary proceeded to accept Alaskan land in trust and create several reservations there. Alaskan land was also held by Alaska Natives in allotment status and in reservations expressly created by Congress, including the Annette Island Reserve, which was set aside by Congress in the Act of March 3, 1891.

The 1968 discovery of enormous oil reserves in Alaska’s Prudhoe Bay and the demand for a pipeline across the state to deliver that oil to the U.S. market required the settlement of pending Alaska Native land claims along the route. To settle those claims, Congress passed ANCSA in 1971. ANCSA was the product of a negotiated settlement between the federal government, the State of Alaska, and the Alaska Federation of Natives (“AFN”), an umbrella group representing the Alaska tribes. AFN had made clear that it was not interested in the traditional Indian reservation model adopted in the lower 48 states. The legislation created a new model adopted for settling native land claims throughout Alaska without creating new Indian reservations. ANCSA expressly extinguished all claims of aboriginal title in Alaska, aboriginal hunting and fishing claims, and any “claims against the United States, the State, and all other persons that are based on…any statute or treaty of the United States relating to Native use and occupancy.”

ANCSA dissolved the existing allotments and all but one of the reservations, compensated Alaska Natives with $962.5 million in state and federal funds, and conveyed 44 million acres of Alaskan land to “Alaska Native Corporations” (“ANCs”). Alaska Natives became shareholders in the ANCs instead of receiving money and land directly. Many of the ANCs continue to generate substantial dividends and employment opportunities for their shareholders.

In 1978, Associate Solicitor-Indian Affairs Thomas Fredericks issued an opinion declaring that acceptance of trust land in Alaska would be an abuse of secretarial discretion, and in 1980, the Department promulgated the regulation known as the “Alaska Exception.” That regulation provided that the Department’s land-to-trust regulations “do not cover the acquisition of land in trust status in the State of Alaska, except acquisitions for the Metlakatla Indian Community of the Annette Island Reserve or its members.”

Akiachak Lawsuit and Department of the Interior’s Reversal

In 2007, a group of Alaska tribes including the Akiachak Native Community sued the Secretary and Department of the Interior in the federal D.C. District Court arguing that the Alaska Exception illegally discriminated against Alaska Natives by prohibiting them from placing land in trust status. In March 2013, following years of litigation, the District Court agreed with the Tribes and held the Alaska Exception to be void and unenforceable because it violated a law prohibiting regulations that diminish the privileges available to Alaska Natives relative to the privileges available to all other federally recognized tribes.

In December 2014, Assistant Secretary Kevin Washburn formally revoked the Alaska Exception. Washburn’s statement accompanying the revocation declared that ANCSA did not prohibit trust land acquisitions in Alaska under the IRA and that “the shocking and dire state of public safety” in Alaska Native communities could be improved by allowing land to be placed in trust status, thereby allowing Alaska Natives the opportunity to exercise criminal jurisdiction over those lands. The revocation was not legally challenged and became effective on January 22, 2015.

Alaska’s Appeal

Despite the legal finalization of the Secretary’s revocation of the Alaska Exception, the State appealed the District Court’s decision and asked for a declaration that ANCSA prohibits the creation of new trust land and Indian Country in Alaska. The Alaska Native parties and the Secretary have moved to dismiss the State’s appeal on the basis that ANCSA never repealed the Secretary’s IRA authority to place Alaskan land in trust and that the Bureau of Indian Affairs’ repeal of the Alaska Exception rendered the controversy moot.

In its appeal, the State characterized the revocation of the Alaska Exception as nothing more than an “administrative end-run around ANCSA, facilitating the re-creation of trust land in Alaska after Congress expressly revoked it.” The State further argued that Congress never granted the Secretary the authority to reverse the deal struck between the State and the Tribes through ANCSA.

Implications of the D.C. Circuit Decision

The pending decision may have far-reaching consequences in Indian Country and may fundamentally alter the rights of Alaska Natives. In its 1998 Alaska v. Native Village of Venetie Tribal Government decision, the United States Supreme Court struck down a tribal tax imposed on non-tribal members contracted to build a school on land owned by the Native Village of Venetie, a former reservation which has been dissolved through ANCSA. The Court held that, because the Village was not “Indian Country,” the Tribe could not impose any tax on the land.

Should the D.C. Circuit affirm the District Court and open Alaskan lands to trust status, key issues ostensibly decided in the Venetie case would be reopened, resulting in a likely contentious struggle between the State of Alaska and its large population of Alaska Natives to define the jurisdictional boundaries and taxability of those lands, as well as rights to conduct gaming and regulate natural resources development. Such an outcome would almost certainly prompt the State to propose federal legislation preventing the Department from accepting Alaskan land in trust. With those issues at stake, the D.C. Circuit’s resolution of the case is being closely watched by Alaska Native communities and their neighbors alike.

Tuesday, December 22, 2015

Texas Continues to Wage War Against Indian Gaming

By Dennis J. Whittlesey

Texas Attorney General Kenneth Paxton appears to not like Indian gaming. Two of the state’s three federally recognized tribes have been pursuing gaming opportunities for years, but the Attorney General’s opposition continues even in the face of a recent federal decision supporting their rights to conduct gaming.

In the way of background, it is worth revisiting the current situation. For starters, it is important to understand two things: (1) the three tribes do not share equal legal status and (2) earlier this year, the Texas Legislature ostensibly proposed to “level the playing field” so that all three would have an equal gaming opportunity. The key word is “ostensibly.”

The three tribes are (1) the Texas Band of Kickapoo Indians in Eagle Pass, which is 143 miles southwest of San Antonio on the Rio Grande River and far from the Gulf Coast, (2) the Ysleta del Sur Pueblo Tribe – also known as the Texas Tigua Tribe – located near El Paso, which also is far from the Gulf Coast, and (3) the Alabama-Coushatta Tribe of Livingston, 74 miles north of Houston and 76 miles northwest of Beaumont, and clearly much closer to the Gulf Coast and the hundreds of thousands of tourists annually traveling to the Gulf. Each of these tribes was recognized by a special Act of Congress.

The Kickapoo Tribe was recognized by Congress through the Act of January 8, 1983, a federal law which imposed no restrictions on the Tribe’s right to conduct gaming. The Alabama-Coushatta Tribe and Texas Tigua Tribe were recognized through the Act of August 18, 1987, which restricted any tribal gaming to gaming activities that are lawful under Texas state law. The distinction between the Kickapoo Tribe gaming opportunity and that available to the Alabama-Coushatta Tribe and Texas Tigua Tribe has become a legal battleground, and the Attorney General is leading the opposition to any new gaming development by the Texas Tigua Tribe.

Texas law has never specifically authorized gaming and, accordingly, the Texas Tigua Tribe has not been able to conduct gaming because of the language in the Tribe’s 1987 Restoration Act requiring state laws specifically authorizing gaming.

The Texas Tigua Tribe’s efforts to secure gaming are summarized in the following timeline:

  • 1987: The United States Supreme Court rules in California v. Cabazon Band of Mission Indians that Indian tribes have rights to conduct gaming that is not prohibited by state criminal laws so long as the gaming activity occurs on tribal lands.
  • 1988: Congress passes the Indian Gaming Regulatory Act (“IGRA”), which permits casinos on reservations.
  • 1990: Tribes in other states begin opening casinos.
  • 1991: Texas voters approve a state lottery.
  • 1993: Texas Tigua Tribe wins federal court permission to open a casino. Speaking Rock Casino opens.
  • 1998: Texas Gov. George W. Bush asks Texas Attorney General to close the casino.
  • 1999: Texas Attorney General files suit against the Texas Tigua Tribe.
  • 2002: Federal court rules against the Texas Tigua Tribe. Speaking Rock Casino closes February 12.

The Texas Tigua Tribe gaming issue has been in the courts continuously since 2002, and the Tribe’s attempts to secure gaming approval have been successfully resisted by the State in a number of federal court rulings.

In the meantime, the Alabama-Coushatta Tribe has been in the same state of “gaming limbo” since it also was recognized by the 1987 Restoration Act and is subject to the same “lawful under Texas law” gaming limitation used to oppose the Texas Tigua Tribe’s efforts. However, the landscape changed in late October with the publication of a decision by the Department of the Interior and the National Indian Gaming Commission that both tribes have a legal right under federal law to operate Class II gaming facilities on tribal lands. IGRA established classes of gaming that tribes can conduct on Indian lands. Class II gaming is defined as bingo, as well as pull-tabs, lotto, punch boards, tip jars, instant bingo, and other games similar to bingo.

While the October decision has been hailed as a major turn in the Tribes’ favor, the Attorney General sees it as a continuum of tribal efforts to conduct illegal gaming. This position was stated in a recent court filing in response to a request for comments from the federal court in which the Texas Tigua Tribe legal battles have been waged. The Texas Tigua Tribe did submit two documents in support of the proposed gaming, and the federal government declined the court’s invitation to submit an amicus curiae brief. The Texas Attorney General continued his strong opposition to the decision.

The battle lines have been drawn for a number of years, as shown by the Texas Tigua Tribe timeline. In light of the statutory restriction in the 1987 Restoration Act, the Tribes continue to face a difficult fight. However, the federal decision is a new tool in the Texas Tigua Tribe’s legal arsenal despite the federal government’s reluctance to defend it at this time. Nonetheless, there is a legal precedent for the tribal position in the language of the Cabazon decision (allowing tribal gaming that is not prohibited by state law). The obstacle confronting the tribe is reconciling the Restoration Act’s language with the Supreme Court ruling.

Tuesday, December 15, 2015

Nevada’s Live Entertainment Tax for Events on Gaming Properties Takes Final Form

By Jennifer Gaynor, Greg Gemignani, Kate Lowenhar-Fisher, and Jeff Silver

The Nevada Gaming Control Board (Board) has finalized its changes to the state’s Live Entertainment Tax (LET) assessed on gaming licensees, as mandated by the Nevada Legislature. With the adopted final draft, the Board resolved some contentious issues.

In many ways, this new LET is simpler. Under the new LET structure, all live entertainment events for which there is an admission charge are taxed uniformly at a flat rate of 9 percent of the admission charge to a venue where live entertainment is provided. The tax is no longer imposed on amounts paid for food, refreshments, or merchandise sold at the venue (unless the purchase of such items is required as part of the price of admission), is not imposed on amounts paid for access to tables, seats, lounge chairs, or particular areas of a venue, and is not imposed on the value of admissions provided to a patron on a complimentary basis. The new LET applies to outdoor entertainment events (which were formerly exempted), nonprofits that sell more than 7,500 tickets to an event, and legal escort services (a new LET category).

The other exemptions found in the old LET remain largely the same and include professional sports events if one of the teams playing is domiciled in Nevada, Nevada college sports events, other school events if only the students and teachers provide the entertainment, boxing events, events at facilities with an occupancy of 200 or fewer persons, and entertainment at trade shows, in shopping malls, at organizations’ private dinners or meetings, and roving musicians.

Some issues, however, required additional discussion and clarification following the initial Board draft. The Board has addressed these in the final draft. One issue, for example, was a question on how the LET will apply to luxury suites, boxes, or similar products for venues with less than a 7,500-person occupancy. The new LET does not include license or rental fees for luxury suites, boxes, or similar products at facilities with a maximum occupancy of at least 7,500 persons; however, the LET must be paid for such license or rental fees for venues with less than a 7,500-person occupancy. The question was raised by a taxpayer whether for these smaller venues they should continue to use “historical practices” to calculate that admission charge – which they submitted should be the number of luxury boxes divided by the ticket price times the number of live events. In the final draft, the Board has provided for flexibility to consider such alternative methods of calculating the LET by adding in a new subsection that provides that taxpayers may submit a written request to the Chairman to obtain approval to use an alternative method of calculating the tax under this section.

Another issue concerned events where admissions may be charged on an ongoing basis but entertainment is provided for only a portion of the time. The Board addressed these concerns by allowing venues to dispute how the LET is applied to their event based on the timing of when the admissions were paid and when the event begins and concludes by submitting a written request to the Chairman to obtain approval to use an alternative method to determine which admission charges are subject to the tax.

Another key issue the Board resolved is which associated fees or “service charges” are to be included in the LET. As noted in our last article on this subject, the traditional payment of credit card or debit card fees to a financial institution that are unreturned to the venue remain clearly exempt under the revised law. This debate centered on the definition of the term “service charge” and what additional “service charges” should be included in the tax – and specifically whether Ticketmaster fees and other similar charges by third parties who sell and issue tickets would be included in the LET.

Taxpayers argued that service charges by Ticketmaster or other third parties should be treated like credit/debit card fees and not taxed as part of the LET when that service charge is not remitted to the venue. They also argued that charges for additional services or amenities, such as special event parking or shuttles to the venue, should not be included in the LET as long as those charges and services are optional and not required for admission to the venue.

The Board addressed these concerns by clarifying that “service charges” are to be included in the LET. This debate centered on the definition of the term “service charge” and what additional “service charges” should be included in the tax – and specifically whether Ticketmaster fees and other similar charges by third parties who sell and issue tickets would be included in the LET.

Taxpayers argued that service charges by Ticketmaster or other third parties should be treated like credit/debit card fees and not taxed as part of the LET when that service charge is not remitted to the venue. They also argued that charges for additional services or amenities, such as special event parking or shuttles to the venue, should not be included in the LET as long as those charges and services are optional and not required for admission to the venue.

The Board addressed these concerns by clarifying that a “service charge or any other fee or charge” means “an amount imposed and received by, or on behalf of, a taxpayer or operator for which the patron could not obtain admission to the facility without its payment.” Second, they introduced two new definitions – for “ticket broker” and “ticket service provider” – and provide that a “service charge” does not include “an amount imposed and retained by a ticket broker or a ticket service provider.”

One last concern that the Board clarified is the definition of “performance.” This has always been a subjective definition, to which the Board has attempted to add clarity. One way the Board has done this is to specifically define disc jockey performances and provide that they are “performances” under the LET, whether or not the DJ vocally addresses the crowd. The amended regulation also updates the definition of “performance” which is the presentation of an activity as set forth in NRS 368A.090(2)(a) that is the “primary reason” for which a patron or patrons paid an admission charge to access the facility. In considering whether the activity was the “primary reason” for the payment of admission, the Board has two factors they may consider:

  1. Whether the live entertainment activity is advertised, promoted, or otherwise marketed; and/or
  2. Whether the live entertainment activity garners the predominant attention of a patron or patrons at a facility.

If a potential taxpayer has any questions on whether the LET will be applicable to their event or how it should be calculated, the taxpayer may request an advisory opinion from the Board. The Board may publish some of these advisory opinions if they find they respond to general questions and can assist a number of taxpayers. Such publication would be made in a way as to not disclose the identity of the taxpayer who requested the opinion.

These new regulations are not in effect. Note that for non-gaming licensees there are parallel regulations to implement SB267 that are being worked on by the Nevada Department of Taxation.