n a decision dated Dec. 17 but not yet released for publication, the Oklahoma Supreme Court unanimously ruled in favor of Video Gaming Technologies, a Tennessee company that is fighting tax assessments in at least seven Oklahoma counties.
County assessors maintained that VGT was liable for property taxes on machines it leases to tribal casinos. VGT protested the assessments, saying the machines are exempt because they’re used in lawful Indian gaming. Class II games are technically variations of bingo and not subject to regulation under tribal gaming compacts.
The company sued, asking for dismissal of past assessments and relief from future ones.
A Rogers County judge dismissed VGT’s suit, citing a 2013 decision by the Second U.S. Circuit Court of Appeals. The state Supreme Court overturned that decision and remanded it back to the lower court with instructions to dismiss the case in VGT’s favor.
In an 8-0 decision, the state Supreme Court said a key question is whether the machines were integral to the act of gambling, and it concluded that they are, Tulsa World reports.
“The gaming equipment in this location cannot be used for anything but gaming,” the decision says. “The ad valorem tax would not apply to this gaming equipment in the absence of (Indian Gaming Regulatory Act), because the gaming equipment is only located in Rogers County due to its use in Indian gaming activities.”
The decision, by Justice Richard Darby, also notes the U.S. Supreme Court’s “clear guidance to construe federal statutes relating to tribal activity generously.”
Tulsa attorney Mike McBride, who heads the Indian law and gaming practice group at the firm Crowe and Dunleavy, said the decision confirms that the Indian Gaming Regulatory Act “preempts the field, and that equipment is essential (to) gaming.”
McBride said cases involving preemption — the principle that federal law generally preempts state law — usually originate in federal court.
This one could go there, too, if Rogers County decides to appeal to the U.S. Supreme Court. The District Attorney’s Office reportedly was still mulling its options this week but declined to comment.
Another decision, also dated Dec. 17, went in VGT’s favor, too. Although the underlying issue is the same, this particular case dealt with the company’s standing to appeal a decision of the Tulsa County Board of Tax Roll Corrections in district court.
VGT has taken legal action to avoid property taxes in at least five other counties — Osage, Okfuskee, Nowata, Grady and McIntosh. Those cases are likely to remain on hold pending Rogers County’s decision on an appeal.
The amount of money involved in each individual case is relatively small. Court documents indicate that VGT’s tax bills in Rogers and Tulsa counties amounted to about $10,000 a year, and sometimes less.
Reportedly, other vendors have paid local property taxes rather than go to the expense of challenging the assessments in court.
The Oklahoma Supreme Court website warns that the two decisions could be revised or withdrawn because they have not been released for publication.