The United States Supreme Court will not review a lawsuit brought by officials in an Oklahoma county against a video gaming manufacturer that is a major supplier for Native American casinos in the Sooner State.
Last year, the Rogers County Board of Tax Roll Corrections filed suit against Video Gaming Technologies Inc. (VGT), claiming that the company must pay taxes on its gaming terminals. County officials argued that since VGT is not a tribal enterprise, it must pay property taxes on its gaming terminals that it leases to Native American casinos.
The county contended that ad valorem taxes apply to VGT’s machines placed inside tribal casinos. Ad valorem is a form of taxation based on the value of a transaction or property.
After a lower state court agreed with Rogers County, ruling that VGT should pay taxes on the value of its Class II gaming machine leases, the Oklahoma Supreme Court reversed the decision. The state high court ruled that the gaming equipment cannot be used for anything other than Class II gaming.
Class II gaming, protected from state interference under the Indian Gaming Regulatory Act (IGRA), allows federally recognized tribes to operate bingo-based games on their sovereign lands. Rogers County petitioned the Supreme Court to review the matter. But this week, the high court dismissed the motion.
VGT was founded in 1991 by Jon Yarbrough, who has an estimated net worth of $2.6 billion. VGT was acquired by Aristocrat Leisure in 2014 for $1.3 billion.
Today, VGT manufactures and distributes 20,000 bingo-based gaming terminals in more than 140 tribal casinos. Headquartered in Tennessee, Justice Clarence Thomas believes the Rogers County lawsuit against VGT warranted the court’s review.
This case presents a square conflict on an important question: Does federal law silently pre-empt state laws assessing taxes on ownership of electronic gambling equipment when that equipment is located on tribal land, but owned by non-Indians?” Thomas asked.
Thomas says that while the Oklahoma Supreme Court ruled yes, several years ago the federal Second Circuit said no. “This disagreement alone merits review,” the justice declared.
“Because the Court declines to take up this case, geographical happenstance will continue to play an outsized role in a State’s ability to raise revenues, and pre-emption law will remain amorphous. The State of Oklahoma deserves more respect under our Constitution’s federal system than we give it today,” Thomas concluded.
VGT will not be required to pay property taxes on its distributed gaming terminals. But there are numerous other tribal gaming lawsuits that remain undecided in Oklahoma.
Most importantly is Oklahoma Gov. Kevin Stitt’s (R) challenge that he has the power to negotiate new gaming compacts with the state’s 35 federally recognized tribes that operate Class III gaming (slot machines and table games). The first-term governor contends that their 15-year revenue-sharing agreements with the state expired January 1, 2020.
The tribes say they automatically renewed for another 15-year run.
The contentious legal battle remains pending in Washington, DC federal court. The lawsuit against Stitt has been brought by the Cherokee, Chickasaw, Choctaw, and Citizen Potawatomi Nations.