Carson District Judge Todd Russell on Wednesday tossed out a petition seeking to raise the tax on Nevada's largest casinos, saying a series of errors makes the description of effect misleading enough to be fatal.
Conservative activist Monte Miller, who filed the petition, said he will refile with the secretary of state.
Russell agreed with Matt Griffin, representing the Nevada Resort Association, that the wording was fatally flawed in the following ways:
• The use of "unrestricted" licensees instead of the statutorily correct "nonrestricted" licensees;
• The statement that it would apply to "gross revenue" of a resort instead of the gross gaming revenue;
• Confusion over whether the tax would apply to the largest gaming-machine manufacturers and distributors, such as IGT, which it does not now do.
The most serious issue for Russell was the difference between gross revenue and gross gaming revenue. The gaming tax, technically a fee, doesn't apply to food, beverages, rooms or anything else a resort provides for its customers - only to gaming revenue. Gaming revenue actually makes up just under half the total revenue at major resorts.
Griffin described that as "a billion-dollar mistake" because the petition would dramatically expand the gaming tax to all resort revenue at the same time it raises the top tax tier to 9 percent.
Russell agreed in his ruling, telling proponents, "To me you're implying we're going to get 9 percent of all gross revenues, not of gross gaming revenues."
Margaret McLetchie, representing Miller, characterized those problems with the description as minor and said she doesn't see them as in any way misleading to voters who might sign the statutory petition.
"This is a very, very simple petition," she said. "All this is doing is adding one tier to an existing statutory scheme."
The current top tier is 6.75 percent for all resorts making more than $134,000 a month in gaming revenue. The new top tier would tax resorts making more than $250,000 a month in gaming revenue 9 percent and generate hundreds of millions of dollars in added tax revenue.
She said the rates for the existing three tiers of casinos making less than that - the lowest being just 3.5 percent for small casinos - would remain the same as they are now.
Miller said after the hearing that rather than appeal to the Nevada Supreme Court, they would refile a new petition with the secretary of state's office.
To qualify, Miller and his supporters must collect at least 72,352 valid signatures from Nevada voters. They must get at least 18,088 in each of Nevada's four congressional districts. The signatures must be filed with the secretary of state's office by Nov. 13.
