Louisiana Board of Tax Appeals Rejects Bossier Parish Effort to Tax Complimentary Riverboat Casino Hotel Rooms

In a case of first impression, the Louisiana Board of Tax Appeals vacated some $6.67 million in tax assessments, interest, and penalties claimed by the Tax Collector for Bossier City/Parish against firm clients, Margaritaville Resort Casino and Boomtown Casino & Hotel in Bossier City, Louisiana.

The sole issue at trial was whether local sales and occupancy taxes were due on complimentary hotel rooms that the riverboat casinos had furnished to certain patrons free of charge.

The Board determined that there was no quid pro quo in the transactions, i.e. no requirement on the part of a patron who received a complimentary room to gamble at the casino during their stay or perform any other material act that would constitute “consideration.” Further, there was no rent or fee charged by the casinos to the patrons for furnishing the rooms. The rooms were therefore not subject to local sales or occupancy tax.

Instead, the Board characterized the comped rooms at issue as a “marketing tool and a means to incentivize gaming.” It held that the “expected or ‘hoped for’ aggregate increase in gaming profits resulting from comp rooms were not rents paid by the patron, fees charged to the patron, or consideration given by the patron in exchange for the comps for purposes of either the local sales tax or the occupancy tax.”

The opinion was issued on February 5, and the Collector has 30 days therefrom to file a motion for review of the decision by an appellate court.

Baton Rouge partner Greg Stevens led the Phelps litigation team with trial assistance from counsel Kevin Welsh.