Casino Owner Seeks $3M Tax Refund, Nevada Gaming Commission Delays Decision

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According to Reviewjournal, Nevada Restaurant Services Inc. (NRSI), the owner of 41 licensed casinos, including those under the Dotty’s and Bourbon Street Sports brands, is seeking to recover more than $3 million in overpaid gaming taxes from the state. The overpayments occurred over a 32-month period beginning in August 2021.

During a 45-minute hearing on Thursday, the Nevada Gaming Commission rejected a proposed settlement agreement. The rejection centered on whether the refund should include interest on the overpayment, and if so, how much should be paid.

The five-page stipulation for settlement, which was turned down by the commission, revealed that NRSI’s overpayment stemmed from the company’s failure to correctly deduct wagered amounts from gaming-related promotions from a gross revenue of $46.9 million.

The proposed settlement between NRSI and the state would have involved the state reimbursing $3,120,197.28 in overpaid gross gaming revenue taxes, along with $222,744.12 in accrued interest through August 22. Additionally, the settlement would have included a daily interest payment of $446.09 until the refund was fully paid. Both parties had agreed to cover their own legal fees and costs.

Had the commission approved the deal, NRSI would have agreed not to contest the matter in court.

Under Nevada law, the Gaming Control Board is required to pay interest on refunds at a rate equal to half the prime rate of Nevada’s largest bank plus 2 percent. However, commissioners were informed that the settlement terms were negotiable, and they expressed concerns about potentially overpaying, as they believed the error should have been identified earlier by NRSI management.

The commission highlighted that interest rates have fluctuated since the overpayment was first identified in August 2021. However, the refund request was only submitted this month. Consequently, the commission directed the Gaming Control Board to revisit the settlement, which would have resulted in a payout of over $3.1 million plus interest exceeding $222,744.

“This issue was brought to NRSI’s attention in 2021,” Commissioner Brian Krolicki, a former state treasurer, stated during the hearing at the Las Vegas City Council chambers. “If this is formulaic, then I get it. There’s not much we can do. But by definition, the stipulation is a negotiated agreement.”

The commissioners emphasized the need to protect the interests of state residents by renegotiating the settlement, particularly since the delay by NRSI contributed to the increased refund amount.

Although the commission considered paying NRSI the $3.1 million overpayment and negotiating the interest amount, Kannon Smith, an attorney representing the company, stated that he lacked the authority to approve a revised settlement.

“I can’t speak for my clients, so I don’t know what they’ll have to say,” Smith informed the commissioners. “I don’t suspect that we’d want to be adversarial over this and take it to a hearing, but it’s not my decision.”

The commissioners noted that interest continues to accrue daily, meaning the final refund amount could rise further until a settlement is accepted or the matter is brought to a hearing.

Also Read – Three Florida Men Plead Guilty to Multi-Million Dollar Tax Fraud Scheme

Refund requests for tax overpayments are not uncommon, but Control Board staff mentioned that they are usually for much smaller amounts. Refunds exceeding $250,000 require commission approval.

“I don’t want to offend our licensee, Dotty’s, but I just feel this is wrong,” Krolicki said. “It’s costing us for your company’s lack of attention to this matter.”

Details regarding how the overpayment was discovered and why the refund request was delayed were not disclosed.

The commission could revisit the matter in September if a renegotiated settlement is presented.

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