The battle over casino-tax revenue has extended to the courthouse, pitting regulators against the county where the bulk of the state’s gambling business is generated.
In a lawsuit filed against the Colorado Limited Gaming Control Commission, Division of Gaming and others, Gilpin County alleges that regulators have for years misallocated gaming-tax revenue, a pot that exceeded $107 million in 2010.
The county claims it has been underpaid by about $14 million since 1992 — money that instead went to Teller County, the other Colorado county with casino gambling.
The state distributes a percentage of gaming funds to counties and cities in proportion to gross gambling revenue — total bets minus payouts — generated in their jurisdictions. The funds are intended to help mitigate the impacts of gaming.
The constitutional amendment authorizing casino gambling stipulates that the funds should be allocated based on tax revenue, rather than gross gaming revenue, generated in the jurisdictions, according to the suit filed in Denver District Court in May.
Gilpin County, home to the gaming cities of Black Hawk and Central City, produces about 90 percent of the state’s gambling-tax revenue. Thus, the county claims, it should receive 90 percent of allocations for the two counties. But it receives roughly 80 percent of allocations.
Teller County, which covers Cripple Creek, generates 10 percent of gaming-tax revenue and receives 20 percent of allocations for counties.
Cripple Creek casinos pay proportionately lower taxes because of the state’s graduated tax structure, which taxes operations with higher revenue at a higher rate. Cripple Creek is home to smaller operations, and many are exploiting a loophole in the gambling statutes that allows them to spread revenue across multiple licenses to avoid higher tax rates.
“If they’re paying less taxes, then they should get less taxes back,” said Roger Baker, county manager for Gilpin County.
The Teller County administrator didn’t return calls for comment.
All of the casinos that pay the highest tax rate, which was 20 percent in 2010, are in Gilpin County, according to the lawsuit.
The county received about $8.7 million in gaming-fund distributions in fiscal 2010, roughly half of its annual budget.
Division of Gaming spokeswoman Cameron Lewis said the agency, which is the administrative arm for the Gaming Control Commission, will not comment on pending litigation.
Gilpin County raised the dispute with regulators last October. In February, the Gaming Control Commission adopted a rule to state that distributions should be based on gross gaming revenue. The lawsuit seeks to declare that the rule is unconstitutional.
Community colleges and historic- preservation groups, which also receive a portion of gaming funds, have raised concerns about being shortchanged because of a 5 percent tax cut that regulators approved in May. Gov. John Hickenlooper, disappointed by the cut, last week overhauled the Gaming Control Commission.
Andy Vuong: 303-954-1209, avuong@denverpost.com or
