CENTRAL CITY — In its first public remarks on the issue, the city of Black Hawk pushed Thursday for “clarity” on a licensing and tax loophole that regulators have been reviewing since October.
Meanwhile, the Colorado Gaming Association, which represents many of state’s casinos in Cripple Creek, Black Hawk and Central City, said its members will oppose any change.
The Colorado Limited Gaming Control Commission held a second public hearing Thursday to gather testimony about a controversial rule that allows casino owners to receive up to three retail licenses, even if their properties are contiguous. Spreading revenue across multiple licenses lowers an operator’s tax burden because of the state’s graduated tax structure, which charges higher rates on higher revenue.
“The city does feel that the commission is authorized and should address this issue and should come up with some kind of bright-line rule so that casinos operating within the city of Black Hawk can know whether or not they should be under a single license or whether they should be able to apply for multiple licenses,” Patrick Wilson, an attorney for Black Hawk, said during the hearing.
Most of the adjoining, commonly owned casinos operating under multiple licenses are in Cripple Creek, whose officials have lobbied hard against any change. Casinos in Black Hawk generate the bulk of the state’s gambling revenue.
The Division of Gaming presented three options for the commission to consider, two of which would effectively close the loophole. The only difference between the two is that one would grandfather current operators into existing regulations unless there is an ownership change.
The third would be to take no action. A Gaming Division spokeswoman stressed that the options are just a starting point.
The commission has stated it wants to determine whether the multiple licensing rule, when coupled with the graduated tax, gives some operators an unfair competitive advantage, a view the state auditor’s office supports.
Gaming association attorney Mark Grueskin testified that the existing tax structure “promotes investment in the industry,” which is what it’s required to do.
The state has determined that operators with multiple licenses for contiguous casinos would have paid an additional $4.9 million in taxes in fiscal 2010 if they had each operated under one license.
Economist Fred Crowley, hired by the gaming association, told commissioners that casinos would have to cut 248 jobs if they faced $4.9 million more in taxes, all other factors staying the same.
The five-member commission closed the packed, day-long hearing without rendering a decision. It has 180 days from Thursday to issue a decision.
