A controversial rule that some casinos are using to trim tax liabilities by millions of dollars annually will probably stay intact despite calls from the state auditor and the city of Black Hawk for regulators to close the loophole.
The Colorado Limited Gaming Control Commission held two public hearings in October and November to review the rule, which allows operators to receive up to three licenses even if their casinos are commonly owned and physically connected. Spreading revenue across multiple licenses eases an operator’s tax burden because the state charges a higher tax rate as a casino’s gross revenue increases.
The hearings “indicated that this was not an abusive situation,” commission chairman Robert Webb said Wednesday.
For the most part, owners of smaller casinos in Cripple Creek are exploiting the rule. They came out in full force during the public hearings to explain that the regulation helps, in part, to offset the higher costs of operating properties that have strictly adhered to state historic preservation guidelines. Casino owners in Black Hawk have essentially had free rein to build Las Vegas-style properties.
Webb said none of the larger casinos objected to the tax benefits gained by the smaller operators during the hearings.
“There’s clearly a financial advantage caused by the progressive tax rate structure,” Webb said. “However, the only place that we’ve seen that this has occurred was with historic properties … those operations were shown to be more expensive to build, more expensive to operate and therefor, at least to some extent, a financial advantage could be viewed as warranted.”
The state auditor’s office released a report in November urging regulators to amend the regulation. The city of Black Hawk, perhaps in response to criticism about its loose adherence to historic preservation guidelines, told the commission that the rule gives some operators an “unfair and anti-competitive tax advantage.”
Webb said regulators probably won’t pursue any changes at this time, though the decision will be made by the five-member commission, which is holding its monthly meeting today.
“As chairman, I’m inclined to allow things to stay the way they are,” Webb said.
Andy Vuong : 303-954-1209 or
