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State Wants Cut Of Casinos’ Free-Play Bets

Sky City Casino Hotel, located between Albuquerque and Grants, offers up to $1,000 in free play for joining the casino’s player’s club on this I-40 billboard near Atrisco Vista Boulevard. The New Mexico Gaming Control Board is negotiating with several tribally owned casinos over free play and revenue sharing. (adolphe pierre-louis/journal)
Sky City Casino Hotel, located between Albuquerque and Grants, offers up to $1,000 in free play for joining the casino’s player’s club on this I-40 billboard near Atrisco Vista Boulevard. The New Mexico Gaming Control Board is negotiating with several tribally owned casinos over free play and revenue sharing. (adolphe pierre-louis/journal)
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The New Mexico Gaming Control Board is negotiating with eight gaming pueblos and two tribes over whether slot machine wagers initiated with “free play” or “bonus point” credits should be included when the casinos report their total quarterly wagers.

At stake are millions of dollars the tribes pay the state in revenue sharing.

Under their gaming compacts with the state, tribes pay the state a percentage of their “net win” – the amount wagered on slot machines minus prize payouts and approved regulatory fees.

Gaming Control Board officials maintain that by not adding the value of “free” or “bonus” play to the total amount of cash wagered and reported to the state, the tribal casinos are paying the state less than they should.

The Gaming Control Board also says that, by deducting the jackpots won by betting on slots using free or bonus plays, the casinos lower their “net win” and the revenues that go to the state.

Tribal casino officials maintain that, because slots players using free or bonus points are not betting actual money – and thus are not making a “wager” – there is no “revenue” produced.

Currently, tribes with an annual net win of less than $15 million pay the state 3 percent. Tribes with a net win of $15 million to $50 million pay 9.25 percent, and those with a net win of more than $50 million pay 9.75 percent of their net win. Some of those percentages increase slightly over the life of the compacts, which now extend to the year 2037.

David Norvell, the board’s chief counsel and former chairman, said last year the deductions the tribal casinos are applying to free play and bonus play had cost the state between $13 million and $20 million.

Norvell said Monday that negotiations were taking place and could be continued today. He did not have a current estimate of the amount tribal casinos might owe the state.

Related documents indicate that the Gaming Control Board has notified the affected tribes that they are underpaying the state.

Definition of wager

The term “wager” is important because the compacts say jackpots are deducted to determine the net win only when they result from a winning wager.

Further complicating the wager issue is the inability of current slot machine accounting systems to differentiate between jackpots won with free credits and those won with cash or a cash equivalent.

The Gaming Control Board argues that an undetermined monetary value should be attached to free and bonus plays.

According to documents related to the case, the tribes say the issue of free and bonus play are moot because they are not specifically addressed in the compacts and that “generally accepted accounting principles” do not recognize free and bonus play as revenue.

The current negotiations include 10 of the state’s 14 casino-operating tribes: Mescalero Apache, Jicarilla Apache, and Acoma, Isleta, Pojoaque, San Felipe, Sandia, Santa Ana, Santa Clara and Tesuque pueblos.

In 2011, tribal casinos reported a total net win of $713.9 million, and they paid the state $65.2 million in revenue sharing, according to the Gaming Control Board.

Attempts to reach a spokesman for the New Mexico Indian Gaming Association, which represents a majority of the states’ gaming tribes and pueblos, for comment on Monday were unsuccessful.
— This article appeared on page A1 of the Albuquerque Journal

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