Three pueblos owe New Mexico a combined $40 million under a long-disputed interpretation of an old agreement for sharing revenue from tribal casinos, state regulators said.
The Tesuque, Sandia and Isleta pueblos have asked a judge to block the state from collecting what they argue would amount to an illegal tax, The Santa Fe New Mexican reported.
The disagreement is centered on free play credits that are given to gamblers to push them toward playing slots.
New Mexico Gaming Control Board regulators previously argued that credits should be included when calculating the revenue tribes must share with the state.
The tribes maintain it would violate federal law.
Under a 2015 agreement, the credits aren’t included in tallying the revenue that tribes must share.
Regulators in April demanded a share of revenue from the free play credits.
Under the state’s calculation, Tesuque Pueblo owes about $3.2 million, Sandia Pueblo owes nearly $26.5 million and Isleta Pueblo owes more than $10.3 million.
Shared revenue from casinos goes into the state’s general fund, which has neared empty during the past year and is expected to contain far less cash throughout the next year than officials would prefer.
In a statement on Wednesday, governors from the three pueblos likened the state’s demand to insisting a clothing store selling shirts on sale for half-price charge tax on the full price.
“This claim makes no sense,” the governors wrote.
The case does have precedent. In 2015, the state sought to collect back revenue from free play credits at racinos – racetrack casinos that are also required to share revenue with the New Mexico government. The racinos filed suit but eventually settled before the case went to trial.