Connecticut issue: taxes and sovereignty

Aug 15, 2006 9:33 PM

The "sovereign nation" status is the issue being used by both Foxwoods Resort Casino and Atlantic City Coin and Slot Service Co. in their argument that the town of Ledyard, Conn., has been collecting taxes on the slot machines illegally.

Slot machines were introduced at the Indian casino back in the mid-90’s when then Foxwood’s CEO Mickey Brown and former Gov. Lowell Weicker worked out a deal whereby the casino would voluntarily give the state of Connecticut 25% of its slot machine revenue for the exclusive right to operate slot machines in the state.

That arrangement was modified later when the Mohegan Tribe opened its Mohegan Sun Casino and agreed to the same deal as the Mashantucket Pequots, who owned and operated Foxwoods.

The issue of taxing the slot machines came up in 2003 when Ledyard officials began taxing the machines provided to Foxwoods by AC Coin. Last year, the machines were valued at $430,701 and a tax bill of $10,758.90 was forwarded to the casino.

In a recently-filed lawsuit, the casino and the slot machine distributor alleged that the federal Indian Gaming Regulatory Act completely exempts state or municipal authorities to regulate, tax or otherwise control Indian gaming, except as set forth in IGRA’s express provisions. It also alleged that the tax effort interfered with the tribe’s "self determination and sovereignty."

The Ledyard town tax collector agreed that Foxwood’s casino and operation are exempt from taxes but that since the AC Coin machines are leased property and actually are owned by an independent company they are subject to taxation.

In a previous lawsuit, resolved in an out-of-court settlement, the town taxed leased motor vehicles used by the tribe. In the settlement, the town was permitted to keep all previously collected taxes but agreed to tax only those vehicles that were used outside the Indian reservation.