Gambling cruises not subject to reporting total profit, S.C. high court says

John O'Brien May 13, 2008, 2:15pm



COLUMBIA, S.C. (Legal Newsline) - The operators of casino boats do not have to report their overall earnings to the state, the South Carolina Supreme Court decided Monday.

The Justices reversed an administrative law judge's ruling that required SunCruz Casinos to give the state's Department of Revenue a total figure instead of just a percentage of winnings to losses.

In reading the relevant state law, Justice Donald Beatty said it was the wrong call.

"Although the statute also allows the Department to obtain information, including the total amount of money taken in and paid out, to confirm the percentages for an annual audit, it does not require monthly reports of this information," Beatty wrote.

"Further, although section 3-11-400(C)(3)(b)(iv) authorizes the Department to promulgate regulations to further implement this section, the Department admitted at oral argument that it has not promulgated any regulations requiring monthly reports of total monies paid in and paid out at this time. Thus, the Department is currently exceeding its power to collect information regarding gross proceeds from gambling cruise operators."

The Department of Revenue told SunCruz in 2005 that its reports did not meet statutory requirements because the company was not using forms developed by the DOR. The DOR then told the company to fill out the proper form within 10 days, threatening SunCruz with $41,500 in fines per day if late.

The administrative law judge heard the dispute May 8, 2006, then made the decision. The lone dissenter, Justice John Waller agreed with the judge's finding.

"As respondent aptly argues, the result of the majority's interpretation of the statute would lead to the absurd result that counties and municipalities have the ability to levy a tax on the gross proceeds of a gambling vessel, but the gambling vessel is not required to report these gross proceeds," he wrote.

"Such a result is patently absurd, and I reject that this is what the Legislature intended."

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