In two court cases filed last week, MGM Grand Detroit claimed it should not have to pay taxes on the unpaid portion of loans it extends to gambling customers. The casino has asked the court to order the Department of Treasury to refund taxes the state charged–nearly $41,000 in one case and more than $14,000 in the second—on the unpaid portion of the debt.
In the first case, a player with a $3 million line of credit requested $1.89 million and lost $677,500 playing table games. The casino agreed to discount 10 percent of the loss from the required repayment. In the second case, a player with a $2 million line of credit requested a draw of that total amount and then lost $1.945 million. The casino again agreed to discount 10 percent of the loss.
In both instances, MGM Grand claimed the discounts as uncollectible gambling debts. Casino attorneys noted the state’s Gaming Control and Revenue Act allows a casino to deduct uncollectible losses against its gross receipts.
However, in letters sent earlier this year, the state denied refunds of the taxes paid by MGM Grand on the discounts, claiming the casino “did not take any collection steps to recover the full amount owed to it” and the casino could not meet its own requirements for a write-off on the losses. In other words, the casino is not eligible for a tax credit on the discounted amounts. The casino will dispute this assertion in court.
