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August 29, 2014

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Caesars Palace prevails in court battle over live entertainment tax

Image

Erik Kabik/Retna/www.erikkabikphoto.com

Bette Midler celebrates the 100th performance of The Showgirl Must Go On at The Colosseum in Caesars Palace.

The Nevada Supreme Court has ruled that Caesars Palace does not have to pay an additional $797,790 on its live entertainment tax on shows at the Colosseum on the Las Vegas Strip.

The court, in a unanimous decision Monday, said the interpretation of the law by the state Gaming Commission was "arbitrary and capricious" in assessing the casino that amount from 2004 to 2008.

Caesars and other large gaming companies pay a 10 percent tax on admission tickets to their shows.

In this case, Caesars retained AEG to manage the Colosseum, sell the tickets and collect the tax. AEG then sends the collections and the tax to Caesars, who pays the state.

AEG, in turn, gave Ticketmaster the right to sell tickets online and by phone. Ticketmaster collects the cost of the ticket, the entertainment tax plus a convenience or royalty charge. It then sends the money plus 40 percent of the royalty charge to AEG.

AEG never sent Caesars any of the royalty money collected during the four years. The state Gaming Control Board said those royalties were part of the cost of the ticket and was taxable.

The Gaming Commission ruled those royalty fees received by AEG were part of the cost of a ticket and were subject to the 10 percent entertainment tax due from Caesars.

Caesars filed suit challenging the assessment and lost in District Court in Clark County.

The Supreme Court said the wrong interpretation of the law by the gaming commission "violated Caesars' substantial rights."

It said the law is clear that the royalties are not subject to tax and "no reasonable mind could read the statute's language otherwise."

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