Posted on Tue, May. 09, 2006

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WINNINGS REPORTS

Sun Cruz challenges state's right to data

By Zane Wilson

The Sun News

RANDALL HILL/The Sun News

A charter fishing boat passes a docked Sun Cruz casino boat along the waterfront in Little River.

COLUMBIA - The state appears to be within its authority to demand specific gaming winnings reports from Sun Cruz Casino, an administrative law judge said Monday.

Administrative Law Court Chief Judge Marvin Kittrell said after the hearing that he will rule later in the case that is the first step to challenging the new law that allows local governments to ban or tax and regulate casino boats.

Sun Cruz protested the way the state Department of Revenue gathers information about winnings under the law.

So far, the only boats operating in South Carolina are in Little River. Horry County has not chosen to either ban or tax the boats.

Zoe Sanders Nettles, attorney for Sun Cruz, told Kittrell the law says casino boats must report their monthly average percentage of winnings.

But the agency is asking for specific amounts of money from each machine or game, and the law doesn't say they can do that, Nettles said.

Kittrell said the law's definition of "gross proceeds" appears to include what the agency is asking for in its reports. He said he could not see any legislative purpose for allowing local governments to tax the boats on a percentage basis without requiring the specific amounts of winnings to be reported.

Harry Hancock, attorney for the revenue department, said the agency uses that definition and the meaning and intent of the casino boat law as its reasoning to ask for specific winnings information.

Without that information, "it would be essentially a meaningless report" and the local governments would not be able to figure how to tax the boats, Hancock said.

But Nettles said the details are provided in an annual audit and the local governments could use that information to set fees or taxes.

The annual audit would not provide useful information if there were nothing to compare it with, such as the figures in the monthly reports, Hancock said.

Hancock said Sun Cruz compiles the figures for its own bookkeeping, so it is not burdensome for the state to ask for it.

Dwight Drake, also an attorney for Sun Cruz, said that even though the company does keep detailed records, it should not have to report them to the government without the law clearly saying so.

Drake would not say whether Sun Cruz intends to pursue an attack on the law itself.

"It hinges on how this comes out," he said.

But the possibility is preserved because it was raised in Sun Cruz' case on the winnings reports.

"We reserve the right to challenge the constitutionality of the Gambling Cruise Act to another court," Nettles told Kittrell.