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Flandreau Santee not required to pay tax on casino work

Posted on Jul 19, 2018 by
General News

FLANDREAU, S.D. (AP) ~ A federal judge has ruled that South Dakota cannot force a Native American tribe to pay excise taxes on its $24 million casino renovation.

The Flandreau Santee Sioux Tribe sued the state last year after it rejected the tribe’s contention that non-tribal contractors working on the Royal River Casino expansion were not required to pay the tax. State law requires contractors to pay 2 percent of their gross receipts on construction projects.

Judge Karen Schreier has ruled in favor of the tribe’s argument that South Dakota violated the Indian Gaming Regulatory Act, the federal law that allows tribes to establish casinos. Schreier noted the state’s compact with the tribe doesn’t include a provision permitting the collection of the tax, the Argus Leader reported.

“The state’s excise tax undermines the objective of IGRA because the tax is passed from the contractor to the tribe which interferes with the tribe’s ability to make a profit from gaming activities,” Schreier wrote. “Thus, Congress intended for IGRA to completely regulate Indian gaming and there is no room for the state’s imposition of an excise tax.”

State officials will review the decision and decide next steps, said Tony Venhuizen, the chief of staff to Gov. Dennis Daugaard.

The ruling is the latest in a decades-long legal battle between the tribe and the state over taxation and tribal sovereignty. Former governors clashed with tribal officials over sales tax payments and amending its compact to accommodate more slot machines.

Daugaard eventually approved a new compact that doubled the number of slot machines from 500 to 1,000. The tribe has said its expansion project is necessary in order to make room for the new machines.

Information from: Argus Leader,