yes your honor mrs please the court counsel my name is stacy hickey and i am a puring on behalf of the appellant in this matter the state has the authority to tax the non tribal members use of goods and services purchased from businesses ancillary to a  at that license business imposes a used tax on the numbers use of goods and services such as food beverages hotel rooms and r v park a couple purchased at the casinos ancillary businesses  pursuant to state law at the state tonight three alcoholic beverage licenses issued to the tribe because the tribe was not collecting and remitting just used tax on these transactions first we look to whether the indian gaming regulatory act preempt ancillary businesses or amenities the lower court found that the state taxation of amenities is preempted by a grab because those amenities are directly related to the operation of gaming the air in this ruling is most evident in the context of preempt the state tax on the now members purchased alcohol and presumably all state regulation of alcohol at the casino and ancillary businesses directly conflicts with eighteen u eleven sixty one the tax is that if you are more than alcohol correct correct your honor did you to buy those out for the district or to to look at the alcohol taxes versus the taxes on the other amenities a use tax on the purchase of services and goods the use tax and encompasses the use of alcohol so it's the same tax being applied it's just being applied to  entirety and that that's a bit of a stretch so i did get there we believe in the context of alcohol that it shows the error in the court's ruling that alcohol as well as the other food and beverages are directly related to gaming specifically regarding alcohol congress would have needed to expressly print any regulation through agra and it did not do so if there is no mention of alcohol or liquor in and the lower taxes incurred as a result of the license but that the lower court invalidated this condition failing to recognize the state's authority through eighteen u s c eleven sixty one it's important to keep in mind that this condition applies to everyone and specifically relates to the taxes incurred at the licensed business when you say applies to everyone what do you mean everyone is required to pay the taxes associated with their license bu context of non tribal retailers it's the sales tax which would be imposed in that situation in the context of tribal members or the tribe it would be to collect the use tax incurred at the business from the from the not members the court errors in analyzing the condition under the collection brought in perspective rather than eleven sixty one and this is shown by the inconsistency created in the court's ruling applying the court's ruling the state may regulate license to use to ensure that they are of good moral character yet it cannot require the licensee to fulfill their legal obligation to collect and remit a nonmembers used tax so your main argument on that is that the district court conducted the improper analysis that it's that it's improper under eleven sixty one is that is that your position yes your honor the lower court failed to recognize the state authority through eleven sixty one to regulate licensees so your position is that eleven sixty one is broad enough to give the state the authority to link these two things the remittance of the tax and link that to approval of an alcohol license correct your honor eleven sixty one can be  as weak the condition can be viewed as requests requiring what is already required by law and that tribes and tribal members collect and remit the use tax alcoholic beverage regulation now going back to the remaining transactions and whether the tax in that case the lower court relied on section twenty seven ten d four to support the boundaries of the state tax implications and agra outside of the gaming proceeds it isn't taking away any of the state's authority that it already has in this respect it grows tax neutral the lower court read twenty seven ten d four as prohibiting a state tax on the purchase of amenity used by those who gamble however under that interpretation do for could not apply or preempt taxes on those under twenty one who are not even allowed to gamble section one point two of the gaming compacts between the tribe in the state so it's no person under the age of twenty one player would be allowed to play in any gaming device yet the court did not recognize that individuals can't play games and so therefore d for wouldn't cover them d for can only be read to preempt a state tax on the class three gaming it does not appear that any other court has interpreted the former to prohibit attacks outside of the play of games this is supported by both twenty seven ten d three c three and ryan can both which seem to provide exceptions to tax and gaming profits indeed it would be a logical the tribe directly excuse me your honor but the state can't tax the tribes directly anyway they don't you don't they don't drive don't need a group for that that is absolutely correct here on  because it does not involve the tribes governance of gaming which according to the circuit endorsed ian whitney is the key question it's important to keep in mind the specific transaction that's being taxed here the non tribal members use of goods and context of state taxation courts of the state tax on slot machines as well as construction materials used to build a casino they were directly related sort of almost didn't quite i don't know if this court went as far as a but for analysis but can you address that a bit absolutely your honor the court did look at the did apply a but for a test to say it's within the catch all provision it's a subject that is directly related to the operation of games the court said that these tracking transactions are directly related because but for the casino the transactions at the ancillary businesses would not exist and but for those businesses the casino could not operate the quote an arrogant adopting the but for test from coyote valley to an out of circuit case especially after the department of interior is indication that ancillary businesses do not fall within the catch up provision is there any look to dorsey in witney which is controlling and the but for test produces a result which conflicts with the tribal governance of gaming the transactions that these ancillary businesses are indeed one step removed from the gaming the department of interior has again recognized that these ancillary businesses don't fall within the provision it recognizes as the state argues that a bro interpretation of what a hard tribes generally states would be allowed to go in and compact and regulate on all sorts of different topics if the catch all provision is opened up can you explain that a little more what are the implications of that you say that would harm the try why because the state could then bring to the table that it wants to regulate the tribe operation of its restaurant it wants to impose health and safety standards on the tribe it would allow the state to bring that to the table without the without a possible bad flee bad faith claim being brought against the state so it's essentially opens up the state to allow these subjects and to where the state could regulate the tribes actions you mean it could regulate the tribe in a way that's different from the way it regulates everybody else or your position tribal members to correct so generally speaking a state would have no authority to go require the tried to get its left restaurant license for example under the state department of health but if the restaurant is included as a topic that's directly related to the operation of games the state could then bring to the table that hey we want to like we want to regulate we want to license your restaurant what state has brought that to the table and got sued for agreements i get the sense in minnesota it's almost permanent this is nothing to renegotiate all the tribal and everything the first time around now i believe in the state in the tribes came in contact us last for five years and the state does topics correct your honor you think that's contrary to i do your honor and i believe the department of interior is interpretations and approvals disapprovals or approvals because they just allow them to go into effect recognize that the department of interior doesn't necessarily view these as appropriate topics they point out that these amenities it goes beyond the compact of all subjects but rather than hard and put a stop to the tribes casino and potentially harming the tribe in the state where they've gotten to the department of interior just allows them to go into effect to the extent they are consistent with  restrain aggression from powerful states this is found in docket number forty one dash to the state is respecting those boundaries especially considering the department of interior is indication that these ancillary businesses are not an appropriate subject do you think judge pierce all brecker else in this case if not is that something this court can do in the first instance i do not believe the lower court did  i do believe this court could look at it at this level without reminding on that issue the facts are century undisputed this issue has been fully briefed to those court and i think we can also look no further look to the lower courts on appealed brecker analysis regarding the convenience store in this case the same reasons here justify a ruling in the state's favor as recognized by the lower court in that context tribal sovereignty and tribal economic development are insufficient to bar the state tax we can also look to the lower court's decision regarding overhead costs overhead costs were not enough to bar the state's imposition of the tax the non members on which just taxes imposed have no say in tribal affairs or do they share in any tribal dispersement what it was what in your view  what was the logging case is that rama or the other one with the bracketed case but the the point being i think the state makes is that the federal interest was more pervasive or whatever in logging it in gaming and they explain why i suspect you're going to say well the gaming interest is just financial support of the logging interest was regulatory but i don't see how that regulates gaming and while there's a lot of federal regulations on the topic of gaming or gave me gaming revenue it does not regulate these transactions wrecker analysis required to look at the federal interest the tribe interest in david kills one hundred you know your honors the union gaming regulatory act was passed in october of one nine hundred eighty eight by congress it has had a tremendous impact on the lives of tribal members living in their homelands a car crossed th nation class three came in casinos have as this court has recognized affan meant the difference between an adequate governmental program and a skeletal program that is totally dependent on federal funding that w this court's holding in the city of duluth versus one to lock there the court and in the dorsey whitney case recognized it has extraordinary preempted the fact it preempts the field i don't understand  of the indian gaming regulatory act it is intended to be preemptive the end of the entire field and that is based on the field though what do you mean by the field and sort of feel of the operation of gaming activity what is that how broad is the right right and that is the question here did congress when it passed the law intended say we're only regulating the play of game that the supreme court has identified it recently right to gaming and it dealt with what a class three gaming activity was this case is about the scope of twenty seven ten d three seven is it directly related to the operation of gaming and the ninth circuit case and coyote valley two which is a certain i case through one explains why it was bradley than the regulation of the play of game congress knew when it passed the indian gaming regulatory act the style the senate report which is cited in coyote valley to actually explains the congress said specifically that our intention is to give tribes an equal playing field when it comes to these complex gamin operations so that they can have economic development that was the whole intent of the statute and to have them be free from state regulation unless they compact it for it with the state so what then is the standard for determining whether amenities are directly related to the gaming operation how do you determine that obviously you're saying in this case it's what we've got here then with that everything but the convenience store how do you define it for the future would it what does this what is the limit directly related sure and i think i think that judge pierce also reliance on the coyote valley too is appropriate it's a two way test the first directionals can that amenity exist or would it exist without the operation of gaming the second part of the task is would the gaming revenue be impacted dramatically by not having that am indian gaming commission and the tribal gaming ordinance is the flanders auntie sue travel casino all of these areas are regulated they are subject to the bank secrecy act regulations in terms of the movement of money they're subject to the comping regulations on who can comp to kill or can you help me understand what you mean by that they are all within the facility which you mean by that they are within the facility licensed under the indian gaming regulatory act as a gaming operation so require that they be licensed building by building every separate building house to have a license to be able to game there it is a grow whatever casino building that has the license from the national indian gaming commission in the tribal gaming commission in that building we have alcohol at the bar which is served on the gaming floor we have food which also can be served on the gaming floor we have the hotel we have the gift shop and we have  entertainment it is not like we have eight buildings and we're saying no the building half a mile down the road is subject to the indian gaming regulatory act they are all part of the same omphalos there is extensive information the record how interrelated they are and this is not the tried manipulating it to make it sell it is it is industry standard that if you do not have these amenities you are not going to get gaming revenue in this case the record i lost leaders meaning that these amenities are not there to make money they are there to to encourage customers to stay in play and to gain new customers they don't make any money we actually lose a million dollars at that restaurant every year there is a casino that moved in and large what iowa right down the road and they had more machines allowed than our than the flanders casino was allowed at the time by the state of south dakota and they have a lot of amenities golf course restaurants and the the food that they eat whether doing that and thereby decrease the gaming revenue decrease the number of customers the record is very clear that these are complimentary in an economic sense these amenities when you increase the price of an amenity you're going to decrease the consumption of gaming play of games i do want to your honor's focus on the fact that the indian gaming regulatory act doesn't just regulate the black play of class three games we feel personal got it right you have to ignore the entire structure of the indian gaming regulatory act by the states argument twenty seven zero two two is the legislative history addressed a taxation other well i'll go first to the parts of the history it is late of history say that we wouldn't we wouldn't want the states to impose the same taxes on amenities as yes not indian competitors would pay the states otherwise because that would get in the way of the steak and collecting of a large sales tax in addition to pocketing the casino profit so i'm going to read to the parts of the committee report that address this issue of taxation cited i knew we were short amenities are there to support it bring in the people is that that that's what's absolutely correct and that's on the record so it's still going to the history again the history of the ad is there any discussion of that sort of an analogy between models and other words a direct reference to this is what we're thinking is that they referenced the fort mojave compact actually which is a compact with the state of nevada and that particular reference jurisdiction except for taxing because the tribe didn't want to they didn't want them to have taxing jurisdiction and it really does allow states in stripes to negotiate the concern of congress was that tribes be able to negotiate on an even playing field so your position is that the state could regulate it through a compact the hotel restaurant and so forth that are associated with the casino if the tribes agree to it purely tribal jurisdiction over gaming there is no role for the state you agree with the state that the department of interior has expressed concern about reading the catch all too broadly because it would give states authority to negotiate over amenities and things outside of gaming itself we absolutely disagree kevin washburn was speaking for himself he was not an interior official when he wrote the article and his concern ballot the amenities within the compact in process causing a problem of not being able to win a bad faith case against the state the senate report on the indian gaming regulatory act and interior have been clear as the supreme court opinion that makes very clear right it's so that you don't have a spillover effect into the state of unregulated alcohol in indian country here this used tax has nothing to do with the regulation of alcohol flow this use tax has nothing to do with an alcohol tax the tribe he's the alcohol tax to the state is south dakota through its wholesalers it's imposed upstream this tax in the south dakota law in dispute only applies to indian tribes and their members were the only ones required to collect that use tracks which is somebody else's tax cording to the state that we have to collect for them and that is well beyond  scope of their police power to regulate alcohol so your your your argument is that that licensing requirements just simply invalid absolutely so is that your burden is that the tribes are to show the validity of that requirement i don't believe so your honor because the state is the one wanting to pose that on the tribe we start the playing field with this is tribal regulation right this area of tax is not clearly belonging to the tribe the niland is a very helpful case in this respect because there are the courts said look you can impose an alcohol tax that's used the revenues used to regulate alcohol but we're not sure if this was an alcohol tax if you could impose this casino has never had an alcohol violation the squeaky clean the state agrees with that they regulate alcohol well and we have certainly never suggested that because indian gaming regulatory act preempts taxes right taxes that somehow we don't have to abide by your preexisting authority to regulate alcohol along with the tribe we think your honour's it's really important here a notice to state doesn't do anything for this casino that it isn't reimbursed for this tax is not going anywhere but in the general fund of the state this state has no government buildings on this reservation they don't do the roads they don't do any of these things for those patrons gaming  arcus you know the tribe funds it because this tribe has been successful under the indian gaming regulatory act i think the additional views of the late senator john mccann are instructive in the senate report he said the state in the gaming industry have always come to the hable with the position that what is theirs is theirs and what the tribes have is negotiable i believe it's important to underscore that statement that appears on page ten of the report the committee does not intend to operate any from tribe to a state backed is the key this tribe deserves to compete on equal footing with other casinos not be subject to a double tax it deserves to be the primary economic beneficiary this court in fond du lac made clear we don't care if you call a six million dollars for ya to travel casino rent if it does not bear no relationship to the services you're providing as provided for in the compact under see three you can't are the tripe keeps going back to how it regulates gaming facilities but that's how they tried to find that the tribe wants to define it's the cellular anything connected but not even that because in the context of the r v park the v park is not physically connected to the casino this let's shift the focus back to the casino rather than gaming which is what a great is regulating regarding amenities kevin wash article describes it best these amenities are not part of a growth they are not subjects directly related to the gaming and while washburn was not acting under his authority as assistant secretary of the department of interior while writing that article he does  to several department of interior official letters with that same same position and it was also recognized by the district court in washington d c recently in the case of forest county pot of gaming it grows legislative history does address the taxation and says the states can't compact on taxation also regarding eleven sixty one the tribe has a legal obligation to collect this tax the condition narrows that to taxes incurred at the license business eleven sixty one allows the states to do th have twenty seconds left and closing that apartment or the lower court's decision goes against the interests of tribes generally interpret in the catch all provision probably to primp states jurisdiction over nonmembers increases the subjects that the state can regulate the tribes questions will take it under