Opinion ID: 4537298
Heading Depth: 2
Heading Rank: 2

Heading: Plain Language of Section 75-76-193

Text: ¶42. Mississippi Code Section 75-76-193 deals with the calculation of gross revenue and allows tax deductions: (1) In calculating gross revenue, any prizes, premiums, drawings, benefits or tickets which are redeemable for money or merchandise or other promotional 5 This Court does not suggest that agencies cannot promulgate regulations and interpret them. But when an agency creates a regulation that interprets a statute, courts must conduct a de novo review when the statute is under judicial consideration because the judiciary is the only governmental branch with the constitutional power to interpret statutes. See Miss. Const. art 1, § 1. 17 allowance, except money or tokens paid at face value directly to a patron as the result of a specific wager and the amount the cash paid to purchase an annuity to fund winnings paid to that patron over several years by an independent financial institution, must not be deducted as losses from winnings at any game except a slot machine. (2) In calculating gross revenue from slot machines, the actual cost to the licensee of any personal property distributed to a patron as the result of a legitimate wager may be deducted as a loss, but not travel expenses, food, refreshments, lodging or services. Miss. Code Ann. § 75-76-193 (Rev. 2016). ¶43. Hollywood Casinos asserts that the MDOR’s and the MGC’s regulations are contrary to the “unambiguous terms or best reading of the statute,” which, it contends, clearly and unambiguously allows it to deduct from its gross revenue the cost of the prizes won by its Marque Rewards members for slot machine play. See Buffington v. Miss. State Tax Comm’n, 43 So. 3d 450, 454 (Miss. 2010) (citing Miss. Methodist Hosp. and Rehab. Ctr., 21 So. 3d at 606-07). Hollywood Casinos claims that the plain language of Section 75-76193(2) focuses on whether a prize was won as a result of a legitimate slot machine wager, rather than as a result of a specific slot machine or coin-out transaction, as required by the MDOR’s and the MGC’s regulations. See 35 Miss. Admin. Code Pt. V, R. 4.01(100)(11); 13 Miss. Admin. Code Pt. 7, R. 3.3(b), (k). ¶44. Hollywood Casinos relies on a 2014 Pennsylvania case in which the Pennsylvania court utilized its rules of statutory interpretation and found that promotional awards were deductible as a result of playing any slot machine, rather than as a result of play that was “tied to the play of a specific slot machine at a specific time.” Greenwood, 90 A.3d at 714. The rules of statutory interpretation in Pennsylvania provide that “statutes that define what 18 property is and is not subject to taxation[, i.e., tax exclusions,] are interpreted strictly in the favor of the taxpayer and against the Commonwealth.” Id. (citing 1 Pa. Stat. and Cons. Stat. Ann. § 1928(b)(3) (West, Westlaw through 2020 Reg. Sess.)). But in Mississippi, the general rule regarding tax exemptions is: Since taxation is the rule and exemption is the exception, and since exemptions from taxation are not favored, [the] general rule is that a grant of exemption from taxation is never presumed; on the contrary, in all cases having doubt as to legislative intention . . . [the] presumption is in favor of the taxing power, and [the] burden is on [the] claimant to prove or establish clearly his right to exemption, bringing himself clearly within terms of such conditions [as] that statute may impose. Fishbelt Feeds, Inc. v. Miss. Dep’t of Revenue, 158 So. 3d 984, 991 (Miss. 2014) (alterations in original) (quoting Miss. Dep’t of Revenue v. Pikco Fin., Inc., 97 So. 3d 1203, 1210 (Miss. 2012)). Further, “[t]he taxpayer has the burden of proving that the facts bring the case squarely within the deduction provisions of the statute.” Purcell Co., Inc. v. Miss. State Tax Comm’n, 569 So. 2d 297, 301 (Miss. 1990) (citing State v. L. & A. Contracting Co., 241 Miss. 783, 133 So. 2d 546, 549 (1961)). Therefore, there is no favorable presumption for the taxpayer in this case, as there was under Pennsylvania law in Greenwood. ¶45. Also, the Pennsylvania statute requires the property (the prize) to be the “result of playing a slot machine,” Greenwood, 90 A.3d at 702 (quoting 4 Pa. Stat. and Cons. Stat. Ann. § 1103 (West, Westlaw through 2020 Reg. Sess.)), while Mississippi’s statute requires the property to be the “result of a legitimate wager.” Miss. Code Ann. § 75-76-193(2). 19 ¶46. Because Pennsylvania and Mississippi have different rules of statutory interpretation regarding tax presumptions and the statute in Greenwood contained different language than that in our statute, we find that Greenwood is not analogous to this case. ¶47. The MDOR and the MGC contend that because Hollywood Casinos’ Marque Rewards program is not a “gambling game,” but instead is a “promotional activity” under the definitions under Section 75-76-5(nn), Section 75-76-193 does not apply. Code Section 7576-5(nn) defines promotional activity as [A]n activity or event conducted or held for the purpose of promoting or marketing the individual licensed gaming establishment that is engaging in the promotional activity. The term includes, but is not limited to, a game of any kind other than as defined in paragraph (k) of this section, a tournament, a contest, a drawing, or a promotion of any kind. Miss. Code Ann. § 75-76-5(nn) (Rev. 2016). The same section defines a gambling game as [A]ny banking or percentage game played with cards, with dice or with any mechanical, electromechanical or electronic device or machine for money, property, checks, credit or any representative of value, including, without limiting, the generality of the foregoing, . . . , slot machine, . . . However, “game” or “gambling game” shall not include bingo games or raffles which are held pursuant to the provisions of Section 97-33-51, or the illegal gambling activities described in Section 97-33-8. Miss. Code Ann. § 75-76-5(k) (Rev. 2016). A slot machine clearly is described statutorily as a gambling game, but a drawing is described as a promotional activity. See Miss. Code Ann. § 75-76-5(nn); Miss. Code Ann. § 75-76-5(k). In Ameristar Casino Vicksburg, Inc. v. Duckworth, the Court found that a casino’s reward-members-only promotional drawing, by which members gained entry based on their play and were chosen randomly, was not a gambling game as contemplated by Section 75-76-5(k). Ameristar Casino Vicksburg, Inc. 20 v. Duckworth, 990 So. 2d 758, 758-60 (Miss. 2008). The manner in which rewards members here and the rewards members in Ameristar gained entry into their drawings is similar to the extent that members earned entries based on their casino play and by displaying their membership cards. See id. at 760. Thus, the property given away by Hollywood Casinos through its rewards program was a promotional activity under Section 75-76-5(nn), not slot machine play under Section 75-76-5(k); therefore, Hollywood Casinos cannot deduct the cost of the prizes as a loss under Section 75-76-193(2). ¶48. Hollywood Casinos claims it has presented data that shows that these prizes resulted from entries earned through slot machine play. But the data provided by Hollywood Casinos fails to demonstrate that the prizes were the result of slot machine play. The data shows that the drawings provided multiple ways for rewards members to earn entry into the drawings: (1) table play or slot machine play, or (2) slot machine play or kiosk. This Court finds no drawings based exclusively on slot machine play. Hollywood Casinos failed to provide evidence that, in a drawing that allowed entries by both slot and table play, it could determine the winning member had won based on an entry earned through slot machine play and not based on table play. ¶49. Additionally, the MDOR and the MGC contend Hollywood Casinos’ rewards programs’ giveaways are not the “result of a legitimate wager” under Section 75-76-193(2). This Court finds that because the rewards program fails to satisfy Subsection 1's requirement of the prizes’ having been derived from slot machine play, which is dispositive, the issue of whether the giveaways were the result of legitimate wagers does not warrant discussion. 21 ¶50. It is clear from the plain language of Section 75-76-5(nn) and (k) that Hollywood Casinos Marque Rewards program’s random computerized drawings fall within the definition of a promotional activity, not that of slot machine play, a gambling game. This Court has held that a random drawing is not a gambling game; therefore, a random computerized drawing is not and cannot be a slot machine, which is a gambling game. See Ameristar, 990 So. 2d at 760. Also, the plain language of Section 75-76-193(1) provides clearly that the prizes are required to be from slot machine play. Miss. Code Ann. § 75-76193(1). We find that Hollywood Casinos failed to demonstrate that its rewards programs’ drawings resulted from slot machine play only and that the drawing was not a promotional activity under Section 75-76-5(nn). IV. Did the chancellor err by not finding there were genuine issues of material fact? ¶51. Hollywood Casinos asserts that the chancellor should not have granted summary judgment because there were genuine issues of material fact: “the nexus of the relationship between the personal property delivered to Hollywood Casino’s Marque Rewards members and slot machine play.” This Court finds that even though the chancellor erred by giving deference to the MDOR’s and the MGC’s interpretations of Section 75-76-193, based on our above analysis, the chancellor nevertheless came to the correct conclusion that there were no genuine issues of material fact. This Court has stated that “we will not reverse a lower court’s decision where that court reaches the right conclusion although for the wrong reason.” Briggs v. Benjamin, 467 So. 2d 932, 934 (Miss. 1985) (citing Huffman v. Griffin, 337 So. 2d 715 (Miss. 1976)). Hollywood Casinos failed to demonstrate that its random computerized 22 drawings fall under Section 75-76-193. Hollywood Casinos failed also to show that it can determine that the drawing winners had won as the result of slot machine play. Hollywood Casinos claims it has data to that affect, but that data is insufficient to show that Hollywood could determine whether a winning member had won through slot machine play or by table play. Therefore, we find that no genuine issues of material fact existed and that the chancellor correctly granted summary judgment to the MDOR and the MGC.