Opinion ID: 1689574
Heading Depth: 3
Heading Rank: 1

Heading: Are Racetracks and Riverboats Similarly Situated?

Text: The first step in our constitutional analysis is to determine whether racetracks and riverboats are similarly situated plaintiffs singled out for differential treatment. The State suggests racetracks and riverboats are not within the same class of activities for purposes of equal protection. We disagree. While it is true some differences exist between the two gaming facilities, a `mere difference is not enough.' It must be relevant or pertinent as well as rational. Deadwood, Inc. v. North Carolina Dep't of Revenue, 557 S.E.2d 596, 599 (N.C.Ct.App.2001) (citation omitted). Here, the State does nothing more than cite to mere differences. See, e.g., Bierkamp v. Rogers, 293 N.W.2d 577, 585 (Iowa 1980) (where passengers of automobiles were treated differently than passengers in other conveyances, the court found a violation of equal protection); Gleason v. City of Davenport, 275 N.W.2d 431, 435 (Iowa 1979) (though not the same, the court found an equal protection violation where charter cities were treated differently than other cities because no special or unique needs of charter cities justified the differential treatment). We find none of the differences sufficiently compelling to find racetracks and riverboats are not of the same class. The State contends riverboats and racetracks are different classes simply because one is land-based whereas the other floats on water. At first blush, this is an appealing argument. However, in reality the essence of the differential treatment is not rooted in the dissimilar scenery surrounding the main activity at both facilities. Rather, the heart of the tax statute is in its disparate treatment of the main activity taking place at both riverboats and racetracks. That is, the essence of the tax is that it treats racetrack slot machines differently than riverboat slot machines. Where the same activity is being taxed at significantly different rates, a mere difference in location is not sufficient to uphold the discriminatory tax. Both facilities exist for the purpose of operating gambling games. The bulk of both entities' revenue is from slot machines. For example, from July 1, 1998 through June 30, 1999, Prairie Meadows' adjusted gross revenue and its slot revenue were identical because the horse tracks have no net revenue. During this same time period, the Miss Marquette riverboat had adjusted gross income of over $32 million, almost $27 million of which came from slot revenue. [3] If the bulk of their revenue was not based on slot machines, but rather we were called upon to determine whether horse revenue is different from gambling table revenue, our conclusion may be different. However, because most of the entities' revenue is derived from the same source, it is of little consequence that there are other different types of gambling games available at racetracks and riverboats. More importantly, both facilities are authorized to operate within the same gaming industry. Both operate slot machines that are the primary revenue-making vehicle for both facilities. Racetracks and riverboats serve gambling games to the same group of consumers. Both gaming facilities are equally important to the State in terms of revenue production. We conclude racetracks and riverboats are of the same class for purposes of this equal protection challenge. If the taxing statute treats them differently and there is no rational basis for such differential treatment, the statute violates equal protection.