Opinion ID: 2536857
Heading Depth: 1
Heading Rank: 2

Heading: historical development of the law

Text: The primary issue before the Court is whether La.Rev.Stat. §§ 4:168 and 4:227 create tax exemptions which have been suspended by La.Rev.Stat. § 47:302(Q)(R). To put this question in its proper context, we must review the complex historical development of the statutory schemes governing both horse racing and sales and use taxation. Louisiana law has taken a special interest in horse racing since the Digest of 1808. Although the Digest generally forbade a cause of action for monies won through wagering, a specific exception was carved out for horse racing and other supposedly martial pursuits which the State saw fit to promote: The law grants no action for the payment of what has been won at gaming or by a bet, except for games tending to promote skill in the use of arms, such as the exercise of the gun, foot, horse and chariot racing. And as to such games, the judge may reject the demand when the sum appears to him excessive. This statute, now codified as Civil Code art. 2983, has remained substantively unaltered since 1808. The legislature occasionally enacted statutes regulating horse races and betting thereon, see, e.g., Acts 1908, no. 57; Acts 1920, no. 127, but it was not until 1940 that an attempt was made to comprehensively regulate the industry as a whole. Act 276 of 1940 created the Louisiana Racing Commission and set forth a statutory framework for the operation of race tracks, gambling parlors, and horse breeding facilities. It also imposed a schedule of licensing fees and other charges to be paid by the racetracks, and stated: The license fees, commissions, and taxes imposed in this chapter shall be in lieu of all license, excise and occupational taxes to the State of Louisiana, or any parish, city, town, or other political subdivision thereof. Acts 1940, No. 276, § 16. The original version of what would become La.Rev.Stat. § 4:168 (then numbered § 4:157) excuses racetracks from paying license, excise, and occupational taxes. Notably, it does not mention sales taxes, as Louisiana did not charge a state sales tax in 1940. [3] Although temporary sales taxes were imposed beginning in 1942 as an emergency war measure, the first peacetime sales and use taxes were not enacted until 1948. See Acts 1948, No. 9. In 1968, the Revised Statutes chapter regulating the horse racing industry underwent a total revision and renumbering. The amended (and now-current) version of § 4:168 states: The license fees, commissions, and taxes imposed in this Part are in lieu of all other such licenses, sales, excise and occupational taxes to the state or to any parish, city, town, or other political subdivision thereof. The only substantive change effected by the 1968 amendment is the added language expressly making the racetracks immune to sales tax. Over the years numerous special statutes were enacted exempting particular transactions from the sales and use taxes. [4] In 1986 the Legislature, faced with a budget crisis, enacted a temporary suspension of all exemptions to the sales and use taxes under La.Rev.Stat. § 47:302. These suspensions have been repeatedly re-enacted and extended, and were in full effect during the relevant time period: Q. Notwithstanding any other provision of law to the contrary, including but not limited to any contrary provisions of this Chapter, for the period July 1, 2002 through June 30, 2004, the exemptions to the tax levied pursuant to the provisions of this Section, except for those exemptions provided by R.S. 39:467 and 468, R.S. 47:305(A)(1), (B), (D)(1)(f), (j), (k), ( l ), (m), (s), and (t), and (G), 305.1, 305.2, 305.3, 305.8, 305.10, 305.14, 305.15, 305.20, 305.25(A)(1) and (2), 305.37, 305.38, 305.46, and 305.50, and R.S. 51:1787, shall be inapplicable, inoperable, and of no effect. R. (1) Notwithstanding any other provision of law to the contrary, including but not limited to any contrary provisions of this Chapter, for the period July 1, 2004, through June 30, 2009, the exemptions to the tax levied pursuant to the provisions of this Section, except for those exemptions provided by R.S. 39:467 and 468, R.S. 47:305(A)(1), (B), (D)(1)(f), (j), (k), ( l ), (m), (s), and (t), and (G), 305.1, 305.2, 305.3, 305.8, 305.10, 305.14, 305.15, 305.20, 305.25(A)(1) and (2), 305.37, 305.38, 305.46, 305.50, and 305.51, and R.S. 51:1787, shall be inapplicable, inoperable, and of no effect. Notably, La.Rev.Stat. § 47:302(Q)-(R) only suspends exemptions, not exclusions. In 1987, the legislature granted racetracks permission to operate OTB facilities. Acts 1987, No. 203. In 1990, the racetrack's sales tax immunity was extended to purchases related to the OTB operations: The license fees, commissions, and taxes imposed upon an offtrack wagering facility in this Part are in lieu of all other such licenses, sales, excise, and occupational taxes to the state or to any parish, city, town, municipality, or other political subdivision thereof. La.Rev.Stat. § 4:227. Despite the added income from the OTB parlors, racetracks continued to face increased competition from other newly legalized forms of gaming including lotteries, riverboat gaming, and land-based casinos. In response, the Legislature passed the Louisiana Pari-Mutuel Live Racing Facility Economic Redevelopment and Gaming Control Act of 1997 in order to revitalize and rehabilitate the State's live horse racing tracks. La.Rev.Stat. § 27:351 et seq. This Act permits racetrack facilities to open a designated slot machine gaming area with a set percentage of the slot proceeds earmarked to supporting horse racing and breeding. La.Rev.Stat. § 27:361. [5] Unlike the racetracks and OTB parlors, there is no provision specifically exempting or excluding the slot machine operations from sales and use taxes.