Opinion ID: 2536857
Heading Depth: 2
Heading Rank: 4

Heading: Scope of Exclusion

Text: The secondary issue concerns the scope of the exclusions set forth in La.Rev. Stat. §§ 4:168 and 4:227; specifically, whether those statutes encompass purchases related to Harrah's slot machine gaming area. Preliminary, the State urges this issue, which was raised in Harrah's crossmotion for summary judgment, is not properly before this Court. The district court granted the State's motion for summary judgment and therefore pretermitted ruling on Harrah's cross-motion. The Court of Appeal, in a footnote and without any meaningful analysis, took up the question and found slot-related purchases within the ambit of the exclusion: This holding also applies to Harrah's slot machine casino, opened pursuant to LSA-R.S. 27:351 et seq., the Louisiana Pari-mutuel Live Racing Facility Economic Redevelopment and Gaming Control Act, which was enacted specifically to authorize slot machine gaming at eligible live horse racing facilities. See LSA-R.S. 27:353. See also LSA-R.S. 33:9561. Harrah's, 22 So.3d at 931 n. 11. According to the State, only those issues considered and ruled upon by the district court are appropriate for appellate review, and the appellate court erred in even considering the issue. The State cites Ayers v. Brazzell, 26,068, pp. 7-8 (La.App. 2 Cir. 9/21/94), 648 So.2d 406, 410, overruled on other grounds, Jacobs v. City of Bunkie, 98-2510 (La.5/18/99), 737 So.2d 14: After our examination of the record, we find that the plaintiffs properly raised this [constitutional] issue in the trial court, but a ruling on the issue was pretermitted. Without a trial court ruling, it would be improper for this court, in the first instance, to consider the issue. In Ayers the pretermitted issue was a challenge to the constitutionality of a statute. La.Rev.Stat. § 13:4448 requires an appellate court to give notice to the Attorney General prior to adjudicating the constitutionality of any Louisiana statute. As the Attorney General had not been notified and given an opportunity to be heard, the court rightly withheld ruling on the statute's constitutionality. Notably, later cases have cited Ayers only as standing for the specific concept that an attack on the constitutionality of a statute must first be raised in the trial court. Koeppen v. Raz, 29,880, p. 5 (La.App. 2 Cir. 10/29/97), 702 So.2d 337, 340; Joseph v. Hospital Service District No. 2, 2001-1951 (La.App. 1 Cir. 12/28/01), 805 So.2d 400, 413. The parties' cross-motions for summary judgment present no constitutional issues, and the rationale of Ayers simply does not apply. The State also cites Fields v. State, 98-0611 (La.7/8/98), 714 So.2d 1244, in which we remanded plaintiffs' due process claim because it was not addressed by the trial court nor was it sufficiently briefed or presented to this court for us to make a determination. Id. at 1249. Certainly this Court has discretion to defer ruling on an issue which has not been raised, argued, and briefed. However, we find the scope of the tax exclusion has been properly raised and sufficiently briefed, and it is in the best interests of judicial efficiency to address it here. The question presented by Harrah's motion for partial summary judgment is: Do the provisions of La.Rev. Stat. §§ 4:168 and 4:227 apply to purchases made by [Harrah's] for the improvement and operation of its Racetrack, including purchases related to the slot parlor and to the `common areas' of the Racetrack?  (Emphasis added). Harrah's motion urges that all areas of the Racetrack are important to the continued survival of horse racing in the State and that there is a single facility. [Harrah's] operates the slot parlor and the common areas as component parts of one single horse racing facility. Of interest, we note this question has been addressed by the Third Circuit in Boyd Racing, LLC v. Fruge, 2008-581 (La.App. 3 Cir. 11/5/08), 996 So.2d 659, writ denied, 999 So.2d 780. Boyd Racing operates Delta Downs in Calcasieu Parish, which opened a slot machine casino in February 2002. Boyd Racing argued La.Rev.Stat. § 4:168 excused it from paying sales or use taxes on the material it purchased in conjunction with the renovation of its premises and construction and furnishing of the slots casino, restaurants, stores, and hotel. Id. at 661. The district court granted the motion for summary judgment filed by the State and Calcasieu Parish, and held § 4:168 inapplicable to slots-related purchases. The court of appeal affirmed. By its own terms, La. R.S. 4:168 creates a trade-off for horse racing facilities. In exchange for the payment of the taxes and fees imposed for its horse racing activities, the facilities do not have to pay state and local use taxes. In this respect, we find the language of the statute determinative of the issue before us. The statute specifically says that the fees imposed in this Part are in lieu of State and local sales and use taxes. The statute allowing the horse racing facilities to operate slot machine casinos appears in Title 27. In furtherance of the legislation's stated goals of furthering the horse breeding industry, the statute does provide for significant contributions to the purses for horse races and to horsemen's groups from the net proceeds of the slot machine casino. But Title 27 contains no trade-off provision similar to La. R.S. 4:168. The Act did not create any new burdens for Boyd Racing under Title 4, Chapter 4, Part I. As such, we find that La. R.S. 4:168 does not apply to excuse Boyd Racing from paying sales and use taxes associated with the operation of a slot machine casino authorized under Revised Statutes Title 27. Id. at 663. The court likewise rejected the claim that the horse racing facility and slot facility were one single entity, and La. R.S. 4:168 should be read to offset all purchases made by Boyd Racing, whether they are racing related or not, because without the racing facility there would be no non-racing purchases. Id. at 663. The court held the legislature had enacted a comprehensive set of regulations and fees for operation of a slot casino, yet in defining those taxes and fees, the legislature did not create an offset similar to La. R.S. 4:168, and we will not create one. Id. at 664. We agree with the appellate reasoning in Boyd Racing. When the Legislature originally passed the act that would later become § 4:168, the sole purpose and effect was to benefit the horse racing and breeding industry at live horse racing tracks. Significantly, when the legislature permitted racetracks to operate OTB parlors in 1987, it enacted § 4:227 to extend the benefits of the tax exclusion scheme to OTB parlors as well as racetracks. We cannot presume the Legislature would have passed a meaningless or redundant law. It therefore stands to reason that, if not for the passage of § 4:227, the tax exclusion in § 4:168 would not have extended to OTB parlors. In construing legislative enactments, we must assume that the Legislature intended every word, phrase, and clause to have some meaning and that none was inserted by accident ... Consequently, we will construe every provision of a statute in such a manner so as to give it some effect. Elevating Boats, Inc. v. St. Bernard Parish, 2000-3518 (La.9/5/01), 795 So.2d 1153, 1166. As noted in Boyd Racing, the Louisiana Pari-Mutuel Live Racing Facility Economic Redevelopment and Gaming Control Act of 1997 contains a comprehensive list of regulations and fees regarding the racetrack's operation of slot machine parlors. The Legislature could have expressly extended the racetrack's tax exclusion to the slot machine parlor, but did not. We must assume this omission was intentional, and it is not the function of this Court to extend preferential tax treatment in the absence of a specific mandate from the Legislature. A review of the legislative history reflects that the originally proposed version of the Louisiana Pari-Mutuel Live Racing Facility Economic Redevelopment and Gaming Control Act of 1997 contained a specific tax exemption for slot machines: § 371. Preemption of local laws and taxes Slot machines, the operation of which are licensed pursuant to this Chapter, are exempt from taxes, fees, and licensing restrictions imposed by any governmental entity. Senate Bill 1295, Regular Session 1997, Original Version. This proposed section was removed entirely prior to the bill's enactment. The Legislature considered exempting purchases of slot machines from sales and use taxation, but decided not to. This is strong evidence of a clear legislative intent that the slot gaming facilities would be subject to tax. Harrah's argues Sections 168 and 227 apply to all sales taxes, and thus to all purchases of a Title 4 Licensee. (Emphasis in original). We find this contention is simply untenable. Taken to its logical end, it would permit Harrah's to operate any kind of a businessa grocery, a fashion boutique, a home improvement supply storeand avoid sales and use taxes on purchases made for each of those businesses. It is the clearly expressed intent of the legislature to encourage the business of horse racing and the breeding and ownership of race horses in the State. La.Rev.Stat. § 4:141(A)(1)-(2). We find the Legislature did not intend to give Harrah's carte blanche to avoid sales and use taxes on anything it buys for any purpose. The exclusion only applies to purchases related to the racetrack or to the OTB parlors. This principle is amply demonstrated in Traigle v. Fairgrounds Corp., 288 So.2d 409 (La.App. 4 Cir.1974). In Traigle, the Fairgrounds refused to collect sales taxes from patrons for purchases of items such as food, programs, and parking. Id. at 410. The Fourth Circuit held, although § 4:168 shielded the Fairgrounds from paying sales taxes on items it bought for its own use, it did cover those items which were sold on a retail basis to the patrons of the race track. Id. at 410. Although Traigle is not directly on point with the instant case, it affirms the basic proposition that there is no wholesale exclusion of all sales taxes simply because one of the parties to the transaction happens to be a racetrack. In the alternative, Harrah's argues its racing and slot gaming operations are inextricably intertwined because they are owned by one corporation in one facility, and there is significant regulatory overlap between the two operations. This argument, while more plausible than Harrah's previous claim, still must fail. Horse races and slot machines have very little in common other than they are both forms of gaming. Although there is some regulatory overlap, it is not so substantial as to make the two operations inextricably intertwined. It is abundantly clear one can operate a racetrack without a slot facility, or a slot facility without an attached racetrack. Slots are permitted not only at horse tracks but at riverboat casinos and a land-based casino (operated by one of Harrah's sister companies), and it is well settled that the casinos' purchases of slot machines are subject to sales tax. Showboat Star Partnership v. Slaughter, 2000-1227 (La.4/3/01), 789 So.2d 554. Harrah's points to no compelling reason why slot machines it buys to install at a racetrack are excluded from sales tax, while the slot machines it buys at a casino are not. If Harrah's believes this should be the law, its requests must be directed at the Legislature, not at this Court. What of the purchases made for the Bossier facility's common areas, such as the parking lot and the restaurant, which may be used by either racetrack patrons or by slot patrons? The record on this issue is scanty, and insufficient for resolution on summary judgment. On remand the trial court will be required to make factual findings regarding the proper apportionment of those expenditures. Any portion of the common area expenditures more closely related to the track will not be taxable; any portion more closely related to the slot machine area will be taxable.