Saipan slot clubs sue government over sudden doubling of taxes, hint IPI influence

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The operators of two slot machine clubs in Saipan have filed a complaint against the government of the Commonwealth of the Northern Mariana Islands after it enacted a law that effectively doubles the license fee of electronic gaming operators.

According to a report by Marianas Variety, the Saipan and Northern Islands Legislative Delegation passed the measure last week without conducting a public hearing or issuing a committee report. The new law imposes an additional fee comprising the greater of US$2,500 per machine or 15% of net gaming revenue per machine on top of current taxes. Taxes already in place include a US$100,000 license fee per venue plus 5% Business Gross Revenue and Tax.

On Monday, MARIANA Entertainment LLC, which operates Club 88, and MP Holdings LLC, operator of Saipan Vegas, filed a complaint with the Superior Court claiming not only that the government was unlawful in raising the tax but that there was a conflict of interest related to troubled casino operator Imperial Pacific International (IPI), which last year claimed it should have exclusive rights to all gaming operations on Saipan.

Mondays complaint states, The law was proposed by [Rep.] Ralph Yumul, the brother of the CEO of IPI, Plaintiffs direct competitor, who has a conflict of interest in this matter, and he also voted for its passage. For this reason, passage of the Bill was invalid.

IPIs license is currently suspended for failure to comply with requirements under its license agreement, including payment of its annual US$15.5 million license fee last August and annual US$3.1 million regulatory fee.

Gus Noble, consultant to MARIANA Entertainment LLC, told Marianas Variety that efforts by the government to increase revenue by dramatically raising taxes may have the opposite effect, causing the e-gaming industry in the CNMI to shut down entirely.

If this happens, despite the imposition of a new tax, the citizens of the CNMI will receive zero revenue from e-gaming, he said.