NEW CUMBERLAND - Hancock County Sheriff Mike White has filed suit against Mountaineer Casino, Racetrack and Resort for alleged failure to collect hotel occupancy tax on complimentary rooms it provides as perks to frequent patrons.
The complaint, filed in Hancock County Circuit Court, states the resort improperly refused to collect the tax, which equals 6 percent of a lodging facility's average daily rate, on "comped rooms" beginning in March 2009. It seeks $600,000 in damages for lost tax income plus attorney's fees and "any other compensatory damages permitted by law."
According to West Virginia law, consumers owe hotel occupancy tax for "consideration" paid, defined as "the amount received in money, credits property or other consideration in exchange for the right to occupy a hotel room." The law also states the tax must be imposed on the consumer and the hotel is not permitted "to represent to the public in any manner, directly or indirectly, that it will absorb all or any part" of the tax.
Mountaineer's general manager, Chris Kern, previously has said charging the tax on comped rooms amounts to taxing a free service and the casino is in compliance with all tax requirements.
However, the county's suit argues that gamblers who receive free rooms are indeed providing consideration, because they earn those perks through a rewards club in which "comps" are awarded based on their level of play and the amount of money the casino expects them to lose.
"Casinos want to keep their best customers coming back. Players who have shown that they will give the casino a shot at their money are given complimentary items to encourage players to gamble and spend more money. ... The amount of 'comps' that a player is given usually depends on what games they play, how much they bet, and how long they play," the lawsuit states.
Accompanying the lawsuit is a request for detailed information on Mountaineer's player rewards clubs and complimentary services it provided to patrons from 2008-12, as well as the methods the casino uses to determine how players accumulate "comps."
Mountaineer offers a total of 357 hotel rooms at two lodging facilities, The Grande Hotel and The Lodge. The county estimates that Mountaineer provides 4,000 free rooms per month, which would have yielded $175,000 to $200,000 in annual revenue had the occupancy tax been collected on those rooms, and a total of about $600,000 since March 2009, when county officials say the casino stopped collecting the tax on comped rooms.
Revenues from Hancock County's hotel occupancy tax are split between the county commission and the Top of West Virginia Convention and Visitors Bureau.
The lawsuit has been assigned to Circuit Judge Ronald Wilson.