Greenetrack Alabama Court Ruling Intensifies Electronic Bingo Debate

Greenetrack Alabama Court Ruling Intensifies Electronic Bingo Debate

Alabama gambling law could be its own course at any number of law schools across the United States. While the state is void of most forms of legal online gambling, electronic bingo is a popular way to play in some parts of the state. That’s been the heart of the issue in a recent Greenetrack Alabama court ruling.

The state’s highest court has ruled that the charity component of Greenetrack’s electronic bingo operations does not exempt the business from tax obligations. The ruling could have impacts beyond the back-taxes bill for Greenetrack, though.

Greenetrack Alabama court ruling means $76 million back-taxes bill

Over 10 years after the state originally sued Greenetrack for what it argued constituted illegal gambling and tax evasion, there are no more appeals possible. The Alabama Supreme Court has officially weighed in.

According to Alabama Atty. Gen. Steve Marshall, the judgment against Greenetrack comes to $76 million. The state came up with that number through an assessment of Greenetrack’s bingo operations, with fines and interests.

Marshall called Greenetrack’s bingo games an,

“Illegal gambling enterprise [running] under a scheme that employed a revolving slate of nonprofit organizations.”

Marshall claims that in 2007, Greenetrack distributed just 2.5% of the total take to its charity partners while keeping the balance of almost $69 million.

The Supreme Court’s ruling stated that Greenetrack’s contracts with nonprofits “did not immunize it from taxes.” Greenetrack operated its bingo games under a series of laws that might now be read in a different light.

How did Greenetrack get to this point?

Gambling laws, like many other aspects of life in Alabama, are local. Alabama has a unique legislative system in which county-specific laws must pass through the state’s legislature. Thus, there are several amendments in the state’s constitution that contain language unique to certain counties regarding charity bingo.

Among those counties is Greene County, where Greenetrack has operated. The law allows nonprofits with charitable arms to offer bingo games as a way to raise funds. That’s where Greenetrack came in.

According to Jason Morton of the Tuscaloosa News, Greenetrack argued it was not liable for sales taxes because it merely provided the facilities for its nonprofit partners to actually operate the games. Greenetrack also pointed to charitable contributions it has made over the years.

That’s now a failed argument regardless of its merits. Whether this $76 million tax bill will mean the facility’s closure is uncertain. What’s more clear is that the state is serious about enforcing its interpretation of the numerous laws governing bingo.

What does this mean for other Alabama bingo halls?

The impact of this ruling depends on where other bingo halls call home within the state. In other counties, all bingo games are illegal, even with a charitable component.

For other facilities within Greene County, this ruling should come as a sobering development. Greenetrack might have had some advance notice that its interpretation of the law might not hold up in court, though.

In 2017, the Alabama Supreme Court ruled that the state’s seizure of some of Greenetrack’s bingo machines was legal. To support that action, the state argued that the machines did not fit within the parameters of the governing statute. Essentially, the machines were too much like slot machines.

It can be difficult for bingo halls to translate the language of the localized statutes into useful vernacular, though. They may find themselves asking what exactly constitutes a legal machine? With this recent ruling, they might also ponder exactly how much revenue from bingo games they can keep without incurring the state’s wrath.

The answers to those kinds of questions have changed over time, though. To some degree, it also depends on who you ask. For example, former Alabama Gov. Bob Riley and former state AG Troy King once had a public spat over electronic bingo laws.

In 2016, both the AG and governor in office at that time insisted that electronic bingo games were illegal statewide. The letter stating those opinions came out after the state had seized machines at a facility in Macon County. The laws governing bingo in that county are similar to the same in Greene County.

That probably leaves bingo halls in Alabama keeping in frequent contact with attorneys on retainer. The legislature in Montgomery hasn’t been idle on the issue, though. There has been an attempt to bring clarity.

Alabama gambling measures recently considered

One solution might be to enact a statewide standard that explicitly addresses the legality of electronic bingo and other forms of gambling. The most recent legislative session featured an attempt to do just that.

A pair of bills out of the Alabama Senate would have authorized tribal casinos, a state lottery, introduced legal sports betting, and created room for up to seven commercial casinos with a new commission to oversee all of it.

Several existing bingo hall operators criticized the bill because it specified exact sites for those seven casino licenses. Ironically enough, one of those sites was Greenetrack. Other bingo hall operators argued the legislature was “picking winners and losers” in a move that would make their operations explicitly illegal.

The bills ultimately died on the Alabama Senate floor. However, their proponents committed to at least thinking about making similar proposals in the next session. If they do, more language about electronic bingo could be part of the package.

Author: Tyler Gutierrez