IMPERIAL Pacific International (IPI) decided to sue the Commonwealth Casino Commission (CCC) at Northern Mariana Islands, and the civil complaint was filed in federal court. The reason behind this lies in the casino license agreement (CLA) that the Commission allegedly violated. According to IPI, the unconstitutional impairment of the contract and breach of various clauses occurred.

The issue with regulatory fees:

IPI’s attorneys in the case are Stephen Nutting and Michael Chen, and they want the jury trial to be held. Also, one of the requirements is that the District Court for the NMI isn’t subjected to the regulatory fees because the terms were released before the annual regulatory fee statute, along with declaring the regulatory fee unconstitutional.

But that’s not all – IPI wants the defendant to pay back all regulatory fees that IPI already paid. All other administrative decisions related to the fees should be canceled and repaid, including fees and penalties that IPI had to pay because they didn’t pay the regulatory fees. This includes the suspension of its license as well.

Allegedly, two interested parties had a contractual agreement that gave IPI the rights to work in the CNMI casino in exchange for paying the fees, and it was deprived of these rights.

In the lawsuit, it is written: “The Regulatory Fee Statute imposed additional fees for doing business in CNMI, which constitutes a substantial and unconstitutional impairment of the CLA. IPI was and is still required by CCC to pay the $3 million annual regulatory fee as a prerequisite to exercising its existing contractual and property rights set forth explicitly in the CLA, rights for which it already has compensated the Commonwealth.”

History of the fees:

According to IPI, the fees are unreasonable because of several reasons, including finding a way around already-established terms of CLA to gain a financial advantage. Also, the annual regulatory fees are too high, according to the company, and they actually exceed the real costs of the casino operation.

The casino agreement between IPI, a former CNMI governor, and the Commonwealth Lottery Commission was signed on August 12, 2014, and back then, the annual fee of $15 million was issued. Between 2014 and 2019, the company paid all fees as required.

However, in December 2015, another casino regulatory fee of $3 million was issued, and IPI will be paying it until 2019.

IPI was allowed to use a nonrefundable credit, which allowed it to pay the required amount as a credit against taxes that were established on earned revenue, but the idea of the credit was dismissed rapidly. After that, the company wasn’t able to pay the regulatory fee from October 2020. 

CCC requested that the debt of $17.625 million be paid in order to get back the IPI’s license and allow it to resume operating in the CNMI, which resulted in the lawsuit.