The MGM Grand Detroit has filed two cases within the Michigan Court of Claims in order to earn the right to avoid paying taxes on uncollectible gambling debt. Casinos often loan funds to gamblers which the players then use to gamble. The funds are to be paid back, yet in many cases, the money is not collected. The MGM Grand Detroit is using the cases to hopefully not have to pay taxes on the debt that is not collected.
Last week, the casino filed two cases seeking a refund for taxes paid on gambling debt that was not repaid. MGM wants to see the Department of Treasury refund around $41,000 in the first case and over $14,000 in the second. The casino was charged taxes on the unpaid portion of the debt owed by the gamblers in each case.
In each instance, the casino provided credit to a player, which is known as a marker. In the two cases filed, one player was given as much as $3 million in credit while the second was provided just a little less, at around $2 million.
The player who was provided with $3 million in credit was given $1.89 million to play with and lost just over $677,000. An agreement with the casino was signed and a 10% discount was provided on the loss from the repayment plan required of the player.
The second case with the $2 million in credit, saw the player take out the full amount. Of the $2 million, $1.945 million was lost. The casino also gave this player a 10% discount on the loss in the repayment agreement.
MGM Grand Detroit is claiming in the court filings that the discounts are non-collectible gambling debt and they want to be repaid the taxes paid on those amounts. The casino has argued that the Gaming Control and Revenue Act of the state allows a gaming venue to deduct the non-collectible losses from their gross receipts.
Earlier in the year, the state told the Detroit casino that the refunds would not be provided. This decision was made because the casino did not take any steps to collect the full amount owed. The casino was also unable to meet their own requirements for a write-off involving the losses.
According to the state, the MGM was not eligible for a tax credit on the discounted amounts.