Over the dissent of one justice, the U.S. Supreme Court on Monday declined to review a case about whether a non-American Indian gambling equipment provider must pay state and local property taxes, including school taxes, for machines on an Indian reservation.
The Oklahoma Supreme Court had ruled that state and local property taxes on gambling equipment provided to casinos on tribal lands were pre-empted by a federal statute, the Indian Gaming Regulatory Act.
The U.S. Supreme Court declined to hear a local taxing agency’s appeal of that decision in Rogers County Board of Tax Roll Corrections v. Video Gaming Technologies Inc. (Case No. 19-1298).
Justice Clarence Thomas wrote a short dissent that said, “By enjoining a tax on ownership of property, the Oklahoma Supreme Court has disrupted funding for schools, health departments, and law enforcement.”
Thomas highlighted the court’s 5-4 decision last term in McGirt v. Oklahoma, which held that a large area area around Tulsa remains a federal reservation of the Muscogee Nation. The logic of the court’s ruling could extend to four other tribes in the state, making much of eastern Oklahoma an Indian reservation for certain purposes of criminal law, governance, and taxation.
Thomas was in the minority in McGirt, and on Monday, he repeated wording from Chief Justice John G. Roberts Jr.'s dissent that the ruling “profoundly destabilized the governance of eastern Oklahoma” and “create[d] significant uncertainty” about basic government functions like “taxation.”
“The least we could do now is mitigate some of that uncertainty,” Thomas said in Monday’s dissent, by taking up the case over the gambling equipment, which presents a split of federal authority over how such equipment on tribal lands is taxed.
“Although this case concerns only electronic gambling equipment, it injects uncertainty about whether state and local governments can tax the ownership of many other kinds of property located on millions of acres of now-tribal land,” Thomas said. “The sooner localities in Oklahoma receive a clear answer, the sooner they can plan accordingly and avoid serious funding shortfalls.”
In ruling for Video Gaming Technologies, Oklahoma’s highest court last year relied in part on the U.S. Supreme Court’s 1982 decision in Ramah Navajo School Board v. Bureau of Revenue of New Mexico, in which the court said a state tax on the gross receipts of a non-Indian construction company hired to build a school on tribal land was pre-empted by federal law.
The comprehensive federal regulatory scheme for the construction of Indian schools left no room for the additional tax burden sought to be imposed by New Mexico, the justices held in that case.
In the most recent case, the Oklahoma high court said Rogers County “has not shown any nexus between the services it provides through ad valorem taxation and services that [Video Gaming Technologies] receives on-or-off tribal land.”
The Rogers County tax board urged the court to take up the case because “the issues at stake are critically important insofar as local governments in Oklahoma use ad valorem tax monies to fund local government operations, schools, law enforcement, health services and other government services—in the very jurisdictions where these casinos operate.”
But Video Game Technologies, which provides equipment to Cherokee Nation casinos throughout Oklahoma, pointed out in a brief that the amount of disputed tax collection sought by Rogers County was “de minimis.” For example, the county is seeking to collect just over $10,000 for 2011, one of the years at issue.
The county “presented no evidence to substantiate [its] frequent assertion that the preempted taxes are ‘critically important’ for local schools, law enforcement, health services, or other government services,” the company’s brief said.