AGO 2012-1.

• Case Date: March 07, 2012
• Court: Indiana

Indiana Attorney General Opinions 2012. AGO 2012-1. March 7, 2012OFFICIAL OPINION 2012-1Honorable Luke Kenley State House200 West Washington Street Indianapolis, Indiana 46204RE: Taxation of Set Aside Amounts under Slot Machine Wagering Tax LawDear Senator Kenley, By letter of February 1, 2012, you posed a question with respect to the "Racino Law," which was passed by the General Assembly in 2007 and authorizes additional gambling in the form of electronic gaming devices, including slot machines, at horse race tracks (also known as "racinos"). The Racino Law requires racinos to set aside an amount equal to 15% of each prior month's adjusted gross receipts received from slot machine wagering (hereinafter "set aside" or "set aside amounts"). Ind. Code § 4-35-7-12. The set aside amounts are deposited into funds managed by the Indiana Horse Racing Commission. Id. Indiana's slot machine wagering tax, Ind. Code § 4-35-8-1, imposes a graduated tax on the adjusted gross receipts a racino receives from slot machine wagering. Your question is:

Whether set aside amounts under Ind. Code § 4-35-7-12 are subject to the graduated wagering tax (i.e., the slot machine wagering tax) under Ind. Code § 4-35-8-1?

BRIEF ANSWER The plain language of the Racino Law and relevant evidence of legislative intent make it clear that the General Assembly intended that set aside amounts under Ind. Code § 4-35-7-12 shall be subject to the slot machine wagering tax under Ind. Code § 4-35-8-1. LEGAL ANALYSIS Gambling in Indiana is a heavily regulated industry that exists only as a matter of legislative grace. Prior to 1988, Indiana's Constitution prohibited gambling, specifically lotteries. Ind. Const. Ait. XV, § 8 (repealed Nov. 8, 1988). However, the constitutional ban had been broadly interpreted by Indiana courts to cover other forms of gambling as well, such as pari-mutuel betting at horse races. See, e.g., State v. Nixon, 384 N.E.2d 152, 161 (Ind. 1979). In 1988, Indiana voters repealed the State's constitutional ban on lotteries. After the repeal, the General Assembly legalized pari-mutuel betting on live horse races. Pub. L. 34I-1989(ss), § 2 (codified as amended at Ind. Code § 4-31-1-1 et seq.). In 1992, the legislation was amended to authorize off-track betting facilities. Pub. L. 24-1992, § 18 (codified as amended at Ind. Code § 4-31-5.5-1 et seq). In 2007, slot machines were authorized at the State's only two horse race tracks. Pub. L. 233-2007, § 21 (codified as amended at Ind. Code § 4-35-1-1 et seq). See...