MARIANA Entertainment LLC, operator of Club 88, and MP Holdings LLC, operator of Saipan Vegas, on Monday filed in Superior Court a complaint against the CNMI government for the enactment of Saipan Local Law 22-6, which doubles the e-gaming license fee.
Signed by Gov. Ralph DLG Torres on Aug. 2, 2021, the local measure imposes an additional fee of $2,500 or 15%, whichever is greater, on all electronic gaming devices on Saipan, including poker amusement machines located within e-gaming facilities or hotels.
The Saipan and Northern Islands Legislative Delegation passed the measure without conducting a public hearing or issuing a committee report.
Gus Noble, the consultant of Saipan Vegas and Club 88, said the local law will shut down both businesses and put their employees out of work amid the Covid-19 pandemic.
“We have no CWs,” he told Variety, adding that all their employees are locals or U.S. workers.
In their complaint for declaratory judgment and injunctive relief, the gaming firms, through attorney Michael W. Dotts, state that “a declaratory judgment is necessary to determine the rights and obligations of the parties as to whether the license fee can be lawfully assessed. This is necessary and proper at this time so that Plaintiffs can confirm their rights and obligations as a license holder. It is also necessary so that Plaintiffs can establish as a matter of law that Defendant has no right to collect the license fee.”
According to the complaint, “The law was proposed by [Rep.] Ralph Yumul, the brother of the CEO of IPI, Plaintiffs’ direct competitor, who has a conflict of interest in this matter, and he also voted for its passage. For this reason, passage of the Bill was invalid.”
The complaint also noted that the Saipan and Northern Islands Legislative Delegation “did not give the Saipan Mayor 30 days to review the bill before [it was] enacted by the legislative delegation as required under 1 CMC §1405.”
Moreover, the delegation “has no authority to impose a license fee on electronic gaming machines,” the complaint stated.
Imposing license fees on poker machines, the complaint added, “is authorized [by] (1 CMC §1403(c)(5)), but there is no authorization for imposing license fees on gambling amusement machines.”
Also, the complaint said the newly imposed license fee “is unreasonably high and will destroy Plaintiffs’ business. Although the Local Delegation may impose taxes on the revenue produced by electronic gaming [devices] (1 CMC 1403(c)(4)), the tax, if it is a gross revenue tax, is limited to 1% of the gross income (1 CMC §1402(c)(1)). The Bill imposes a cost of 15% of the gross revenue.”
According to the complaint, “Plaintiffs are entitled to a declaration from this Court that Saipan Local Law 22-6 is void, unconstitutional, and invalid, and Defendant shall not assess or collect the license fee provided for under Saipan Local Law 22-6.”
