County leaves trial up to the judge

NEW CUMBERLAND – Hancock County’s lawsuit against Mountaineer Casino, Racetrack & Resort over the state’s hotel occupancy tax may go to trial as soon as this fall, an attorney said.

Then again, it may not.

The timing of the trial – if the case even goes to trial – has a lot to do with whether it is a bench trial or jury trial, said Weirton attorney Daniel J. Guida, who is representing Hancock County.

“Our position is just let the judge decide. We don’t need a jury trial,” Guida said. “If Mountaineer insists on a jury trial, it’s not going to be until next year.”

Charleston attorney Alexander Macia, part of the legal team for Mountaineer, could not be reached for comment.

Guida recently amended Hancock County’s lawsuit in light of “additional facts” that have been learned in the discovery process. “The complaint does not contain sufficient allegations to permit plaintiff to have his cause fully and fairly presented …,” the motion to amend the complaint states.

The new information has to do with the rewards system whereby Mountaineer gives complimentary hotel rooms to loyal customers, Guida said.

Hancock County is suing Mountaineer over the casino’s practice of not collecting the state’s 6 percent hotel occupancy tax on complimentary rooms – rooms occupied for free by patrons who have earned enough rewards.

Then-Sheriff Mike White filed suit in September 2012 on behalf of Hancock County commissioners after months of discussion about the hotel occupancy tax. Current Sheriff Ralph Fletcher is now listed as the plaintiff.

Commissioners contend that Mountaineer’s practice of not collecting the tax on “comped” rooms has cost the county more than $500,000 in lost tax revenue since March 2009. The county’s lawsuit asks for a declaratory judgment in the amount of $600,000 and any other compensatory damages permitted by law.

The amended complaint states that Mountaineer “comps” about 7,000 hotel rooms a month – a number that would generate an estimated $200,000 in tax revenue for the county annually.

Revenues from the hotel occupancy tax are split evenly between county commissioners, who use it for parks and recreation purposes, and the Top of West Virginia Convention and Visitors Bureau.

Mountaineer General Manager Chris Kern has previously said that it’s not reasonable to charge a tax for free services. Like many casinos, Mountaineer offers free hotel rooms as an incentive to regular patrons. The casino’s “IN Club” loyalty program allows patrons to accrue points based on past gaming that entitle them to, among other things, complimentary rooms.

But the county’s lawsuit reasons that even though a room is complimentary, it is not free because the gaming patron has earned the room through some sort of reward system.

The county’s original complaint focused on the “IN Club” point system whereby patrons accumulate points and then redeem them for rooms. However, “discovery disclosed that that’s just a small number of hotel rooms,” Guida said.

The amended complaint shifts the focus away from the redemption of points and toward Mountaineer’s use of a voucher system for the awarding of complimentary rooms.

“It’s just a tweaking of the complaint. All the issues are still in play, so nothing really changes,” Guida said.

The amended complaint explains the voucher system this way:

* In order to qualify for complimentary rooms, players must get their play “rated” by being in the “IN Club.”

* When players join the “IN Club,” they provide personal information and are issued a credit-card-sized plastic card that is encoded with a magnetic strip on the back. The card keeps track of the amount and duration of play.

* Mountaineer assigns a dollar value to “IN Club” players in order to determine the nature and extent of the “comps” it is going to offer. Such value is based on the calculation of a player’s theoretical loss, or “theo.”

The “theo” is a formula consisting of the house advantage, the average bet, time played, pace and the number of decisions made per hour. “Essentially, (it) is the amount of money a player is expected to lose,” the amended complaint said.

* Mountaineer then provides vouchers for “comped” rooms via a direct mail database solely to “IN Club” members, provided they reach a certain “theo” benchmark – i.e. the member gambles sufficiently enough to deserve or earn a “comped” hotel room.

“The ‘comped’ hotel rooms are not ‘free,’ and a customer indirectly pays for the same via consideration given during gambling activities,” the amended complaint states. “All the incentives … Mountaineer … showers upon players are to keep them on the gaming floor, to motivate them to return and to generate patronage of and excitement within the casino.”

Mountaineer spokeswoman Lesley Campbell could not be reached for comment, but previously has said, “We will allow our pleadings and exhibits to serve as our response at this time.”