Commission denies tax refund for show

By Liz Benston (contact)

Wednesday, April 23, 2003 | 11:05 a.m.

The Nevada Gaming Commission has rejected a request for a tax refund by the producers of the "Tony 'n' Tina's Wedding" show at The Rio resort, surprising organizers who believed the show was exempt from casino entertainment taxes.

A 10 percent admissions tax is levied on casino shows in Nevada that meet certain criteria. The law authorizing the tax was overhauled in 1995 to include an exemption for "interactive entertainment."

At the time, casino attorneys argued that shows such as the Las Vegas Hilton's "Star Trek: The Experience" ride and show should be exempt from the tax because they involve audience members to a degree not seen in typical casino productions.

Introduced in January 1998, Star Trek: The Experience invites the audience to walk through a "spaceship," ushers them on a ride in a "shuttlecraft" and allows them to interact with actors playing both humans and alien creatures of the future.

It is one of few casino entertainment venues that is exempt from casino entertainment taxes that raise more than $60 million each year.

Raphael Berko, who runs A Large Cat Productions in Las Vegas and produces "Tony 'n' Tina's Wedding," says his show also qualifies as interactive entertainment.

Commissioners disagreed last week, voting down a request for a $15,000 refund of casino entertainment taxes paid by the show since it opened at The Rio in January 2002.

"We were very shocked and disappointed," Berko said. "Our show is called the 'mother of all interactive shows.' "

"Tony 'n' Tina's Wedding" involves a cast of 30 actors who simulate a chaotic wedding reception. The audience eats, talks to and dances with dysfunctional "family members" who stay in character throughout the event.

"We want to pay what we're supposed to pay," Berko said. "But we really felt that (the exemption) was almost written for us."

Berko said he applied for the refund after prompting by Rio attorneys familiar with the tax.

Four commissioners voted down the refund, with Commissioner Augie Gurrola dissenting.

The law doesn't include a definition of "interactive entertainment," leaving that interpretation up to regulators, said Gaming Control Board Chairman Dennis Neilander, who advised the commission in their decision Thursday.

"We had a good-faith disagreement with The Rio with respect to what that phrase means," Neilander said.

Lawmakers intended the exemption to apply to "certain new types of entertainment that hadn't heretofore been offered," he said.

The Las Vegas Hilton's "Star Trek: The Experience" became a focal point of discussion because it was a new kind of entertainment that used virtual reality and technology to involve the audience.

By contrast, he said, "we viewed the Rio show as a variation of a traditional dinner show."

When legislators passed the new tax rules, they had in mind mechanical types of entertainment because the Star Trek show was the first to be officially exempted under the law, said Bob Yeager, The Rio's director of finance and an adviser to the show's producers.

During the Star Trek show, customers are interacting with mechanical devices such as rides, for example, Yeager said.

The Rio rents its Calypso Room to the show and provides certain other services, such as the food and beverage service. But it doesn't obtain an up-front cut of the revenue and isn't otherwise involved in the production.

Shows end up passing along the cost of the tax to consumers, who pay more in ticket prices, Berko said.

"We thought we had this in the bag and were ready to reduce our prices," he said. "The consumer is the loser here."

The showroom, which seats 275 people, sells out nearly every week for the show, Rio representatives say.

Show tickets cost about $84 with tax.

Several shows had requested refunds before the law was clarified in 1995, Neilander said. Since then, few have disputed the matter.

The casino entertainment tax, based on a federal Cabaret Tax that was later repealed in 1965, applies to entertainment offered in showrooms of casinos that offer more than 50 slot machines.

The tax raised $64.8 million for the past fiscal year through June 30, 2002, and is expected to raise $68.7 million for the year ending June 30, 2003, according to the Legislative Counsel Bureau.