Gaming tax petition draws second lawsuit

CARSON CITY -- A second lawsuit challenging the legality of the Nevada State Education Association's petition to increase the gaming tax rate has been filed here in District Court.

Las Vegas Sands seeks to have the petition thrown out on the grounds it violates a law that requires petitions to be limited to one subject. The Sands is the parent company of The Venetian and the soon-to-open Palazzo.

Under the petition, the gaming tax rate, now 6.75 percent, would be increased to 9.75 percent in 2011. The increase would apply to casinos that earn more than $1 million a month in gaming revenue.

Earlier this week, the Nevada Resort Association, or NRA, filed a similar lawsuit against the petition. That lawsuit has been assigned to District Judge James Todd Russell. A hearing date has not yet been set.

Scott Scherer, a lawyer for Las Vegas Sands, said Thursday that the judge could decide to consolidate the two lawsuits.

"Las Vegas Sands is not a member of the NRA and is trying to protect its own interests," Scherer said. "We expect our interests will be allied with their interests on this issue."

In its lawsuit, the NRA also sought to have the teachers union petition thrown out because it violates the one-subject rule.

Clark County lawyer Kermitt Waters, who filed two petitions Wednesday that would triple the 6.75 percent gaming tax rate, said Thursday that he expects his petitions also will be challenged by the gaming industry on the one-subject rule.

Last year, the Nevada Supreme Court removed several paragraphs in Waters' petition restricting governments' ability to take private land through eminent domain proceedings because it violated the one-subject law.

Waters said one-subject laws violate the First Amendment of the U.S. Constitution.

He said the issue ultimately should be decided by a federal judge in federal court.

In the latest lawsuit, Las Vegas Sands said the teachers union not only seeks to increase the gaming tax but describes how school districts will spend the additional revenue.

Those sections violate the one-subject law because they are "not functionally related or germane to the initiative's subject of increasing gaming license fees," the lawsuit says.

The lawsuit also notes the petition sets up minimum spending requirements that the Legislature must meet in funding public education.

In addition, lawyers for the Las Vegas Sands argue that the 200-word summary of the petition is misleading and does not inform people of all the financial consequences if they sign the petition.

The petition seeks to amend the state constitution. If the teachers union collects 58,836 signatures by May 20, it would appear as a question on the November 2008 election ballot.

Voters would have to approve it then and again in 2010 before the higher gaming tax would be assessed.