Gold Coast Hotel & Casino V. United States - Arguments

Arguments

Gold Coast argues that its deductions were proper because, using the all-events test, the last event that determined its liability occurred when the minimum number of slot club points needed to earn a prize is accumulated by a member, because under law the customer’s right to the points became fixed. Gold Coast analogized their case to a Supreme Court decision in which the Court held that a casino could deduct the guaranteed payment accrued by progressive slot machines, even though the jackpot had not been won by the end of the tax year.

The Commissioner argued that, with respect to the slot club points, liability of the casino did not arise until members actually redeemed their points for prizes. Therefore, the casino should not be allowed to deduct as expenses those points which have not been redeemed. The Commissioner stressed that not all slot club members will choose to redeem their points, therefore Gold Coast's liability is not fixed until the points are actually redeemed. The commissioner relied on a previous Supreme Court decision that held that an employer that self-insured its employees’ medical plan could not deduct the amount of money placed in a reserve account until reimbursement claims were actually filed.