E-gaming company file suit against Finance

The owners of Saipan Vegas Resort and Club 88 have filed a lawsuit in Superior Court against the Department of Finance in an attempt to prevent the department from collecting the recently enacted local license fees that applies to all gaming devices on Saipan.

Mariana Entertainment, LLC and MP Holdings, LLC, the owners of Club 88 and Saipan Vegas Resort, have asked the court for a temporary restraining order and a preliminary permanent injunction that would prevent the department from assessing and collecting the local license fee outlined in Saipan Local Law 22-6.

The local license fee essentially doubles the license fees on electronic gaming devices and was signed into law last Aug. 2.

The plaintiffs, through counsel Michael Dotts, told the court that if a preliminary injunction, or stay, on the enactment of Saipan Local Law 22-6 is not granted, 70 of its employees will lose their jobs and the entire electronic gaming industry on Saipan will disappear.

“Plaintiffs are likely to suffer irreparable harm in the absence of preliminary relief because if defendants assess the new license fee based on Saipan Local Law 22-6, plaintiffs will have to close their business permanently as soon as possible and forfeit their investments in the hotels and golf courses to avoid a larger loss,” he said.

The plaintiffs also want the court to declare Saipan Local Law 22-6 void, unconstitutional, and invalid.

Dotts argued that the passage of the bill was invalid for a number of reasons and warrants the bill being declared null and void.

One of the reasons the law was invalid, Dotts said, is because the law was proposed by Rep. Ralph Yumul (R-Saipan), who has a conflict of interest in the matter.

“Ralph Yumul, the brother of the CEO of Imperial Pacific International (CNMI) LLC, plaintiffs’ direct competitor, who has a conflict of interest in this matter, also voted for its passage. For this reason, passage of the bill was invalid,” he said.

Also, the plaintiffs claim that the newly imposed license fee is unreasonably high and will destroy their business.

“Although the local delegation may impose taxes on the revenue produced by electronic gaming devices, the tax, if it is a gross revenue tax, is limited to 1% of the gross income. The bill imposes a cost of 15% of the gross revenue. For this reason, passage of the bill was invalid,” said Dotts.

In addition, the plaintiffs believe that the Saipan local delegation did not give the Saipan Mayor’s Office 30 days to review the bill before it was enacted by the legislative delegation, as required by law, which also warrants the bill be found invalid.