Rev & Tax ordered to revoke licenses
by Mindy Aguon
Guam - The Department of Revenue & Taxation is receiving conflicting advice on whether or not to issue licenses for Liberty, Uncle Sam, Pharaoh and other similar gaming machines. KUAM News' story on Monday night on the agency proceeding with the issuance of licenses for the amusement devices came as news to the Attorney General's Office, which is ready to go back to court to keep the devices out of establishments on Guam.
The new developments could mean it will be up to a judge to decide if the devices are indeed a form of gambling.
Lawsuits over licenses for Liberty and similar gaming machines had been lingering in the judicial system for nearly five years. That is until stipulations for dismissal were signed and filed with the court last week. But apparently there was some confusion over what those dismissals actually meant. This is what Rev & Tax director John Camacho said to KUAM on Monday, noting, "What this means basically is it clears the way for these liberty machines to be licensed."
But Civil Division deputy attorney general Pat Mason disagrees. In 2008 Rev & Tax denied re-issuing the licenses to companies like Guam Music, Inc. for the devices. Then-lieutenant governor Mike Cruz ordered the licenses to be issued and then the court ordered them to revoke the licenses and that's when Guam Music, Inc. intervened in the case asking the court to be allowed to stop Rev & Tax from revoking the licenses. The company also filed another lawsuit asking the court to order Rev & Tax to issue the licenses that they had been issued repeatedly for years.
Mason stated, "Those cases were dismissed and the status quo was in effect no licenses. But we learned recently very recently today that Rev & Tax went ahead and issued licenses without our knowledge or without coming and talking to us."
Attorney General Leonardo Rapadas said, "With the other party agreeing also to dismiss the case the assumption is that we are going to go back to the status quo, which is no issued licenses, and that's it." but apparently Rev & Tax didn't get that memo as they started issuing licenses last week. Rapadas contends the machines are illegal and never should have been licensed in the first place.
Rapadas added, "In a normal case when both sides dismiss a case there's normally an agreement which we did not have or nothing happens and were back to square one."
KUAM News asked if in hindsight should there have been an agreement, to which chief deputy AG Phil Tydingco said, "It might have been better that there had been more open communication between the department and the Governor's Office on this issue. Clearly that wasn't that clear, and the lines of communication because it's our understanding that Revenue & Taxation relied on advice of others."
And that advice is based on regulations that essentially legalize the gaming devices like Liberty, Uncle Sam, and Symbolix. Rev & Tax had received advice from the governor's legal counsel, Sandra Cruz-Miller, who relied on regulations stating that any devices licensed before 2001 can be issued new licenses.
But the AG's Office contends that when regulations and law conflict, the law prevails. Additionally they argue the regulations have no effect as there was never an economic impact statement or any record of a public hearing when it was submitted to the Legislature back in 2003. Mason said, "They're relying on these bogus regulations. These bogus regulations specifically refer to gaming devices so if they're relying on them that means they're relying on something that calls their machines gaming devices."
And with Rev & Tax having already issued some of these licenses, the Attorney General's Office is back at square one where they were five years ago. "It seems like we're kind of deja vu back to 2008 circumstances, since Rev & Tax did issue the licenses again," said Tydingco. "We were not contacted nor informed that Rev & Tax was going to do that. It's kind of odd. At the same time we weren't in direct communication about we just assumed they understood these devices were illegal and didn't consult us."
The AG's Office is now preparing letters to each of the business owners who previously possessed these machines advising them that they are at risk of violating the law should they operate the devices. They have also advised Rev & Tax to revoke the licenses that were issued. Should the agency choose not to comply, the AG's Office says it is ready to file a lawsuit against their client to ensure compliance of the law.
Now, KUAM News also spoke with Guam Music, Inc. attorney Randy Cunliffe, who completely disagrees and says he attended a meeting with Rev & Tax and the Governor's Office last week where the parties agreed that the devices can be licensed and GMI agreed to dismiss its lawsuit against the Government of Guam. Cunliffe says he doesn't believe the machines are illegal and says if necessary, the matter will be taken back to court for a judge to decide if the devices are, in fact, "gambling machines".