The Nevada Gaming Commission Thursday balked at paying $250,000 in interest after Dotty’s, a slot machine parlor, overpaid the state $46 million in gaming taxes over a nearly three-year period.

Commission members said they had no problem repaying the $46 million owed to Dotty’s, but questioned why they had to pay interest, currently calculated at 4 ¼%. The mistake, they contend, was on Nevada Restaurant Services doing business as Dotty’s for overpayment in the first place. The interest recalculated every six months was to be paid at the Prime Rate plus 2%.

Dotty’s overpayments went from August 2021 through March 2024. Payment of the principal and interest was put before the Commission at the direction of the Nevada Gaming Control Board.

“Why are we paying interest?” asked Commissioner Brian Krolicki. “This is a Dotty’s – Nevada Restaurant Services issue. If I overpay the IRS, I don’t get interest back. If I don’t pay the IRS, I pay interest. You fixed it and we want to be fair. We’re tax-collector regulators, but we don’t want to do something outside the normal bounds. I totally get the refund. It irritates me that it’s taken staff time and the burden should be on you, not us.”

Dotty’s general counsel Kannon Smith said the operator didn’t request the refund, but it was calculated at the direction of Gaming Control Board staff.

Senior Deputy Attorney General John Michela said state statute dictates the payment of interest, even when an operator is at fault.

“This should not be a statute,” Krolicki said. “This should be on (the operator).”

Other commissioners echoed similar sentiments in a hearing that lasted about 50 minutes. They were willing to back the payment, at first thinking they had no recourse, despite being perturbed by paying interest for someone’s mistake.

“Your financial burden on the state is the best investment ever at the percentage of interest rate,” said Commission Chair Jennifer Togliatti. “It’s Nevada law, but it’s hitting me the way it is everybody else.”

After continued debate, the Commission directed the matter be referred back to staff for discussion of a settlement, saying it’s unfair that taxpayers be saddled with interest payments. Not only that, but Commission members lamented how a large amount of tax, audit, and license division staff time was devoted to the issue.

Smith said he couldn’t make any concessions on the interest payment without talking with his client, but was open to such discussions, noting they don’t want an adversarial relationship with the regulators.

Togliatti asked Smith how the overpayment happened and to such a large degree.

Smith said state regulations exclude what’s not considered gross gaming revenue, including cash promotions. If $5 is given to the player and won back by the operator, it’s supposed to be excluded from taxation.

Smith said their casino management system wasn’t state approved and couldn’t tell what overpayments had been made. After it was approved, they went back through with state officials to find the overpayment amount. The system has been making correct calculations since April.

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