The owner of 41 licensed casinos, including several under the Dotty’s and Bourbon Street Sports brands, overpaid its gambling taxes over a 32-month period that began in August 2021.

Now the license holder, Nevada Restaurant Services Inc., is trying to reclaim over $3 million in overpaid taxes.

The Nevada Gaming Commission rejected an agreement to settle the matter on Thursday after a 45-minute hearing, amid disagreement over whether the refund should include interest on the overpayment and, if so, how much it should be.

The Nevada Gaming Control Board and the Attorney General’s Office, which filed the request for reimbursement, declined a Review-Journal request for a copy of the proposed settlement documents, but commissioners discussed the options during the hearing in the Las Vegas City Council chambers.

Under Nevada law, the Gaming Control Board is required to pay interest on refunds at half the prime rate of Nevada’s largest bank plus 2 percent. But commissioners were also told the settlement was negotiable and they did not want to overpay for a refund that they felt should have been recognized sooner by NRSI management.

Since the error was discovered, interest rates have fluctuated.

Because the overpayment was not discovered until August 2021, but the refund request was received months later, the commissioners ordered the control board to reconsider the settlement, which would have required a payment of more than $3.1 million plus more than $222,744 in interest.

“NRSI was made aware of this (in 2021),” Commissioner Brian Krolicki, a former state treasurer, said during the hearing.

“If that’s formulaic, I understand. There’s not much we can do,” he said. “But by definition, the agreement is a negotiated agreement.”

He and his colleagues on the commission said they believed it was important to protect the interests of the state’s residents by renegotiating the agreement because NRSI’s delay led to the proposed higher reimbursement amount.

Commissioners considered reimbursing NRSI for the $3.1 million overpayment and negotiating interest, but Kannon Smith, a lawyer for the company, said he did not have the authority to approve a revised settlement.

“I can’t speak for my clients, so I don’t know what they have to say,” Smith told commissioners. “I don’t think we want to be controversial on this and have a hearing, but it’s not my decision.”

Interest is accruing at a rate of approximately $446 per day, so the final reimbursement amount could continue to rise until the Commission either votes to accept the settlement or holds a hearing on a disputed settlement.

Claims for refunds for overpaid taxes are fairly common, but control board staff said they usually involve much smaller amounts. Settlement requests over $250,000 must be submitted to the commission for approval.

“I don’t mean to offend our licensee, Dotty’s, but I think this is wrong because not only have we lost the manpower it took to bring this to light, but I can’t be sure that the state actually generated a quarter of a million dollars in interest during that time,” Krolicki said. “This is costing us money because your company is not paying attention to this matter.”

Details on how the overpayment was discovered and why the refund request took so long were not disclosed.

If the agreement is renegotiated, the matter could be examined again by the Commission in September.

This is a developing story. Check back later for updates.

Contact Richard N. Velotta at [email protected] or 702-477-3893. Follow @RickVelotta on X.