Vegas Strip Club Owners Challenge State Tax

By: Carlos Martinez (Courtesy of avn.com)

Posted: April 21, 2006

LAS VEGAS - The owners of eight strip clubs have asked a federal judge to throw out Nevada’s live entertainment tax, claiming it’s a violation of their First Amendment rights.

Last Tuesday, the owners of the Déjà vu Showgirls, Little Darlings, Spearmint Rhino, Olympic Garden, Sapphire, Crazy Horse Too, Treasures and Scores strip clubs filed the complaint which also seeks the return of millions already paid the clubs, according to the Las Vegas Review-Journal.

The suit names the Nevada Department of Taxation, the Nevada Tax Commission and the Nevada State Board of Examiners as defendants.

The club owners argued that the implementation of the levy has been “arbitrary and capricious” and with exemptions for various kinds of businesses except for those with adult entertainment.

The tax on live entertainment, approved in 2003 and adjusted in 2005, requires strip club owners to pay up to 10 percent of ticket sales or admission fees to the state. That means up to $150,000 a month for Pete Eliades’ Olympic Garden and the Sapphire Club which he co-owns.

Eliades complained that the state tax targets adult businesses while others which provide live entertainment are given exemptions.

But state Sen. Dina Titus, a Las Vegas Democrat who helped push the legislation, said she was confident the tax could overcome this latest legal challenge.

She said the tax is needed because strip clubs don’t generally pay payroll taxes or pay for workers’ compensation insurance, since strippers are independent contractors who also don’t receive health insurance. She argued such businesses are also a drain on social services and police.

But Allen Lichtenstein, general counsel for the American Civil Liberties Union, which has joined the strip clubs in fighting the levy, said the tax is illegal because it singles out the clubs.

He noted that the U.S. Supreme Court has ruled that First Amendment businesses like strip clubs can’t be singled out for special taxes. 

Portions of this courtesy of the Free Speech X-Press, the weekly newsletter of the Free Speech Coalition. More info at www.freespeechcoalition.com.

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