For anyone reading this who might not already be familiar with COAMs, they are “coin-operated amusement machines” that, along with Georgia’s lottery, are excused from Georgia’s gambling prohibitions. The COAM industry, however, is highly regulated. To own or operate COAMs in Georgia, you must be licensed by the Georgia Lottery Corporation. Important to a recent Supreme Court of Georgia decision, state law exempts the gross revenues generated from COAMs from the state’s sales and use tax.
The question addressed by the state Supreme Court was whether the revenue generated from a lease of COAMs qualified as gross revenue that would remain tax-free per state law. Funvestment Group, LLC leased COAMs from Tiny Towne International, Inc. and, according to their agreement, would pay Tiny Towne a percentage of the income generated by the COAMs. Such lease payments ordinarily would be subject to sales and use taxes.
Reversing the Georgia Court of Appeals, the Georgia Supreme Court held that the provision of state law exempting “[g]ross revenues generated from all [COAMs]” from taxation extended to the lease payments at issue. The Supreme Court found the statute’s language to be “clear and unambiguous” and with “no words of limitation restricting the manner in which COAMs generate these revenues.”
The attorneys at Chilivis Grubman represent clients of all types and sizes in connection with state and local government and regulatory affairs. If you need assistance with such a matter, please contact us today.
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