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Judge's ruling setback for private clubs

September 10, 1997

By MARLO BARNHART

Staff Writer

Representatives of 23 private clubs with tip jar licenses were dealt a setback Tuesday when Washington County Circuit Judge Frederick C. Wright III dismissed their lawsuit on the "gross profits" issue.

The group of club officials had survived efforts June 26 by the Washington County Gaming Commission to have their lawsuit thrown out of court.

On Tuesday, however, Wright said, "This court cannot rewrite what the lawmakers wrote. They said total proceeds, not less anything but winnings" in defining gross profits.

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The club officials, represented by attorney Wiley Rutledge, had argued that they shouldn't have to absorb the cost of the tip jars and the gaming commission stickers they must buy from the licensed wholesalers.

Rutledge agreed that the law says proceeds equal receipts, but he argued one can't take that in isolation.

Commission attorney Bill Schildt renewed his argument of June 26, saying that the statute clearly states that gross profits is everything minus winnings paid out.

At that hearing, Wright said he was interested in preventing similar litigation by other groups.

"If decided here, that would govern and other lawsuits would then be thrown out," Wright said last June.

In filing the lawsuit, club officials said the gaming commission has "arbitrarily and without legal authority redefined the term gross profits to include money which in no sense represents a profit of any kind but simply represents the cost ... of doing business."

The statute requires that clubs contribute 10 percent of the gross profits for charitable purposes for the year ending June 30, 1997, with the percentage increasing each year until it reaches 20 percent.

One half of that contribution must go to the Washington County Gaming Fund while the other half can be contributed directly by the clubs to charitable endeavors.

Among the organizations that sought the definition were several sportsmen's clubs, American Legion posts, civic, veterans and fraternal organizations.

Many were in attendance Tuesday and were clearly unhappy at the outcome.

Rutledge and several of the club officials said a study would be needed before a decision on whether to appeal the decision is made.

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