What does Louisiana Revenue Ruling 08-010 conclude about the sales tax treatment of electronic bingo dabber devices?

Plain-English summary

Louisiana treated electronic bingo dabber devices as taxable leased tangible personal property. A licensed distributor charged a charity for every dabber used during a bingo session. The charity then provided a device to a player, who returned it after the session. The ruling characterized the second transaction as a taxable re-lease, sublease, or re-rental and said 4% state lease tax was due.

The result did not change merely because the player paid no separate fee labeled for the dabber.

How the arrangement worked

A charitable organization offered packages such as 18 games for $20, 36 for $35, 54 for $50, or 72 for $60. A player selecting 54 or more games could use an electronic dabber without an extra charge.

The device held downloaded bingo faces, electronically marked announced numbers, compared called numbers with the player's cards, identified winning patterns, and alerted the player. A distributor's agent loaded the faces; no player could receive more than two devices; and the player returned the device after the session so its stored cards could be erased.

The distributor charged the charity a set fee for each dabber actually used.

Why the distributor-to-charity transaction was a lease

La. R.S. 47:301(16)(a) treated property perceptible to the senses as tangible personal property. The ruling found that an electronic dabber met that definition.

Under La. R.S. 47:301(7)(a), a lease or rental involved possession of tangible personal property for consideration without transfer of title. The charity paid the distributor per device, possessed the devices, and did not receive title. That was a lease.

Louisiana's charitable-gaming statute also required manufacturers to supply dabbers through licensed distributors, required distributor staffing during use, and required the charity to pay the distributor immediately after each session based on the number of devices supplied, plus applicable taxes and fees.

Why supplying the player was a taxable re-lease

The charity exercised its right to use the leased devices by supplying them to bingo players during the session. The ruling relied on Central Marine Service, Inc. v. Collector of Revenue, where both a barge lease and the customer's sublease to the ultimate user were taxable.

Applying that principle, the Department treated the charity-to-player transaction as a re-lease, sublease, or re-rental. It expressly ruled that 4% state lease tax was due on that transaction.

What this means for you

Charitable bingo operators

Charitable status did not prevent the device arrangement described in this ruling from being treated as a taxable lease chain.

Equipment distributors

A per-use device charge can be lease consideration when the customer receives possession without title.

Businesses bundling equipment with another purchase

The absence of a separately stated equipment charge did not prevent lease treatment here. Analyze possession, consideration, title, and any onward provision of the equipment.

Common questions

Q: Were electronic dabbers tangible personal property?

A: Yes. The ruling said they were items of tangible personal property.

Q: Did the player own the dabber?

A: No. The player returned it at the end of the session.

Q: Did the player pay a separate dabber fee?

A: No. The device was available with qualifying game packages without an extra separately stated charge.

Q: Was the distributor's charge to the charity taxable?

A: Yes. The ruling treated the per-device payment as consideration for a lease.

Q: Was the charity's provision of the dabber to the player taxable?

A: Yes. The ruling treated it as a taxable re-lease or sublease and stated that 4% state lease tax was due.

Citations and references

• La. R.S. 4:739(B)(1) — manufacturer supplies dabbers to a licensed distributor
• La. R.S. 4:739(C)(1) and (3) — distributor supply, on-site staffing, and session-payment rules
• La. R.S. 47:301(7)(a) — lease or rental definition
• La. R.S. 47:301(16)(a) — tangible personal property definition
• Central Marine Service, Inc. v. Collector of Revenue, 162 So. 2d 81 (La. App. 4 Cir. 1964) — lease and sublease of tangible property were both taxable
• LAC 61:III.101.C — Revenue Ruling authority and reliance statement

Source

• Landing page: Louisiana Department of Revenue Policies
• Original PDF: LA Revenue Ruling 08-010

Original ruling text

Revenue Ruling No. 08-010
July 3, 2008
Sales Tax Treatment of Electronic Bingo Dabber Devices
The purpose of this Revenue Ruling is to clarify the sales tax treatment of electronic bingo card
dabber devices which are provided for the use of bingo players at charitable bingo gaming
sessions.
Issue
Whether the electronic bingo card dabber devices provided during bingo gaming sessions for the
use of bingo players are subject to lease tax.
Facts
An electronic bingo card dabber device or an electronic dabber device (“dabber”) is an electronic
device used by a bingo player to monitor bingo cards purchased and electronically mark bingo
cards downloaded into the device during the licensed charitable bingo session. At each gaming
session, a charitable organization (“Charity”) may offer options to allow bingo players to play
many bingo cards (“bingo faces”) at one time for a set amount. For example, the Charity’s game
pricing structure may offer 18 games for $20, 36 games for $35, 54 games for $50 or 72 games
for $60. If a player selects 54 or more bingo games, then the player has the option of playing the
bingo games by using an electronic dabber. The player does not have to pay an extra fee to use
the dabber. The player does not acquire ownership of the dabber. The dabber offers an extra
convenience to the player, because it provides the means for the bingo player to electronically
mark numbers announced by the bingo caller, compare numbers called to the numbers contained
on bingo cards for that session, identify winning bingo patterns, and signal the bingo player
when a winning bingo pattern is waiting or received.
Although the Charity will issue the dabber to the player, the law requires that the Distributor’s
agent download the bingo faces into the dabber device. No more than two dabbers may be issued
to any one player. At the conclusion of each session, the player must return the dabber, and then
all bingo cards or faces previously downloaded into the device are erased. The Distributor
typically charges the Charity a set fee for each dabber utilized during each gaming session.
Analysis
Louisiana Revised Statute 4:739(C)(1) provides that a distributor shall sell, rent, lease, or
otherwise supply or provide any electronic dabber device only to a licensed charitable
organization, a qualified association of licensed charitable organizations, or a licensed
distributor. Per La. R.S. 4:739(C)(3), each distributor shall have at least one employee on site
during the use of its devices. The licensed distributor shall request payment from the licensed
organization immediately after each session in an amount equal to the rental price multiplied by
the number of devices used, rented, leased, or otherwise supplied or provided at the session, plus
applicable taxes and fees. Payment must be made by the licensed charitable organization
immediately after each session and only to the licensed distributor. Per La. R.S. 4:739(B)(1),
manufacturers of the dabbers shall sell, rent, lease or supply the devices only to a licensed
distributor with delivery of the devices to be made directly to the distributor’s facility.

Revenue Ruling No. 08-010
Page 2 of 2

A “lease or rental” is defined in La. R.S. 47:301(7)(a) as “the leasing or rental of tangible
personal property and the possession thereof by the lessee or renter, for consideration without
transfer of the title of such property.” La. R.S. 47:301(16)(a) defines “tangible personal
property” in part as “personal property which may be seen, weighed, measured, felt or touched,
or is in any other manner perceptible to the senses.” The dabber is an item of tangible personal
property. Due to statutory requirements, manufacturers of the dabbers cannot sell or lease
directly to charitable organizations in Louisiana. The manufacturers must sell or lease the
dabbers to a licensed Distributor.
If a Distributor leases the dabbers to the Charity, which in turn re-leases the electronic dabbers to
a player, both transactions would be considered a taxable lease of tangible personal property. In
Central Marine Service, Inc., v. Collector of Revenue, 162 So. 2d 81 (La. App. 4 Cir. 1964), the
taxpayer rented barges to its customers, who in turn subleased the barges to the ultimate users
within the state. The Court found that the lease and sublease were both taxable and held that the
act of subleasing was an exercise of any right over tangible personal property.
Ruling
In this scenario, the Distributor has leased the dabbers to the Charity. The Charity then exercises
its right of use over the dabbers by re-leasing them to the player. The Charity pays a fee to the
Distributor for every dabber used during each gaming session. Since the Charity pays a fee for
every dabber, this is the consideration paid for the lease of an item of tangible personal property.
The licensed charitable organization has possession of the dabber but does not take title thereto.
The transaction between the Charity and the player is a re-lease, sublease or re-rental, which is a
taxable transaction; therefore, four percent state lease tax is due thereon.
Cynthia Bridges
Secretary
By:

Emily W. Toler
Attorney
Policy Services Division

A Revenue Ruling is written to provide guidance to the public and to Department of Revenue employees. It is
issued under LAC 61:III.101.C to apply principles of law to a specific set of facts. A Revenue Ruling does not
have the force and effect of law and is not binding on the public. It is a statement of the Department's
position and is binding on the Department until superseded or modified by a subsequent change in statute,
regulation, declaratory ruling, or court decision