Are the food, beverage, and lane-rental charges for a bowling alley's 'bowling party' packages subject to New York sales tax?

Plain-English summary

Bowlmor Lanes, a 42-lane bowling alley, sells "bowling party" packages that make up 38% of its revenue. A party customer rents a lane for three hours (up to seven bowlers, unlimited games) for a flat fee, and can separately choose to add food (charged per item per person) and/or beverages (either "open bar" for a flat per-person fee, or drink tickets), all as optional add-ons that aren't required to book the lane. Every component — lane rental, food, beverages, gratuity, and sales tax — is separately itemized on the party contract, and Bowlmor already collects and remits tax on the food and beverage portions.

The Department confirmed the split treatment Bowlmor was already applying. A bowling alley is a "place of amusement," and charges for the use of its lanes are "admission charges" — but New York specifically excludes participatory sporting activities, naming bowling alleys by name, from the admission-charge tax. So the lane-rental portion of a bowling party is not taxable. Food and drink, though, are a distinct transaction: they're an extension of the bowling alley's ordinary restaurant/bar business (available to any patron, party or not), aren't required to book a lane, and fall squarely within the tax on food and drink sold for on-premises consumption. Because the two components are genuinely separable — food/drink is optional and separately priced from the lane rental — only the food and beverage charges are taxable, provided the lane-rental charge is reasonable and separately stated. Gratuities that are separately stated and paid over in full to the servers/bartenders are excluded from tax entirely.

What this means for you

Bowling alleys, arcades, and other participatory-sports venues that also sell food/drink

Keep your admission/lane-rental charges genuinely separate and reasonably priced relative to any food and beverage add-ons. As long as buying food or drink isn't a condition of using the lanes/facility, and the charges are separately stated, you can keep the exempt participatory-sports admission treatment for the facility-use charge while still properly taxing the food and drink portion.

Venues bundling activity fees with optional food/beverage packages

The key facts here were that food/drink purchase was optional (not a condition of the lane rental) and separately priced. If you instead build one flat package price that folds food and drink into the admission fee with no option to decline or separate pricing, the whole bundled charge risks losing the exclusion and being taxed in full — see the single-unit-sale rule for taxable-plus-exempt bundles.

Accountants and tax professionals

This is squarely in line with the Department's prior holdings on the same bowling-alley/restaurant-combination fact pattern (TSB-A-00(44)S; TSB-A-90(54)S), applying the general separability principle that distinct, genuinely optional transactions can receive different tax treatment even when sold together, as opposed to a true single-price bundle under 20 NYCRR § 527.1(b).

Common questions

Q: Is the lane-rental charge for a bowling party taxable?
A: No — bowling alley admission charges are specifically excluded from the admission-charge tax as a participatory sporting activity.

Q: Are food and beverages sold as part of a bowling party taxable?
A: Yes, as long as they're optional add-ons separately priced from the lane rental — they're taxed the same as any restaurant or bar sale for on-premises consumption.

Q: What has to be true for the lane rental to stay untaxed when bundled with food/drink?
A: The lane-rental charge must be reasonable and separately stated from the food and beverage charges, and purchasing food/drink can't be a required condition of renting the lane.

Q: Are gratuities on the food and beverage charges taxable?
A: No, as long as they're separately stated as gratuities and paid over in full to the food servers and bartenders.

Q: Can another bowling alley or amusement venue rely on this exact package structure?
A: No. This opinion binds the Department only for this petitioner's specific facts and expressly states it isn't binding as to different facts.

Citations and references

Statutes and regulations:

• Tax Law § 1101(d)(2), (10) (admission charge; place of amusement)
• Tax Law § 1105(d)(1) (food/drink on-premises consumption tax)
• Tax Law § 1105(f)(1) (admission charge tax; participatory sports exclusion)
• 20 NYCRR § 527.1(b) (single-unit taxable/exempt bundle)
• 20 NYCRR § 527.10 (admission charge tax; participatory sports exclusion, Example 6)
• 20 NYCRR § 527.8(l) (gratuities exclusion)

Prior opinions cited:

• TSB-A-00(44)S, Marcum & Kliegman, LLP, Oct. 18, 2000
• TSB-A-90(54)S, Paul J. Carucci, Oct. 24, 1990

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2002.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a02_12s.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Tax Policy Analysis
Technical Services Division

TSB-A-02(12)S
Sales Tax
June 17,2002

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S010202C

On February 2, 2001, the Department of Taxation and Finance received a Petition for
Advisory Opinion from The Cobalt Group, LLC, d/b/a Bowlmor Lanes, 110 University Place,
New York, NY 11797. Petitioner, The Cobalt Group, LLC, d/b/a Bowlmor Lanes, provided
additional information pertaining to the Petition on August 20, 2001.
The issue raised by Petitioner is whether receipts from its sales of “bowling parties” that
include both the cost of the bowling lane rentals and the cost of food and/or beverages are subject
to sales and compensating use taxes.
Petitioner submitted the following facts as the basis for this Advisory Opinion.
Petitioner operates a 42-lane bowling alley and derives its revenues from bowling and several
bowling related activities as described below.
Petitioner receives approximately 30% of its revenue from what is called “open bowling.”
Open bowling is available anytime the bowling alley is open; patrons may walk in and pay for each
game of bowling. The charge for one ten-frame game of bowling is based upon the time of the day
and the day of the week. For example, a game of bowling is more expensive on Friday night than
it is on Tuesday afternoon. The average charge for one ten-frame game of bowling is approximately
$6.45. An additional equal charge is incurred for additional games bowled.
Petitioner receives approximately 4% of its revenue from “shoe rental.” This is a charge to
rent a pair of bowling shoes during open bowling. Petitioner charges $3.00 for shoe rental,
regardless of the time, day or number of games bowled.
As is common with most bowling alleys, Petitioner’s bowling alley has a bar and a snack bar
on the premises. The bar is somewhat larger than the typical bowling alley bar and the snack bar
serves somewhat fancier food than the typical bowling alley snack bar. The bar and the snack bar
do not have a separately enclosed eating and drinking area. The bar and the snack bar do have a
glass partition separating them from the bowling lanes. In addition, there are tables and counter
space for patrons to sit at while they eat or drink. There is no access to the bar or the snack bar
except through the bowling alley. The bar serves both alcoholic and non-alcoholic beverages. The
snack bar serves food normally expected to be found at a bowling alley such as hamburgers, hot
dogs, and pizza, as well as “higher-end” food such as pasta, hot appetizers and sandwiches.
Petitioner does not serve “sit down” meals, as restaurants do.

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Any time the bowling alley is open to the public, all patrons have complete access to the bar
and snack bar to order something to eat or drink. All food and beverage items have a per item
charge. For example, a hamburger or sandwich may cost $6.00, french fries $3.00, a soda $2.50 or
a beer $5.00 (prices are approximates). Bar receipts from open bowl patrons account for 18% of
revenues. Snack bar receipts from open bowl patrons account for 4% of revenues. All gratuities
received in connection with the sale of food and beverages are turned over to the food servers and
bartenders. The bar and snack bar are closed when the bowling alley is closed.
Petitioner receives approximately 5% of its revenue from other miscellaneous sources such
as vending machine sales and sales of clothing (bowling shirts, etc.), bowling equipment, trophies
and other items.
Petitioner receives approximately 1% of its revenue from “childrens’ parties.” A child’s
party includes pizza, soda, ice cream cake, two games of bowling and shoe rental for a per child
charge. This charge is approximately $28.
The remaining 38% of Petitioner’s revenue is from “bowling parties.” It is the sales tax
implications on these charges that are at issue in this Advisory Opinion. Revenues from bowling
parties come from three sources. These three components are separately stated in the contract for
a bowling party.
The first component of a bowling party is the lane rental. The lane rental charge varies from
$125 to $190 per lane and entitles the bowling party customer to use of the lane for three hours by
a maximum of seven bowlers. Petitioner requires that a bowling party customer rent at least one
lane per seven bowlers. There is no limit to the number of games that can be bowled in the three­
hour period.
In addition to the lane rental, the bowling party customer has the option to order food for the
party guests. The purchase of food is not required as a condition of the lane rental. The bowling
party customer chooses from the various food choices on the menu and Petitioner charges the per
item charge multiplied by the number of persons in the party. For example, a bowling party
customer could choose to have chicken fingers and fried shrimp appetizers available for its guests.
If chicken fingers are $5.00 a serving and fried shrimp is $7.00 a serving, the bowling party
customer would be charged $12.00 per person for food. This charge is in addition to (and separately
stated from) the lane rental charge.
During the party, chaffing dishes are set up behind the lanes where the party guests are
bowling so that they can eat at their leisure. Normally, bowling parties are not segregated from the
rest of the bowling alley, nor is there a separate section of the bowling alley for bowling parties.
Also, in addition to the lane rental, the bowling party customer has the option of ordering
beverages for the party guests. The ordering of food without beverages or ordering of beverages

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without food is allowed. Again, ordering beverages is not a requirement of the lane rental. The
bowling party customer has two choices when ordering beverages for its guests.
The bowling party customer may purchase “open bar” privileges for its guests. In this
situation, the bowling party customer is charged a certain fee (approximately $35 per person) which
entitles the guests to unlimited drinks for the three hours Petitioner has reserved the lane for the
party. The actual fee charged depends on whether the bowling party customer is purchasing
unlimited alcoholic beverages, nonalcoholic beverages, beer or wine.
The other beverage option a bowling party customer has is to purchase a certain number of
drink tickets. These tickets are exchanged by the guests for drinks (one ticket equals one drink).
The bowling party customer may purchase as many or as few tickets as it chooses. The cost of the
ticket is dependent upon whether it can be exchanged for an alcoholic or nonalcoholic drink. These
drink tickets usually cost approximately $5.00.
All charges for the lane rental, food, beverages, gratuity and sales tax are separately stated
in the contract. Charges for the lane rental, food and beverages contain a similar profit margin.
Petitioner charges and remits sales tax on all charges for food and beverages purchased during
parties. The customers are required to pay an 18% gratuity on all food and drink charges. All
gratuities received in connection with the sale of food and beverages are turned over to the food
servers and bartenders. Accordingly, sales tax is not charged on gratuities.
Guests attending the bowling parties have the option of purchasing additional food or drinks
on their own simply by walking over to the bar or snack bar and ordering the food or beverage and
paying for it. Petitioner remains open for “open bowling” during a bowling party. There may be
several parties going on at the same time and there is no requirement to start any of these parties at
a certain time, although the party must end by the time the bowling alley closes. In rare cases, very
large parties reserve all 42 lanes. In those cases, the bowling alley is not available for open bowling
because there are no lanes available. However, it is also possible that there would be no lanes
available because open bowlers occupy all the lanes.
Of the 38% of the bowling alley’s receipts that are attributable to bowling parties, 4% of the
revenue is from food, 8% is from beverages and the remaining 26% is from the lane rental charge.
Applicable Law and Regulations
Section 1101(d)(2) of the Tax Law defines admission charge as “[t]he amount paid for
admission, including any service charge and any charge for entertainment or amusement or for the
use of facilities therefor.”
Section 1101(d)(10) of the Tax Law defines place of amusement as “[a]ny place where any
facilities for entertainment, amusement, or sports are provided.”

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Section 1105(d)(i) of the Tax Law imposes sales tax on:
The receipts from every sale of beer, wine or other alcoholic beverages or any
other drink of any nature, or from every sale of food and drink of any nature or of
food alone, when sold in or by restaurants, taverns or other establishments in this
state, or by caterers, including in the amount of such receipts any cover, minimum,
entertainment or other charge made to patrons or customers (except those receipts
taxed pursuant to subdivision (f) of this section):
(1) in all instances where the sale is for consumption on the premises where
sold. . . .
Section 1105(f)(1) of the Tax Law imposes sales tax on:
Any admission charge where such admission charge is in excess of ten cents
to or for the use of any place of amusement in the state . . . except charges to a
patron for admission to, or use of, facilities for sporting activities in which such
patron is to be a participant, such as bowling alleys and swimming pools.
Section 527.1(b) of the Sales and Use Tax Regulations provides:
Taxable and exempt items sold as a single unit. When tangible personal
property, composed of taxable and exempt items is sold as a single unit, the tax shall
be collected on the total price.
Example:

A vendor sells a package containing assorted cheeses, a
cheese board and a knife for $15. He is required to collect tax
on $15.

Section 527.10 of the Sales and Use Tax Regulations provides, in part:
(a) Imposition. (1) A tax is imposed upon any admission charge, in excess
of 10 cents, to or for the use of any place of amusement in this State.
*

*

*

(b) Definitions. (1) Admission charge.
(i) The amount paid for admissions . . . to any place of amusement, including
any service charge and any charge for entertainment or amusement or for the use of
facilities therefor.

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*

*

*

(3) Place of amusement. Any place where facilities for entertainment,
amusement, or sports are provided. Such places include without limitation . . .
bowling alley. . . .
*

*

*

(d) Admissions excluded from tax. . . .
*

*

*

(4) Charges to a patron to or for the use of sporting facilities or activities in
which the patron is to be a participant are excluded from tax.
Example 6:

Admission charges for the use of bowling lanes . . . are not
subject to tax. However, any charge for the use of tangible
personal property in conjunction with the sporting activity is
taxable. . . .

Opinion
Petitioner operates a 42-lane bowling alley and derives its revenues from bowling and several
bowling related activities. At issue in this Advisory Opinion is the application of the Sales and Use
Tax Law to a single aspect of Petitioner’s business known as “bowling parties.” A bowling party
consists of the use of bowling lanes by a maximum of seven bowlers per lane for a 3-hour period,
during which time an unlimited number of games can be bowled. For additional optional charges,
bowling party customers may purchase food and/or beverages (alcoholic and non-alcoholic) for their
party guests to eat and drink while bowling. These additional charges are separately stated in the
contract for the bowling party.
Petitioner’s bowling alley is a “place of amusement” and its charge for the use of a bowling
lane is an “admission charge” within the contemplation of Section 1105(f)(1) of the Tax Law.
Under Section 1105(f)(1), charges for admission to a participatory sporting activity are specifically
excluded from the imposition of sales tax. The exclusion from tax explicitly refers to bowling as
the kind of activity intended to be excluded under the statute. Therefore, the charges for bowling
lane rental are not subject to sales tax. However, when sold in conjunction with the sale of taxable
food and drink, the issue arises whether the non-taxable nature of the bowling charges is affected
by the other taxable components of the sale.
In addition to the lane rental charge, a bowling party customer has the option of ordering
food and/or beverages for its guests. Such sales of food and drink fall within the purview of

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Section 1105(d) of the Tax Law and are subject to the imposition of sales tax. The food and drink
supplied at bowling parties is an extension of Petitioner’s normal restaurant and bar business located
at the bowling facility. The purchase of such food and drink by a bowling party customer is separate
from the bowling the same way it is anytime that any bowling customer purchases food or drink
from the snack bar or bar. As described above, the purchase of food or drink is not required as a
condition of the lane rental.
Accordingly, the bowling component of Petitioner’s bowling parties is a distinct, discrete
activity separate from the sales of food and drink. The two transactions are sufficiently
distinguishable to allow differential tax treatment. Therefore, provided the lane rental charges are
reasonable and separately stated from the charges for food and drink, only the food and drink
portions of the bill are subject to sales tax (see Marcum & Kliegman, LLP, Adv Op Comm T&F,
October 18, 2000, TSB-A-00(44)S; Paul J. Carucci, Adv Op Comm T&F, October 24, 1990,
TSB-A-90(54)S. Likewise, charges specifically designated as gratuities that are separately stated
from the charges for food and drink and are paid over in total to the workers providing the food and
drink service are not subject to tax. See Section 527.8(l) of the Sales and Use Tax Regulations.
This Advisory Opinion is based on the facts submitted by Petitioner. This Advisory Opinion
is not binding on the Commissioner of Taxation and Finance with respect to different facts.

DATED: June 17, 2002

NOTE:

/s/
Jonathan Pessen
Tax Regulations Specialist IV
Technical Services Division

The opinions expressed in Advisory Opinions are
limited to the facts set forth therein.