Ezel / Tax Rulings / TX
TX 9805620L Sales and/or Use Tax (State,Local,MTA) 1998-05-21

Are gaming lessons, casino-themed practice time, private casino-night party rentals, and a 'High Roller Club' membership taxable in Texas?

Short answer: It varies by activity: gaming lessons are not taxable, informal practice time IS taxable as an amusement service, renting the whole facility for a private casino-night party is a nontaxable real property rental (though any separate admission charge is taxable), and a bundled 'High Roller Club' membership is fully taxable unless the nontaxable pieces (like magazine subscriptions) are separately stated. A business offering an instructional casino (blackjack, craps, Caribbean stud, baccarat tables) alongside a travel agency and gaming retail products asked about four specific offerings. (1) Formal gaming lessons at $10/hour are NOT taxable. (2) Informal 'practice time,' where a customer just plays and the dealer shares tips/tricks informally, IS taxable as an amusement service (not a lesson) -- the business should keep records clearly showing which service was actually performed. (3) Private evening casino parties, where a group rents the whole instructional casino (with hired dealers and office space, no liquor or food sold) for a private party or fundraiser, are NOT taxable -- this is treated as renting real property; but any separately stated admission charge to the party IS taxable. (4) A $250 'High Roller Club' membership bundling 30 hours of playing/lesson time, two magazine subscriptions, and a 10% retail discount is fully TAXABLE as a single charge -- unless the business separately states the nontaxable magazine-subscription piece (subscriptions sold for a semiannual period or longer, entered as second-class mail, are exempt regardless of the publisher's location), using any reasonable, records-supported allocation method.

Apply this to your situation

This page answers the general question as of 1998. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1998
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official Texas Comptroller of Public Accounts letter published on the State Tax Automated Research (STAR) system. Letters on STAR can be the basis of a detrimental reliance claim only for the taxpayer to whom the letter was directly issued (see 34 Tex. Admin. Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas tax professional about your specific situation.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page) is the authoritative source for any reliance.

Plain-English summary

A business combining a travel agency, gaming-industry retail products, and an "instructional casino" (blackjack, craps, Caribbean stud, and baccarat tables) asked about the taxability of four distinct offerings.

  1. Gaming lessons ($10/hour, formal instruction): Not taxable.
  2. "Practice time" — where a customer just plays informally and the dealer chats/shares tips, without it being a structured lesson: Taxable as an amusement service. The business should keep records/invoices clearly documenting which type of service (lesson vs. practice) was actually provided, since the tax treatment differs.
  3. Private evening casino parties — a group rents the entire instructional casino for the evening (with hired dealers and office space, no liquor or food sold), for private business parties, nonprofit fundraisers, etc.: Not taxable, because this is treated as renting real property (the whole facility). However, any separately stated admission charge to the party IS taxable.
  4. "High Roller Club" membership ($250/year, bundling 30 hours of playing/lesson time, two magazine subscriptions, and a 10% retail discount): Fully taxable if billed as a single charge. But magazine subscriptions sold for a semiannual period or longer, entered as second-class mail, are independently exempt (regardless of where the publisher is located) — so the business CAN separate out that nontaxable piece using any reasonable method supported by its books and records, rather than taxing the whole membership fee.

What this means for you

Instructional gaming/casino-themed venues

Structured lessons are untaxed, but informal "just play" time is taxed as an amusement service — so keep clear records distinguishing the two. Renting your whole facility out for a private themed party is a nontaxable real property rental, separate from any admission fee you charge attendees, which remains taxable.

Businesses selling bundled memberships or packages

A single bundled charge covering both taxable and nontaxable components (like playing time plus magazine subscriptions) is fully taxable unless you separately state the nontaxable pieces using a reasonable, records-supported allocation.

Common questions

Q: Are casino-themed gaming lessons taxable in Texas?
A: No, per this letter — formal gaming lessons are not taxable, but informal "practice time" is taxable as an amusement service.

Q: Is renting out an instructional casino for a private party taxable?
A: No, per this letter — renting the whole facility for an evening is treated as a nontaxable real property rental, though any separate admission charge to attendees is taxable.

Q: How do I handle a membership package that bundles taxable and nontaxable items?
A: Per this letter, the whole charge is taxable unless you separately state the nontaxable components (like qualifying magazine subscriptions) using a reasonable, records-supported method.

Source

Original ruling text

May 21, 1998

Via Facsimile

Dear **:

Thank you for your recent letter which is restated in part with response below.

In February, we opened **, which has a full-service travel agency
in it. In addition, we offer other products and services to serve the gaming
industry. Besides retail (books and software, etc.), we offer some unique
services.

  1. Gaming lessons- We have an instructional casino with three black jack
    tables, a craps table, Caribbean stud and baccarat tables. We offer gaming
    lessons for $10.00 per hour. I need to know if this service is taxable or not.

Response: Charges for gaming lessons are not subject to sales tax.

  1. Practice time- In the instructional casino, what if a person comes in and
    just wants to practice? The dealer will talk with the client and they will
    exchange information, and tricks and tips will be communicated. Would this
    constitute a lesson or an amusement service?

Response: Charges for practice time in the instructional casino are subject to
sales tax as the provision of an amusement service. Your records and invoices
to your clients should clearly show what services are performed.

  1. Casino parties- We will be offering evening parties in our instructional
    casino. We will hire dealers, and this will be for private business parties,
    non-profit organization fund-raisers, private requests, etc. The price will
    vary with the number of attendees, number of dealers hired, etc. We will
    provide the casino, dealers, and office space, but will not sell liquor or
    food. Is this service taxable?

Response: No sales tax is due when an individual or group rents the entire
facility for the evening. You will be considered to be renting real property
in this situation. Sales tax will be due on any separately stated charges for
admission to the party.

  1. Membership fee- We are offering a one-year membership to our "High Roller
    Club" for $250. This equates to a minimum value of $374, calculated below:

30 hours of playing time which may include lesson time or just practice time.
This has a value of $300. (30 hours @ $10 each)
A subscription to the Las Vegas Advisor - subscriber cost is $50 (our cost is
$35)
Subscription to Casino Player - subscriber cost is $24 (our cost is $12).
A 10% discount off products sold in our retail store.

Response: Sales tax will be due on the total charge if a single charge is
made. Separately stated charges for the sale of subscriptions to magazines
entered as second class mail and sold for a semiannual or longer period of time
are exempt from sales tax. The publisher's location does not affect the tax
treatment of the subscription. You may separately state your taxable and
non-taxable charges based on any reasonable method supported by your books and
records.

This opinion is rendered based on the facts presented. If there are additional
or different facts, the opinion may change.

You may call me toll free at 1-800-531-5441, ext. 3-4680. The direct line is
512/463-4680. You may also write to Tax Policy, Comptroller of Public
Accounts. The email address is .

Sincerely,

Al Van Allen
Tax Policy Division

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