Comptroller rules define this term to mean “ntertainment, recreation, sport, pastime, diversion, or enjoyment that is a pleasurable occupation of the senses.” 34 TAC § 3.98(a)(1). The first issue was whether the sweepstakes game constituted an “amusement service” under § 151.0028(a), Tax Code.

In an opinion by Justice Baker, the court of appeals affirmed. A Travis County trial court granted summary judgment in favor of the comptroller and denied Sidetracked’s competing motion for summary judgment. Sidetracked paid the taxes under protest and filed a suit for a refund. The audit determined that Sidetracked provided an nonexempt, taxable “amusement service” and owed tax, penalties, and fees, which the comptroller duly assessed. When Sidetracked didn’t pay any sales taxes for several years, the comptroller got curious and audited the company’s contract with the Post (and probably others as well). Post 95 had nothing else to do with the operation other than open the bank account. Sidetracked collected the proceeds of the “donations” and deposited them in Post 95’s bank account, which paid out 40% to Sidetracked IT vendors and 50% to Sidetracked, retaining only the Post’s 10% share. Once they exhausted the free card, they could obtain additional entries by making a “donation” to the VFW hall. They could then do one of two things: use an “instant validation terminal” to determine if their card had any winners or play a simulated slot-machine game on an “entertainment validations terminal” to reveal any winners.

The sweepstakes game worked essentially like a coin-operated slot machine, where patrons received upon entry to the facility a magnetic card containing a certain number of free entries.

Here Sidetracked contracted with Post 95 for a 10% share of the gross proceeds of a gaming facility located on premises leased by Sidetracked, using equipment owned or leased by Sidetracked, and operated by Sidetracked personnel. The subject of the audit, Sidetracked, operates, among other things, “sweepstakes” games under contract with charitable organizations such as VFW posts. denied June 9, 2023) arose from a sales tax audit conducted by the comptroller that resulted in the assessment of tax, penalties, and interest of almost $400,000. Glen Hegar, Comptroller of Public Accounts of the State of Texas and Ken Paxton, Attorney General for the State of Texas (No. The Texas Supreme Court has denied a petition for review in a case involving a gaming company’s contract with a local VFW post to offer a “sweepstakes game” in return for a percentage of the proceeds.

Texas vfw gambling