## Facts

- A West Virginia statute authorized municipalities to impose an admission/amusement tax only on entertainments conducted within city limits “for private profit or gain,” with the tax collected by the ticket seller from the purchaser and capped at 2%.
- The City of Morgantown enacted a 2% amusement tax and sought to require the West Virginia Board of Regents, operating West Virginia University (WVU), to collect the tax on tickets for WVU-sponsored athletic contests and other entertainment events open to the public.
- The City argued WVU’s athletics and entertainment operations resembled a profit-making enterprise because the athletic department was described as separate and self-supporting and event revenues were kept in special revenue accounts rather than a general revenue fund.
- The City also relied on the fact that the State imposed consumer sales tax on certain receipts from these activities, suggesting commercial character.
- The Board of Regents maintained that WVU’s sponsorship of the events was a public, governmental function; revenues remained public funds; and no private person or entity had a proprietary right to receive or distribute any “profits.”

## Issues

1. Whether WVU-sponsored ticketed athletic and entertainment events are “conducted … for private profit or gain” under the municipal amusement tax statute, permitting the City to require the Board of Regents to collect the tax.
2. Whether the use of special revenue accounts and the collection of state sales tax on some receipts create a genuine factual dispute that the events are conducted for private profit or gain.

## Decision

- The Supreme Court of Appeals of West Virginia affirmed summary judgment for the Board of Regents.
- The court held the City could not require collection of the municipal amusement tax on WVU-sponsored events because the events were not conducted “for private profit or gain.”
- The court concluded there was no genuine issue of material fact on the “private profit or gain” element.

## Legal Principles

- A municipal amusement/admission tax authorized by statute may be imposed only on entertainments conducted “for private profit or gain,” and the statutory limitation excludes public governmental activities lacking a private proprietary beneficiary.
- “Private profit or gain” requires that some private person or entity have a proprietary interest in the revenues; retention and use of receipts by a public institution for institutional purposes does not satisfy the statutory requirement.
- Accounting treatment of receipts as special revenue funds does not convert public funds into private profit.
- The State’s imposition of a sales tax on certain state-related activities, as authorized by statute, does not change the public character of those activities for purposes of a municipal amusement tax.

## Conclusion

Because WVU’s events were carried out as a public university function and no private party had a proprietary right to benefit from the revenues, the events were not conducted “for private profit or gain,” so the City lacked statutory authority to impose its amusement tax on those ticket sales.


City of Morgantown v. W. Va. Bd. of Regents, 354 S.E.2d 616 (W. Va. 1987)