Ohio casino cities tax your winnings
Columbus Dispatch - August 6, 2012
Columbus’ move to tax gambling winnings puts it at the table with the state’s other largest cities.
The city council voted unanimously last week to impose the city’s 2.5 percent income tax on any winnings claimed by its residents on games of chance, including church raffles, the state-run lottery and other drawings. Even those who win cash playing bingo or entering basketball-tournament pools would be required to give up a share of their jackpots.
It also doesn’t matter whether a city resident wins a jackpot in Columbus, Las Vegas or Louisiana. And the tax applies to any nonresidents who win a jackpot in Columbus. For the most part, players who win $1,200 or more at a casino or at a video-lottery terminal at a “racino” will be taxed. The threshold is $600 for lotteries, drawings, horse racing and promotions, according to the city’s ordinance.
The city wanted an income tax in place before the Hollywood Casino opens on Oct. 8 on the West Side. The tax will be retroactive to June 1 of this year once the ordinance clears the 30-day referendum period this month.
“The (ordinance) mirrors what is stated in the Ohio Revised Code and what the IRS requires people to claim on their federal taxes,” said Melinda Frank, the city’s income-tax administrator. She said it’s unclear how much revenue the income tax will generate for the city.
The state’s three other cities that host casinos — Toledo, Cleveland and Cincinnati — imposed income taxes on gambling winnings long before voters approved casinos in 2009.
Of all the state’s 765 cities that impose income taxes, just five have a higher rate than Columbus does. Parma Heights tops the list with a 3 percent tax.
Among the four casino host cities, Columbus’ income tax is the highest. That means those who gamble in Columbus and gamblers who live here will give up more of their winnings.
Cleveland’s ordinance imposes a 2 percent income tax just on residents of its taxing district. Toledo taxes winnings of $2,500 or more, and Cincinnati’s ordinance is nearly identical to the one in Columbus.
Like those other cities, Columbus also will not allow gamblers to offset an income tax by claiming losses, unless the IRS considers them to be professional gamblers. A professional is someone who makes his livelihood at gambling.
Bob Tenenbaum, spokesman for Penn National Gaming, which owns the Toledo and Columbus casinos, said Penn is responsible for imposing Columbus’ tax on any casino winnings of $1,200 or more during a single event.
“When it comes to jackpots won on slot machines or any electronic game, we will withhold the tax from the player’s winnings,” he said. “As for other games, we still need to have discussions with the city on how to impose that tax.”
Tenenbaum said the Columbus casino likely will offer a 30-table poker room, blackjack, craps, roulette and various other table games. He said it’s likely that players who cash in on those games will have to declare their winnings on their annual taxes filed with the IRS for the city to collect the tax.
Frank said the city has an information-sharing agreement with the IRS, so any winnings declared by Columbus residents on federal tax returns will be reported to the city.
“We will conduct audits to make sure the taxes are being paid,” she said.
Wendy Patton, a senior project director for left-leaning research group Policy Matters Ohio, said the decision to tax gambling winnings means the city is on top of its economic priorities.
“As fast as the economy changes, the government’s finance system needs to be just as fast and make the important market shifts,” Patton said. “This is a quick response by the city to an emerging economic condition and shows quick thinking on their part.”