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Wednesday, July 1, 2009

Belmont track won’t sue, but won’t collect
state’s new tax on gambling winnings either
By Michael Kitch Moreover, although all gambling winnings are liable
BELMONT — The Lodge at Belmont has decided to federal tax, the taxable amounts vary with the type of
against challenging the tax on gambling winnings in gambling. All pari-mutuel payouts of more than $600, or
court, Rick Newman, the lobbyist and spokesman for the where the winnings are at 300 times the amount of the
establishment, said yesterday. But, he was quick to add wager, are taxable, But, the threshold for bingo games
that “we are working with the Racing and Charitable and slot machines is $1,200, for keno $1,500 less the
Gaming Commission and the Department of Revenue amount of the bet and for poker tournaments $5,000, less
Administration to mitigate the impact of the tax and if the buyin.
there is opportunity we will seek a legislative fix.” Newman said that by applying the thresholds of the
Newman said that the management team at The Lodge federal tax the New Hampshire tax violates the state
was on the brink of filing suit, but after much discussion Constitution, which requires that all taxes must be
decided “we would sue and wait two years for decision. “proportional and reasonable.”
We’ve already seen an exodus of customers and we’ll On the eve of beginning to levy the tax, which state
see more. We don’t have the luxury of time.” officials and lawmakers estimate will yield $14-million
The 10-percent tax on all winnings in excess of $6,000 during the 2010-2011 biennium, confusion reigned over
was added to the state budget by the House and Senate how to collect it. Newman said that while the Lottery
committee of conference at 1 a.m. on its last day of Commission may be prepared to collect tax on winning
deliberations and is scheduled to begin being collected lottery tickets, he does not know how the state intends to
today, July 1, the first day of the new The tax is pegged collect the tax on pari-mutuel wagers and charitable
to the federal gambling tax as reported on the gaming. “The law says that the Racing and Charitable
withholding form W-2G. Gaming Commission will withhold the tax,” he said,
However, Newman stressed that unlike the federal tax, “but the commission doesn’t pay out any money so how
the state tax provides no deductions for losses. can it deduct any tax?” Nor can the tracks collect it. “We
“That is the fatal flaw in the tax,” he said, explaining will not be deducting the tax,” Newman continued.
that “a gambler could file any number of W-2Gs and pay “The law does not require us to deduct it and more
little or no federal tax, but pay the full freight of 10- important, we have no authority to deduct it.”
percent on all reported winnings in New Hampshire.” On Monday, the Racing and Charitable Gaming
Newman said other states tax gambling winnings, but Commission wrote to the Department of Revenue
at a lower rate with a deduction for losses. Administration, raising nearly two dozen concerns about
“This tax puts us at a huge competitive disadvantage,” the administration and collection of the tax.
Newman said. He estimated that as much as 90-percent Executive Director Paul Kelley told the New
of the wagers on simulcast thoroughbred, harness and Hampshire Union-Leader “we don’t believe we can
greyhound racing taken at The Lodge are placed by fairly and accurately start the tax collection process until
telephone by players from out of state. we know what criteria they are going to set,” adding that
“Why would they continue to play here?” he asked. in places the law appears to contradict itself.
Newman ventured that the net effect of the tax would Meanwhile, Newman suggested that the chances of
be to reduce revenues from the pari-mutuel tax, which lessening the adverse impact of the tax would improve if
amount to about $2.8-million a year, as well as the other parts of the budget unravelled. He said he was
business taxes levied on the three racetracks — The eying the legal tussle between policyholders and the
Lodge, Seabrook Greyhound Park and Rockingham state over the $110-million from the New Hampshire
Park. “I doubt the tax on winnings will offset the loss of Medical Malpractice Joint Underwriting Association
other revenues,” he said, “and it will certainly lead to (JUA). “I’ve got pompoms,” he crowed. “All the way
lost jobs.” JUA!”