Posts Tagged ‘John Kasich’

Ohio Tax Man Giveth, then Taketh from Gamblers

July 11th, 2013 1 comment

On June 30, 2013, Ohio Governor John Kasich signed into law Amended Substitute House Bill Number 59. The 3,747 page bill sets forth the Buckeye State’s 2014-15 fiscal year budget.

But that’s not all. Tucked into the bill is the following:

Sec. 5747.01….

As used in this chapter:

(A) “Adjusted gross income” or “Ohio adjusted gross income” means federal adjusted gross income, as defined and used in the Internal Revenue Code, adjusted as provided in this section:

(29) Deduct, to the extent not otherwise deducted or excluded in computing federal or Ohio adjusted gross income for the taxable year, any loss from wagering transactions that is allowed as an itemized deduction under section 165 of the Internal Revenue Code and that the taxpayer deducted in computing federal taxable income.

Gambling losses are no longer deductible as an itemized deduction for purposes of the Ohio income tax, effective immediately.

Gambling losses became deductible under Ohio tax law beginning January 1, 2013, as part of legislation expanding commercial gambling in Ohio.

I located one remark after a brief search for the purpose behind the repeal, in an article quoting a GOP budget fact sheet: “Why should Ohioans subsidize the risky behaviors and bad luck of others?”

I wasn’t fully satisfied, so I kept searching, and found this 2010 Columbus Dispatch op-ed that details the circumstances arising to allowing the deduction in the first place. Legislators have since been convinced otherwise, apparently.

From my reading, the repeal is retroactive. In other words, gambling losses are not deducible in Ohio in 2013 for any part of the tax year.

Ohio rejoins the list of other “bad” gambling states that do not permit gambling losses as an itemized deduction at all for income tax purposes:

  • Connecticut
  • Illinois
  • Indiana
  • Massachusetts
  • Michigan
  • West Virginia
  • Wisconsin

This change in the law does not impact professional gamblers in Ohio, of course. Professionals may deduct gambling losses up to the extent of gambling winnings as a trade or business expense.

Back To Work

June 15th, 2011 No comments

Earlier today, Ohio Gov. John Kasich released an agreement he reached with Rock Ohio Caesars, ending a month long dispute between the parties that had resulted in casino construction stoppage.

The gaming giant suspended construction of casinos in Cincinnati and Cleveland in order to protest a tax measure Gov. Kasich sought to include in the state’s budget; namely, the 0.26% Commercial Activity Tax (CAT) imposed on all wagers placed in the casinos, regardless of amounts paid for winning wagers.  This levy on casino revenues would have been the first in the United States not to reduce the tax base by paid winning wagers.  Given the obvious difficulties the casinos would have faced administering the tax, and, more importantly, the unpredictably high tax dollars at stake, I didn’t blame Caesar’s at all for making this move.

If you read the agreement, you’ll realize Caesar’s in part got what it wanted: modification to the CAT formula.  The CAT will be imposed on total wagers less winnings paid.

In my opinion, this result is significant not only for the parties involved, but also the U.S. internet gambling industry as a whole.  Various bills for the legalization of internet gambling are currently being drafted at both the federal and state levels.  Of course, a major selling point to the skeptics of legalization is the amount of tax revenues to be generated.  If Kasich and Caesar’s had agreed to his CAT formula, then I believe it would have been more likely for federal and state legislators to seek a similar internet gambling taxation framework in the form of a deposit tax.

Whether or not Kasich sought to impose the CAT according to his definition simply as a bluff in order to squeeze as many dollars as possible out of Caesar’s, we’ll likely never know.  Indeed, Caesar’s could have taken Kasich to court to challenge the validity of the tax.  Instead, sidelined casino construction workers in Ohio can now get back to work.  I think I can even hear them happily humming along to this classic:


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