New York State Gambling Tax
New study commissioned by the Oneida Indian Nation analyzed the state and local tax rates paid by full-service casinos in Upstate New York. The report comes out as New York is undertaking its own study of all aspects of the state’s gambling industry, including a look at “equalizing” casino tax rates plus issue like mobile sports betting and opening new casinos downstate. Top Vegas casino owner Caesars Entertainment is partnered with three of New York’s sports betting casinos, so the odds should generally match those on offer in Vegas. Any differences that exist will usually be the result of local promotions and special offers. The gambling tax rate in Nevada is 6.75 percent while it is 10 percent in New York. Missing from the left-leaning tax-the-rich rhetoric Thursday was any talk of legalizing gambling and pot, which a large faction of lawmakers seem to support, and have over the last several years. ' State gaming agency' shall mean the New York state gaming commission, its authorized officials, agents, and representatives acting in their official capacities as the regulatory agency of the state which has responsibility for regulation with respect to video lottery gaming or casino gaming. Under the casino gaming plan outlined in the new law, all localities in the state will share in increased education aid, or lower property taxes, no matter where the casinos are located. Our focus has been to bring jobs and boost local economies in Upstate New York, where decades of decline have taken their toll in our communities,' Governor.
- New York State Gambling Losses Income Tax
- Does New York State Tax Gambling Winnings
- New York State Tax On Gambling Winnings
- New York State Gambling Tax
- New York State Gambling Tax Rates
- New York State Gambling Taxes
FREQUENTLY ASKED QUESTIONS |
| 1. Why can Indians conduct gambling activities? 2. What is a Federally recognized tribe? 3. What does tribal sovereignty mean to Indians? 4. Why are Indians sometimes referred to as Native Americans? 5. How many tribes are there in New York State? 6. How many Tribes have gaming in New York State? 7. What is New York State’s role at Indian casinos? 8. Who regulates Class III Indian Casinos? 9. Who regulates Class II Indian bingo? 10. How does a company do business with the casino? 11. How does a person obtain employment at Indian casinos? 12. Why aren’t Indian casinos taxed? 13. Can Indian casinos serve alcoholic beverages? |
| 1. Why can Indians conduct gambling activities? Indian land is not under State law unless a Federal law places it under State law. The Supreme Court held that even if a tribe is under State law the State gaming regulations do not apply on Indian trust land. In 1988 Congress passed the Indian Gaming Regulatory Act permitting federally recognized Indian tribes the ability to conduct gaming activities under certain circumstances. This law allows traditional Indian gaming, bingo, pull tabs, lotto, punch boards, tip jars, and certain card games on tribal land. However, it requires a Tribal/State compact for all other forms of gaming. The Tribe may regulate traditional forms of Indian gaming by itself. Bingo, pull tabs, lotto, punch boards, tip jars, and certain card games are regulated by the Tribe in conjunction with the National Indian Gaming Commission, although tribes, under certain circumstances, may self-regulate these activities. All other forms of tribal gaming are subject to regulation as determined and defined by State-Tribal gaming compacts. The National Indian Gaming Commission was established by Congress to develop regulations for Indian gaming. For more information contact the National Indian Gaming Commission, 9th., Floor, 1441 L Street, NW, Washington, DC 20005 (202) 632-7003. Updated information can be found at http://www.nigc.gov. 2. What is a Federally recognized tribe?There are about 566 federally recognized Tribes in the United States. 'Federally recognized' means these tribes and groups have a special, legal relationship with the United States government. This relationship is referred to as a government-to-government relationship. A number of Indian Tribes and groups in the United States do not have a federally recognized status, although some are state recognized. This means they have no relations with the federal Bureau of Indian Affairs (BIA) or the programs it operates. A special program of the BIA, however, works with those groups seeking federal recognition status. 3. What does tribal sovereignty mean to Indians? When Indian tribes first encountered Europeans, they were dealt with because of their strength in numbers and were treated as sovereign governments with whom treaties were made. When tribes gave up their lands to the United States, they retained certain sovereignty over the lands they kept. While such sovereignty is limited today, it is nevertheless jealously guarded by the tribes against encroachments by other sovereign entities such as states. Tribes enjoy a direct government-to-government relationship with the United States government wherein no decisions about their lands and people are made without their consent. The term, 'Native American,' came into usage in the 1960's to denote the groups served by the Bureau of Indian Affairs: American Indians and Alaska Native (Indians, Eskimos and Aleuts of Alaska). Later the term also included Native Hawaiians and Pacific Islanders in some Federal programs. It, therefore, came into disfavor among some Indian groups. The preferred term is 'American Indian.' The Eskimos and Aleuts in Alaska are two culturally distinct groups and are sensitive about being included under the 'Indian' designation. They prefer, 'Alaska Native.' There are eight federally recognized Indian tribes in New York State. They are:
Additionally the Unkechauge Nation of Poospatuck Indians tribe on Long Island has state but not federal recognition. This tribe has a government-to government relationship with the State of New York but not with the United States. As a matter of policy, the State of New York does not grant recognition to or enter into government-to-government relationships with Indian nations that are not federally recognized. The Poospatuck relationship with the State of New York was cultivated in colonial times when on July 2, 1700 the Poospatuck received a deed of land from William Tangier Smith. The State continued to treat the group as an Indian tribe after the American Revolution. Before this tribe could open any form of gambling establishments under the federal Indian Gaming Regulatory Act they would first have to obtain recognition by the federal Department of Interior. 6. How many Tribes have gaming in New York State?Only three tribes have lawful gaming: The Seneca Nation of Indians operate the Class III Seneca Niagara Casino in Niagara Falls, the Class III Seneca Allegany Casino, the Class III Seneca Buffalo Casino in Buffalo, and Class II bingo on both their Cattaraugus and Allegany Reservation lands; the St. Regis Mohawks operate the Class II Mohawk Bingo Palace and the Class III Akwesasne Mohawk Casino, which also houses Class II poker games; and the Oneida Indian Nation of New York operates the Turning Stone Casino, which houses both Class II bingo and poker, as well as its Class III gaming operations. The State maintains a constant twenty-four hour presence within the gaming facilities of the five Class III facilities to maintain the integrity of all activities conducted in regard to Class III gaming, and to insure the fair and honest operation of such gaming activities. Additionally, the State conducts background investigations on all employees of the casino and enterprises who conduct gaming related business with the casino to ensure their suitability. Pursuant to each Compact the State jointly regulates Class III gaming facilities with a Nation or Tribal Gaming Agency, respectively. Class II gaming activities, e.g., bingo, pull tabs, lotto, punch boards, tip jars, and certain card games, are regulated by the Tribe in conjunction with the National Indian Gaming Commission, although tribes, under certain circumstances, may self-regulate these activities. Any company wishing to provide services, supplies or equipment to a Class III gaming operation must be registered by the State of New York Gaming Commission. This process begins by the Nation or Tribal Gaming Agency receiving applications and forwarding such to the New York State Gaming Commission, who will review the application and identify principals required to file individual applications. Upon receipt of all required paperwork the Commission will make a determination whether to temporarily register the company pending a background investigation conducted by the New York State Police Casino Detail. If any individuals or businesses seek to provide services, supplies or equipment to the casinos, they should contact: Oneida Indian Nation Gaming Commission St. Regis Mohawk Tribal Gaming Commission Seneca Gaming Authority All tribal gaming compacts require that prior to employment a person must be issued a temporary certification by the State Gaming Commission and a temporary license by the applicable Nation or Tribal Gaming Agency. Individuals must first contact the tribal gaming agency to obtain employment prior to filing an application with the Gaming Commission. It should be noted that every gaming employee will be required to undergo both New York State and Federal Bureau of Investigation criminal history fingerprint profiles and a full background investigation conducted by the New York State Police. 12. Why aren't Indian casinos taxed? States are limited by federal law on the monies they are authorized to receive from Indian tribe's Class III gaming operations. Section 2710 (d)(4) of the Indian Gaming Regulatory Act states: Except for any assessments that may be agreed to under paragraph (3)(C)(iii) of this subsection, nothing in this section shall be interpreted as conferring upon a State or any of its political subdivisions authority to impose any tax, fee, charge, or other assessment upon an Indian tribe or upon any other person or entity authorized by an Indian tribe to engage in a class III activity. No State may refuse to enter into the negotiations described in paragraph (3)(A) based upon the lack of authority in such State, or its political subdivisions, to impose such a tax, fee, charge, or other assessment. Additionally, the Indian Gaming Regulatory Act limits how each tribe may expend the revenues they derive from gaming operations. Pursuant to § 2710 (b)(2), the Chairman of the National Indian Gaming Commission may not approve any tribal ordinances or resolution for the conduct of Class II gaming if net revenues from the tribal gaming are to be used for purposes other than to:
Yes, provided that the nation or tribe has obtained a license to do so issued by the New York State Liquor Authority and complies with all State laws, rules and regulations regarding alcoholic beverage provision. As of October 31, 2012, all Indian casinos with the exception of the Seneca Buffalo Creek Casino currently have licenses to sell alcoholic beverages. |
We’ve covered a lot of content over the past two months. To this point, the series has focused on federal law. This week we take a look at some state tax issues.
New York State Gambling Losses Income Tax
Each U.S. state has its own tax code. Not all states, however, impose a personal income tax. Seven do not: Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming. New Hampshire and Tennessee impose personal income tax only on dividend and interest income. Accordingly, residents of these nine states do not have to pay to their state income tax on gambling winnings. That leaves forty-one states with a general personal income tax.
Takeaway #1: In general, a state that imposes a personal income tax levies a tax on gambling winnings of its residents.
This rule mirrors application of the federal tax law to gambling winnings. Be sure to check your own state’s specific rules, though, as there are exceptions. In Connecticut, for example, a resident filing single need not report lottery winnings to the state if the resident’s total gross income from the year is less than $13,000.
On the deduction side for state tax purposes, it’s a different story. And not in a good way.
Does New York State Tax Gambling Winnings
Takeaway #2: Some states limit the extent a taxpayer may deduct gambling losses. In fact, some states do not permit a deduction for gambling losses at all.
These limitations are beyond the limitation of deducting gambling losses under 165(d) of the Internal Revenue Code, which permits the deduction of gambling losses to the extent of gambling winnings.
Keep in mind these limitations apply only to amateur gamblers. Professional gamblers are not subject because a professional’s gambling deduction is incurred in connection with the trade or business of gambling.
Unsurprisingly, there are many tax cases in which a state tax agency challenges, often successfully, a taxpayer’s professional gambler status. A taxpayer cannot simply choose whether one is a professional or amateur; it is a facts and circumstances determination.
One state that does not permit a deduction for gambling losses is Connecticut. Suppose for the year I have $50,000 gambling winnings and $50,000 gambling losses, properly accounted for by session. On my federal income tax return, I report $50,000 of gambling winnings on line 21 as “other income,” and I report $50,000 of gambling losses as an itemized deduction on Schedule A. On my Connecticut income tax return, I must report all $50,000 of gambling winnings, yet I cannot take a $50,000 deduction for the gambling loss. Although I broke even from gambling for the year, I must pay Connecticut income tax on the $50,000 of winnings!
Other states that currently do not permit a deduction for gambling losses include Hawaii, Illinois, Indiana, Massachusetts, Michigan, Ohio, West Virginia, and Wisconsin. Some states, such as Louisiana, Minnesota, and New York, apply other limitations, but may not completely disallow the deduction.
We know many states are currently considering the legalization and regulation of either brick and mortar casinos or internet gambling, or both. What we don’t know is whether any of these “bad” states seeking to expand gambling will amend their tax codes to enable many of its future gaming patrons to deduct gambling losses on their state income tax returns. If not, then there will be a significant disincentive for profit-seeking gamblers to engage in gambling activity within such states. Seems like a potential lose-lose to me.
Takeaway #3: Some states impose income tax on gambling winnings of nonresidents who gamble within the state.
New York State Tax On Gambling Winnings
This is commonly referred to as the “jock tax.” The name originates from states taxing the income of professional athletes who travel into their state to compete. For example, I wrote a piece about how the “jock tax” may apply to baseball star Albert Pujols, who during this offseason inked a 10-year, $254 million contract to play for the Los Angeles Angels.
So how does the “jock tax” impact gamblers? Suppose you are a resident of Florida, and take a trip to Atlantic City, NJ. You win millions playing blackjack one night, like Don Johnson. Although you never lived, owned property, or conducted business in New Jersey, you must report and pay income tax on the gambling winnings to the state.
New York State Gambling Tax
Let’s add a layer of complexity to the scenario. Suppose instead you are a resident of Pennsylvania. Unlike Florida, Pennsylvania imposes a personal income tax on its residents. Does Pennsylvania also have the right to tax the gambling winnings you won in New Jersey?
Usually, the state in which the income is earned has the first right to tax the income. While you are likely required to report the gambling winnings to both New Jersey and Pennsylvania, you may be able to take a credit on the PA return for the taxes paid to NJ. The bottom line is that you should effectively pay only the higher of the two states’ tax rates, and not pay the full tax to both states.
This year’s “Tax Day,” April 17, is approaching. Next week, we’ll cover some items associated with the filing deadline, such as extensions and possible penalties for noncompliance.
New York State Gambling Tax Rates
Author’s note: I must remind all readers that it is impossible to offer comprehensive tax advice on the internet. Information I write on this blog is not legal advice, and is not intended to address anyone’s particular tax situation. Should you seek such advice, consult with a tax professional to discuss your facts and circumstances.
New York State Gambling Taxes
IRS Circular 230 Notice: To ensure compliance with requirements imposed by the IRS, I inform you that any U.S. federal tax advice contained in this blog is not intended or written to be used, and cannot be used, for the purposes of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter that is contained in this blog.