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New Hampshire Imposes 10 Percent Tax On Gambling Winnings

Posted on April 5th, 2010

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A new tax aimed to fix the state’s budget gap will require winners of almost all games of chance to pay the state 10 percent of their payouts. The 10 percent tax, due April 15, affects all gambling winnings, regardless of how small, taken since July 1 of last year, and even applies to those won outside the state. “You pay that tax on dollar one,” said Margaret Fulton, assistant commissioner of the state Department of Revenue Administration.

The new scheme is projected to generate almost $6 million for this fiscal year, and although its objective is to help balance the budget, gambling operators could not help but worry that it could do more harm to an already- ailing industry. For years, the three racetracks in the state have witnessed a continuous decline in the total amount wagered.

Ed Callahan, general manager of Rockingham Park in Salem which offers bingo, poker and simulcast horse racing, said, “One of the only things in our favor is that so many people knew nothing about it (the new tax). But we’re concerned that, ultimately, that drop-off (in wagers) will continue.” Callahan said that after the new tax took effect, gamblers from Massachusetts decreased in number. “Not only are they subject to our gambling tax but their own state income tax as well.

It truly makes little or no sense for a horseplayer who is a professional to come to New Hampshire,” he said. The system of collecting the tax is not the same for every game. For the state lottery, the 10 percent tax on winnings of $600 or more from lottery and scratch tickets are collected by the Lottery Commission, but the state leaves it to the winners of amounts below $600 to remit 10 percent of their prize money to the state themselves.

The lottery commission has reported collections of about $1.6 million on winning tickets since the new tax was imposed. Bingo centers and racetracks do not do the tax collecting, and do not have to present the state with the names of winners, but it is incumbent upon the winners to give the state an account of their payouts and pay the commensurate tax.

Under federal law, casinos and racetracks are expected to report winnings above specific amounts, and those reports may be examined by state auditors to check if the state’s residents are paying the correct figures. “We understand that it’s a tough financial time for people, but we are hopeful and remain highly optimistic that people will comply with state tax laws,” Fulton said.

The federal gambling tax and the state gambling tax also differ in some aspects. Under the federal tax scheme, players can deduct their wagering losses when computing their federal tax liability, but not for the state gambling tax. Also, New Hampshire’s 10 percent gambling tax is due on all winnings, while the 25 percent gambling tax of the federal government applies only to winnings above a specific amount, usually, $5,000.