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North Dakota Senate Favors Charitable Gambling Tax Cuts

Posted on February 25th, 2011

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A huge savings would be granted to charities in North Dakota when the N.D. Senate voted to lower taxes on gambling organized by charities with an estimated tax return at around $11 million in would-be state revenue. The charitable institutions have expressed their delight on the outcome and said that they’d be able to spend more money on community programs. The bill reduced state gambling taxes to the now 1% flat tax rate on wagers in charity gambling. This time, the taxes that charities would be paying will only be about $5 million—almost a third of the previous $15.8 million in a 2 year turn around time. The bill is by far the biggest tax cut legislation that the North Dakota Senate had ever passed. According to game regulators, the difference spelled out a 75% decrease on tax rates and is very promising for the future of the charitable institutions and the recipients of their programs.

Charitable gambling has been operating in North Dakota and has been sanctioned by the state government since 1976. Black jack, bingo, raffles, and pull tabs are the games that organizations are allowed to offer, however, they are prohibited from pulling in electronic slot machines and video poker games whenever they’ll conduct charity gambling. Senator Joe Miller of Park River, said that the North Dakota state government does not need much tax revenues this year and current tax rates were approved when they’ll have more than enough for this year. The state treasury is expecting a $1 billion in surplus tax this coming June and it would not be conducive to charge so much tax on charities’ gambling who, for the better, are going to help the community anyway. “It’s money they need for a lot of important cultural and social service aspects of our society,” Miller said. “The state has enough money now, and it’s time to give it back.”

Charitable organizations are very happy for what the North Dakota Senate had done, and they said that the bill comes as a welcome respite because their income has been gradually declining over the years. All that has changed now and both parties couldn’t be in any friendlier terms than ever. “We’re not against paying taxes, but we’ve been paying an extremely high tax rate for many years,” said Marvin Knutson, vice president of the Charitable Gaming Association of North Dakota. The president of Special Olympics North Dakota, Kathy Meagher said that she, on behalf of her organization, has been relying on gaming money for many years now. However, due to large taxes imposed on gambling, they have reduced their operations to a bare minimum. With the tax cut bill on its way to the final stages of approval, her organization will be able to save about $17,000 per year, allowing operations to continue, and even expand. “That money goes right back into the programs we provide, which is so exciting,” Meagher said. “I think it’ll help out every nonprofit that does gaming.”

The Senate bill would allow charitable gambling’s expenses to reach at 60 percent of their profits in wagers, excluding the winnings paid to gamers. The director of the gaming regulatory division of the attorney general’s office in North Dakota, Keith Lauer said that the new tax and expenditures flow has been simplified. The overwhelming support for the bill was due largely to the a study on charitable gambling, which concluded that the industry was taxed beyond its means. Furthermore the study concluded that the ineffective tax laws that North Dakota had enacted over the years was what caused the problem, so the only solution was to amend the current tax law in order to cater to the needs of the industry.

Lauer added that the tax imposed on charitable gambling has gone out of hand “We started allowing gambling as a way to help charities out, and the tax was to make sure they paid for the enforcement of the industry,” Lauer said. “That grew and grew over time. I think some people finally said, ‘Gee, this isn’t what charitable gaming was set up for, to be a revenue source for the state.’”.