Toledo City Council voted unanimously Aug. 14 to start collecting taxes on the gambling winnings of nonresidents as it does with residents.
The tax is effective immediately. Nonresidents will be taxed at 2.25 percent, the same rate as residents. The revenue will go into the city’s general fund.
Taxable gambling winnings include more than just Hollywood Casino jackpots. Lotteries and raffles as well as the fair market value of bonds, cars, houses and other noncash prizes won or earned within Toledo city limits would also be taxable.
Councilman George Sarantou, chairman of the finance committee, said the legislation was mandated by the State of Ohio.
“This proposed legislation is the result of House Bill 386 that passed in June. The Ohio Senate and House of Representatives mandated that where there are casinos, the city has to collect income tax not just from residents but from nonresidents,” Sarantou said. “This legislation is simply to codify what the State of Ohio passed on a bipartisan basis. We’re bringing our regulation in line with state regulation, so there’s no gap, so there’s consistency in the law.”
Sarantou
House Bill 386 requires casinos in Ohio to withhold local tax on all winnings of $1,200 or more and enables municipalities to enact legislation to collect that local tax.
Sarantou also noted that nonresidents make up a large percentage of casino gambling winners.
“We did get our first check from the state, representing Hollywood Casino Toledo, and 84 percent of the people who paid that tax were nonresidents of the City of Toledo,” Sarantou told City Council.
‘Fair thing to do’
City of Toledo Law Director Adam Loukx said the legislation makes Toledo’s tax fairer.
“A lot of people are coming to Toledo from Oregon, Maumee, Perrysburg, let alone people coming from out of state,” Loukx said. “People who live across the street [from Hollywood Casino] in Rossford are not residents. I think it’s a fair thing to do.”
Columbus recently passed legislation enabling the city to tax the gambling winnings of both residents and nonresidents at 2.5 percent. Cincinnati taxes both residents and nonresidents 2.1 percent for gambling winnings. Cleveland taxes residents on gambling winnings at 2 percent, but does not tax nonresidents. Detroit taxes residents at 2.5 percent and nonresidents at 1.25 percent.
Positive for the city
It’s still too early to predict how much additional revenue the City of Toledo will collect from taxing nonresidents, said John Bibish IV, chief of collections for the City of Toledo.
“It’s a very positive piece of legislation for the city. It’s certainly great for the general fund,” Bibish said. “But I don’t think anyone can honestly predict a definite amount. We really don’t know and, until we close the books, we really won’t know. No one is able to do anything but speculate and, when it comes to revenue, it’s not wise to do that.”
Cleveland’s Horseshoe Casino became the first casino in the state when it opened May 14. Hollywood Casino Toledo opened May 29. Hollywood Casino Columbus is set to open this fall while the Horseshoe Casino Cincinnati is set to open spring 2013.
Penn National Gaming, which operates Hollywood Casino Toledo, did not respond to a request for comment.
