Taxing your gambling loses. Could it happen here?

[CoolBreeze]

Hawaii residents now taxed on Vegas winnings even if they lose
Under new law, state will tax all winnings

Hawaii will tax gambling income. That's not unusual. But it's a tax on gross winnings, not net.
So if you win $100 and then lose $99 the next hand, you're still taxed on $100


A new bill signed into law this month by Gov. Linda Lingle has some frequent Las Vegas visitors and local CPAs scratching their heads.

Under House Bill 1495, no longer will gamblers be able to offset their winnings with their losses for Hawaii's state income tax purposes. Previously gamblers would be taxed only on their net winnings, but now they will be taxed on gross winnings.

A Hawai'i resident who wins $10,000 in a year, for example, and loses $9,000 in the same year used to be taxed only on the $1,000 in net winnings. Under the new law, that resident would be taxed on the full $10,000 in winnings.

Even if you end up a net loser, you will still be taxed on whatever you won along the way.

Dennis Kohara, a certified public accountant in Honolulu, called the law "ridiculous."

"You sit down at the blackjack table. You win a hand. You lose the next one. You win another hand. You lose the next one," he said.

And, under the new law, you now owe taxes on all the winning hands, which are not offset by any of the losing hands, Kohara said.

State Rep. Pono Chong, who sponsored the legislation, acknowledged that Kohara is correct.

However, Chong said, the new law will mainly affect those who have substantial winnings, along with substantial losses.

The law is expected to add about $300,000 a year to Hawai'i tax revenue.

Chong, D-49th (Mauna- wili, Olomana, Enchanted Lake), introduced the measure as a way to bring in additional revenue at a time when the state is "undergoing a significant and possibly protracted economic downturn in tandem with the national and global economic and financial crises."

He said no one wanted to increase taxes, but something had to be done to address the state's budget deficit. Chong said his bill was one of numerous measures taken to address the shortfall.

He also noted that Hawai'i is one of only two states where gambling is not permitted. The previous statute that allowed offsetting wagering income with wagering losses "in effect subsidizes the other 48 states that do allow gambling."

Some in Vegas have not taken the news lightly. Even before the new bill had been signed into law, April Gardner, staff editor for CasinoGamblingWeb.com, criticized Chong as hypocritical for questioning whether it's good policy to allow Hawai'i taxpayers to make deductions for an activity that's not even allowed in their state.

"Of course," wrote Gardner, "the state has no problem taking the taxes on money that is won in other jurisdictions."

Frequent Vegas traveler Robyn Oshita-Vranesevic falls into the category of the average gambler — win a little here, lose overall.

She used to have plenty of losses to offset her winnings.

"When we did go to Vegas I lost my behind," she said.

She said she understands the government's need to make up for lost income but suggested they do it elsewhere.

"I can see why the government wants to do it," she said. "Because there's probably a lot of untapped money out there. But you know what? Make marijuana legal and tax that instead."

The Department of Taxation, which supported the bill, has said it's unclear how much the law will actually bring in to the state. However, if it is assumed the gambling losses remain at the $5 million level currently claimed, the revenue gain could be $300,000 a year, the department said in testimony in support of the measure.

The new law is retroactive to January of this year.

[Tom Taggart]

Let's take a bet on how long before Mr. Pono Chong sleeps with the fishes.....

[cgarison]

Let's take a bet on how long before Mr. Pono Chong sleeps with the fishes.....

Nah.....

The rule (thank god this rule still holds true) "what happens in Vegas, stays in Vegas" is going to hold true and casinos will develop ways to work around the Hawaii reporting rules. For example, as it is described in the article, a casino would have to assign a person from the cage to escort high dollar gamblers in the casino from parlor to parlor (whales don't gamble at the tables like the rest of us) and track the wager/gain on every hand played. In short, Vegas is not going to do that.

I am sure that Steve Wynn and the other large casino owners have a few attorneys working on making sure that the cost to the casino is minimized and the rules are met in the the least restrictive way possible.

Edit:

OH! I see what they are doing. This is not going to affect the casinos in Vegas at all because all they are required to report are gross winnings. Gambling losses is a line that can be used to offset the gains from winnings which can be an arbitrary number if you do not gamble on a marker from the casino and pay the losses at the end of your gambling vacation.

No big deal. But it is funny that not only do the Hawaiians not only dislike the Weinermobile, they also don't know how a casino works. More proof that it does not take worldly knowledge to become an elected official.

[Bob Campbell]

Of course we could all just stop losing......yeah