The Star Beacon; Ashtabula, Ohio

Local News

July 17, 2014

Lottery jackpots will not benefit local governments

Compassion shown local gamblers many years ago has cost the city of Conneaut more than $1 million in tax revenue from last week’s huge Ohio Lottery Powerball jackpot.

Last week it was learned a winning ticket valued at $124.9 million was sold at the True North convenience store in Conneaut. But not one penny of the winnings will make its way to City Hall, thanks to the city’s tax ordinance.

“(Proceeds from gambling) are specifically exempted from our income tax code,” said Finance Director John Williams.

A rewrite of the tax ordinance originally made winnings from gambling fair game, but the City Council at the time opted to strike that clause from the final version. Too bad, because the cash-strapped city could have collected $1.17 million under the present municipal income tax rate should the lottery winner choose the cash option, Williams said.

The local tax exemption is clear in the local law. Within Section 6.65 is this clause: “The provisions of this ordinance shall not be construed as levying a tax upon the following,” and one of the freebies mentioned is described as “receipts from casual sales and seasonal or casual entertainment, amusements and sport events (such as gambling and lottery winnings).”

Ashtabula County has been a hotbed for high rollers — within the past four weeks two lottery tickets with a combined $200 million value were sold in the area. In addition to the Powerball jackpot, a Classic Lotto ticket valued at $73 million was sold in late June at Grumpy Grandpa’s Get and Go on State Road in Ashtabula Township. The township won’t see a penny in revenue because townships don’t levy income tax.

Cash gifts to local government are always welcome, however, Joseph Pete, township trustee, joked Wednesday. “If the winner wants to give us some money, we would be glad to take it,” he said.

Ohio Lottery winners can’t escape a 29 percent hit in federal and state taxes    . The Classic Lotto winner last week opted for the cash option that yielded an estimated $26 million when taxes were paid. The winner, not identified, claimed the prize via a trust fund, the Ohio Lottery Commission announced.

Conneaut’s Powerball winner would walk away with $73 million ($51 million after taxes) if the cash lump sum option is chosen, lottery officials said.

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