Lottery commission celebrates with "Tax Repeal Tea Party"
CONCORD, N.H. — Starting Monday, New Hampshire residents no longer have to pay taxes on their lottery winnings.
The state imposed a 10 percent tax on gambling winnings over $600 in 2009, but the tax was repealed by the current Legislature under a bill going effect Monday.
Gov. John Lynch last week signed into law the bill repealing the tax, which officials said hurt the racetrack and battered lottery sales after the state enacted it two years ago.
"It was great news," lottery executive director Charlie McIntyre said.
"It was definitely a losing proposition," said House Majority Leader D.J. Bettencourt, R-Salem. "This was hurting our cross-border advantage."
The lottery commission is celebrating with a "Tax Repeal Tea Party" at its headquarters. It's also unveiling a new $10 instant ticket called "$250,000 Tax Free." Federal taxes on the top prize for the game will be paid by the state. The tickets will be available at the lottery commission office Monday, with a buy one, get one free promotion, and then statewide starting June 6.
After the 10 percent state tax was imposed in 2009, lottery officials watched as scratch ticket sales, especially in border community stores, plummeted immediately and continued downward.
Scratch sales were off 5.82 percent statewide last year. "We were down and Massachusetts, Maine and Vermont were all up," McIntyre said. "To me, that was the statistic that was most telling."
McIntyre said the impact was dramatic. "We noticed the drop-off in the border towns specifically," McIntyre said. "All were much worse off."
Scratch sales in Pelham and Salem tumbled 10 percent.
The lottery does big business in Southern New Hampshire. More than $18.3 million in scratch sales and $9.2 million in online or jackpot sales in the last fiscal year.
Because scratch players weren't playing as much, that likely hurt jackpot sales, too. "We have crossover play," McIntyre said. "Someone who buys a scratch ticket often will play Powerball, too."
The lottery wasn't the only operation taking a hit. So was the track.
"We saw about an 8 percent reduction in our overall handle and revenue in the areas of charitable gaming, bingo and racing," Callahan said.
"We had people who packed up and moved away to a more favorable state," Callahan said. "We'll see if it bounces back. I think it will take six months. There's no guarantee, of course."
Players lost to other states may never return, Callahan said.
McIntyre believes lottery winners were carefully watching the repeal developments.
"Our weekly sales report showed cashings were down dramatically," McIntyre said. "I'm sure people were holding off."
Bettencourt said the House, Senate and governor all agreed to repeal the tax. He was critical of the governor, though. "He should have been proud to do this," Bettencourt said. "This helps Salem and Southern New Hampshire."
Reaction from lottery players was positive.
"We can use all the little breaks we can get now," said Nancy Kelley of Sandown. "You can take that 10 percent and put it in your gas tank."
"That's cool," said Renee Ferland, also of Sandown. "Ten percent? That's an awful lot of money you have to pay in taxes. Not to mention what you spend for tickets."
Jim Hennessey of Northwood said he would have been surprised to win and get hit with the tax.
"If I won $100 million and they took 10 percent, that would be quite a bit," Hennessey said. "I would have asked, 'What did they do?"'
Leon Vitale of Hudson said he never knew about the tax. "I just give them my dollars every week and pray like everybody else," Vitale said.
The tax on winnings was just "ripping them off even more," Vitale said of lottery players. "They take enough out of us with regular taxes."
The repeal didn't matter to Terri Godfrey of Windham because she said the lottery helps fund education in New Hampshire. "If I was lucky enough to win $1 million, and got to keep $900,000, I wouldn't mind $100,000 going toward something good," Godfrey said. [Editor: Of course, Godfrey left out the other $250,000 that the federal government would take, leaving her with only $650,000, instead of $750,000 she would now get without the 10% state tax.]
Godfrey did pause to wonder about the consequences of repeal. "Where is the money going to come from now?" Godfrey asked. "Are they going to start taxing my car more?" [Editor: No, they would sell many more lottery tickets, bringing in even more revenue than they did with the 10% tax.]
Jackie Jendrick of Salem said the repeal made no difference to her. "I would have had no problem paying that tax," Jendrick said.
Keith Wilhelm of Windham was pleased to hear a tax had been repealed in New Hampshire. "That's always a good idea," Wilhelm said. "How can that be a bad thing?"
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