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Oregon Weighs Ending Tax Break for Gambling Losses as Tribes Oppose Bill

Confederated Tribes of the Grand Ronde Community of Oregon is leading a fight against a state proposal that would end a tax deduction for gambling losses — saying it would hurt much-needed tribal operations.

Oregon State Sen. Mark Hass has proposed eliminating a tax break for gambling losses in the state. (Image: The Business Journals)

The tribe, which runs Spirit Mountain Casino, has joined with the Oregon Tribal Gaming Alliance (OTGA) to oppose Senate Bill 212. The legislation is sponsored by Senate Finance Committee Chairman Sen. Mark Hass (D-Beaverton), who was not available for immediate comment.

The legislation was approved by the Oregon Senate in March. It is now pending in the House with the chamber’s Revenue Committee yet to vote on the proposal.

Particularly at risk for the tribes is money derived by higher-stakes casino patrons using slot machines. In 2018, 2 percent of these gamblers provided 50 percent of Spirit Mountain’s revenue, according to OregonLive.com

The frequent venue patrons often consider the tax deduction when figuring out how much they should wager at the casino. “Nobody will gamble if they can’t write off their losses,” Justin Martin, a lobbyist for the Grand Ronde tribe, was quoted by Williamette Week.

The money from those customers goes toward us being able to provide essential governmental services,” Martin told Smoke Signals, a Grande Ronde publication, earlier this month.

Among the tribal operations that may be impacted are those on cultural resources, education, health care, housing, public safety and natural resources, according to a statement sent by OTGA chairman Gary George to House Speaker Tina Kotek. “Tribal gaming revenue is key to Oregon’s rural economy,” George added.

As of 2015, earnings from gaming were used to pay for nearly $151 million in tribal government services and $98.6 million for tribal community services, according to the OTGA.

“This bill is terrible for Indian country,” Martin added. The state government may also see less revenue if the bill is approved.

Under current state law, eligible taxpayers can deduct money they lost gambling — up to the amount they won in gaming — when figuring out taxable income. The Internal Revenue Service has a similar deduction for federal taxpayers.

The break for gambling losses now costs the state close to $6 million annually, according to state estimates, OregonLive.com reported.

By eliminating the tax deduction, it would make way for another break: allowing eligible taxpayers to deduct some money spent on college tuition and fees. Many universities in the state back that option.

In 2016, gaming associated with the state’s tribal casinos raised over $163 million in tax revenue or revenue sharing for the local Oregon government, according to a 2017 report from the American Gaming Association.

Tribal Gaming May Expand

Some Oregon tribes are considering expanding gaming operations. For instance, the Coquille Indian Tribe has proposed a second casino, this one in Medford. In February, tribal leaders were awaiting a Department of the Interior Bureau of Indian Affairs ruling on whether a 2.42-acre site is part of its reservation.

That decision will decide whether the tribe can open the venue. The tribe has gradually amassed 13 acres over six years, with the latest two parcels in South Medford being acquired late last year.

Sports Betting Debated in Oregon

Interest in sports betting is also growing in the state. Oregon regulators want to have a sports betting option on an existing app in place by September.

Under one proposal, bets would be limited to those made by mobile app. Bettors would only wager on results of games and only on professional sports.

Oregon lawmakers are considering using the proceeds from online athletic wagering to reduce the state’s $27 billion unfunded pension liability.