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Emily D. Swoboda

Local Ohio I-Gaming Tax Ordinance Unlikely to be Enforced

20 February 2009

A small town in Ohio updated its laws recently to impose a 1.5 percent income tax on Internet gambling winnings, but a local gaming attorney doesn't think that law would be enforceable.

The Council of Lisbon, Ohio -- the county seat of Columbiana County -- on Feb. 10 passed the ordinance for reasons of complying with Ohio law, according to local reports.

Virginia Barborak, Lisbon's solicitor, told Salem News that the amount, 1.5 percent, matches the amount at which other forms of income are taxed.

Mike Zatezalo, managing director of the law firm Kegler Brown Hill & Ritter in Marion, told IGamingNews Monday that most municipalities in Ohio only tax wages, not capital gains or other forms of income which are considered income for federal tax purposes.

Thus, he can only speculate on the reasons behind the addition of Internet gambling income to Lisbon's tax code.

Regardless, Mr. Zatezalo does not see how this would be enforced, and points out the fact that while Ohio has no express written laws prohibiting online gambling, it is considered illegal by most state law enforcement authorities.

"No prosecutor in Ohio has ever tried to bring any kind of action," he said. "It's just beyond the bounds of their jurisdiction, so they're not going to do anything. But I think most prosecutors would say it's illegal."

At the federal level, the Department of Justice has made no secret of its position on Internet gambling but has admitted it would most likely never go after the individual gambler.

And Mr. Zatezalo believes Ohio law enforcement would bear the same attitude.

"I think Ohio prosecutors, and even the attorney general, would say the same thing," Mr. Zatezalo said. "So this taxing gambling winnings is kind of silly, in a way, because who's going to report it?"

Holly Hollingsworth, spokesperson for Richard Cordray, Ohio's attorney general, told IGamingNews that at this point the attorney general's office would have no reason to interfere with Lisbon's legislative process.

"(Cities) have the jurisdiction to pass a (local ordinance)," Ms. Hollingsworth said. "If there were a challenge to that then perhaps other questions would be raised, but we would not have jurisdiction to tell a city their ordinance is incorrect."

Ms. Hollingsworth emphasized that not all challenges warrant the attorney general's involvement.

Several calls to the Lisbon Council and Ms. Barborak went unreturned by press time.

Local Ohio I-Gaming Tax Ordinance Unlikely to be Enforced is republished from
Emily D. Swoboda
Emily D. Swoboda