Best state and ADW combination for taxes?

[horseysauce]

What is the best state to be a resident in if I want to reduce or eliminate paying of state taxes on my horse racing winnings (I have no problem paying my full federal taxes)?

I know people always list the 7(?) states that have no income taxes as the best states. These would be
Alaska
Florida
Nevada
South Dakota
Texas
Washington
Wyoming

But, if you look at the the various ADWs around the country, many of these ADWs don't allow betting in several of these states.

My overall favorite ADW is Xpressbet. Here is their list of state restrictions:

http://www.xpressbet.com/StateRestrictions

From this list - compared to the list of states with no income taxes, it would look like the only choices are Florida, South Dakota, Washington, and Wyoming. Does anyone know if these are basically the only state income tax-free states that most ADWs allowing wagering from? Or are there any other state income tax-free states that some ADWs allow wagering?

Also, amongst these state income tax-free states, are there any that have some kind of other advantage tax-wise or ADW-wise that I should know about?

Thanks.

[lamboguy]

New Hampshire

[Saratoga_Mike]

I believe TN allows ADW betting and there's no state income tax.

[startngate]

What is the best state to be a resident in if I want to reduce or eliminate paying of state taxes on my horse racing winnings (I have no problem paying my full federal taxes)?

I know people always list the 7(?) states that have no income taxes as the best states. These would be
Alaska
Florida
Nevada
South Dakota
Texas
Washington
Wyoming

But, if you look at the the various ADWs around the country, many of these ADWs don't allow betting in several of these states.

My overall favorite ADW is Xpressbet. Here is their list of state restrictions:

http://www.xpressbet.com/StateRestrictions

From this list - compared to the list of states with no income taxes, it would look like the only choices are Florida, South Dakota, Washington, and Wyoming. Does anyone know if these are basically the only state income tax-free states that most ADWs allowing wagering from? Or are there any other state income tax-free states that some ADWs allow wagering?

Also, amongst these state income tax-free states, are there any that have some kind of other advantage tax-wise or ADW-wise that I should know about?

Thanks.
Depends on what you are looking for as far as an ADW goes.

Throw out Texas and Alaska which don't allow ADW.

If you are looking for large rebates, Washington and Wyoming are problematic because they have State laws that include a mandatory source market fee which will reduce your rebates. Florida is OK for rebates only if you live far enough away from the tracks to not get hit with a source market fee, and don't like to bet Tampa which doesn't allow FL residents to bet on them through an ADW.

If you aren't looking for rebates then Washington and Wyoming would be fine, as would anywhere in Florida (again, unless you want to play Tampa).

Nevada is good, but there are limited phone betting options and nothing internet based as of the last time I checked. South Dakota would be great, if you want to live there. Tennessee and New Hampshire would be good too. They only tax dividend and interest income AFAIK.

Of course, you probably need to consider that even with no income tax, the States are going to get their money somehow. Other taxes (like property, sales, etc) may more than offset the income tax savings. For example, NH has one of the highest property taxes in the US.

[serp]

I believe TN allows ADW betting and there's no state income tax.

This. TN has no income tax but it does have dividend and interest tax. Low cost of living. Short drive to KY tracks :)

[Charli125]

If you are looking for large rebates, Washington and Wyoming are problematic because they have State laws that include a mandatory source market fee which will reduce your rebates.

Very good, and important point.

The source market fee in Washington is 6.5%. That means that if takeout is 20%, the track takes around 6%, the source market fee takes up another 6.5%, leaving 7.5% to be split between the ADW for profit and the player for a rebate.

[Ted Craven]

Nevada is good, but there are limited phone betting options and nothing internet based as of the last time I checked.

You can bet online from Nevada, though a certain minimum annual handle applies. Send me a PM.

Ted

[SpotPlays]

So, what U.S. licensed ADW is able to take Nevada residents?

[Track Collector]

If you are looking for large rebates, Washington and Wyoming are problematic because they have State laws that include a mandatory source market fee which will reduce your rebates.

Is it really true that STATES have imposed Source Market Fees?

I was under the impression that it was Signal Contest Providers like Monarch and Churchill Downs Inc. who imposed these SMFs. As track owners, their logic was to insure that specific state residents wagered directly at THEIR track or thru their established OTW network. If you wagered thru a separate ADW, Monarch/CDI would lose the middle-man fee, and thus they created SMFs as a way to keep it, regardless of who you wagered thru. Just like retail businesses give incentives to their largest customers, it is not an uncommon practice for Signal Contest Providers to drastically reduce or even waive altogether these SMFs for high-volume customers.

The basis of my question is to understand whether or not there would be opportunity for negotiation of SMFs for those who live in a state like Washington. A state-imposed fee obviously leaves one out of luck.

[Charli125]

Is it really true that STATES have imposed Source Market Fees?

I was under the impression that it was Signal Contest Providers like Monarch and Churchill Downs Inc. who imposed these SMFs. As track owners, their logic was to insure that specific state residents wagered directly at THEIR track or thru their established OTW network. If you wagered thru a separate ADW, Monarch/CDI would lose the middle-man fee, and thus they created SMFs as a way to keep it, regardless of who you wagered thru. Just like retail businesses give incentives to their largest customers, it is not an uncommon practice for Signal Contest Providers to drastically reduce or even waive altogether these SMFs for high-volume customers.

The basis of my question is to understand whether or not there would be opportunity for negotiation of SMFs for those who live in a state like Washington. A state-imposed fee obviously leaves one out of luck.

You are correct that the track owners were behind it, but it is now a State Law, at least in Washington. Read the description below and you'll see that the funds are "given" to the state of Washington to "fund horse racing".

I've spoken to all of my state representatives, and while they were willing to get on the phone and listen to me, they get big money from the tribes(are all for it because it makes it less appetizing to bet on horses), as well as the racing industry. Only one representative actually was interested in, and asked questions about the math involved. I guess he's the one I should keep targeting.

http://www.whrc.wa.gov/dictionary.php

Source Market Fee
WAC 260-49-070
The Source Market Fee (SMF) is the portion of the wager made from Advance Deposit Wagering (as authorized in RCW 67.16.260) that is returned to the state of Washington to fund horse racing. Ninety percent of the SMF is returned to Emerald Downs, which is authorized to conduct ADW. From this Emerald Downs must distribute two and one-half percent of the total SMF to the Washington bred owners' bonus fund and breeder award fund account to fund breeder awards (RCW 67.16.175). The remaining eighty seven and one-half percent of the total SMF is used to fund both operations at Emerald Downs and purses for races at Emerald Downs (per agreement with the horsemen). Ten percent of the SMF must be distributed to the commission. From this the commission distributes two and one-half percent of the total SMF to the Washington bred owners' bonus fund and breeder award fund account to fund owners' bonuses (RCW 67.16.102); one-half of one percent of the total SMF to the Class C purse account (RCW 67.16.285); and seven percent of the total SMF to fund operations of the commission.