Gambling, whether it's horse-racing or slot machines, is regulated at the state level. The gambling industry is undergoing tremendous change. It was not too long ago that Nevada was the only state in the United States that allowed casino gambling. Today, numerous states are either considering legalizing gambling or already have done so.

Controversy Surrounding Gambling in the U.S.

Despite the economic benefits, the idea of legalizing gambling is not without controversy. Opponents argue that gambling causes too much personal tragedy; as people who are addicted to gambling have been known to lose everything and wreak havoc on their families and personal lives. If you or a loved one has a gambling problem, contact the National Council on Problem Gambling's 24-hour hotline at 1-800-522-4700.

Types of Gambling

Casino gambling is not the only type of gambling that exists, nor is it the only kind of gambling addressed by state laws. There are many different ways to gamble. The most common subject of regulation is wagering on contests, such as horse racing.

Pari-mutuel wagering is a betting pool in which those who bet on competitors finishing in the top three (3) positions share the total amount bet, less a percentage for the management.

Horse racing, dog racing, or betting on sporting events are those most frequently and specifically banned. However, regulation of regional events is common. The state of Alaska, for example, lists about 10 different events that are allowed. These include many that would be unthinkable in the south: Deep Freeze Classic, Snow Machine Classic, and the Ice Classic are examples.

In Florida, there are a number of legal gambling activities that appeal specifically to the state's large number of retired citizens, such as:

• Penny-ante games with winnings not exceeding $10
• Poker
• Pinochle
• Bridge
• Dominos
• Mahjong

One of the more unusual prohibitions is found in Massachusetts where gaming is not permitted within one mile of a cattle show or military muster. Overall, the subject of legalized gambling as an industry is far from settled and is likely to change regularly in the coming years.

Factors in Support of Legalized Gambling

There are two factors driving the legalization of organized gambling in many states. First, Native Americans have won the right to establish casinos on their lands regardless of the laws of the state in which they are located. The establishment of these casinos has softened the general public's attitudes toward casino gambling and has led to the introduction of legislative initiatives that permit it, or to voter referendums on the issue. Often, in each situation, the initiatives have resulted in outcomes favorable to gambling.

The other factor that has led to legalization of gambling is the economic impact. Many of the regions where gambling has been legalized have realized untold economic benefits in terms of taxes, jobs, development of infrastructure, etc.

Gambling and Taxes

Federal Law requires the lottery to report winnings of more than $600 to the IRS and to withhold 25 percent of any claim of more than $5,000. To illustrate, if one person wins the jackpot and chooses the $389 million lump sum payment, $97 million will go straight to the IRS.

The same is true at the state level. While lottery winnings are subject to state income tax in most states, withholding tax varies from zero (California, Delaware, Pennsylvania, and the states with no state income tax) to over 12 percent in New York City.

Note: State gambling laws are constantly changing -- contact a gaming attorney in your state or conduct your own legal research to verify the state law(s) you are researching.

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